CREATION: Ad agencies to see less growth in online advertising next year

Hong Kong's advertising agencies should not expect significant growth in Internet advertising next year, according iCom (International Communications Agency Network). A global survey by the company revealed Hong Kong was likely to see bigger benefits from interactive TV as dotcoms were likely to reduce their advertising spending because of financial difficulties and closures. Mr John Cohen, chief executive of PMP Advertising, told CReATION that while he expected next year to be more profitable for agencies in Hong Kong, he did not expect much revenue to be generated through online advertising, as agencies and clients were "too green" in terms of technology and the Internet. "At the moment we're not seeing much (online advertising) from our clients. It is mostly the dotcoms advertising on the Internet, and I don't think that's going to change. But I'm certain we are going to see more dotcom closures in the coming year. "That coupled with great confusion over which sites provide effective advertising potential and very low recall of banner ads doesn't bode well for the future of the Internet as an advertising medium." He added that interactive TV would be more profitable "once it gets going" as it would be easier for clients to make the transformation. "It's (iTV) more conventional advertising - something the clients can understand. It's something they know more and is not as dreamy as the Internet so they can relate to it better ... There are lots of opportunities when you consider interactive TV. I don't know exactly when it will come, but when it does, it's going to get moving fast. It's certainly more exciting," he said. Mr Cohen added he did not expect rapid changes in the advertising sector next year. The survey found that more than half of the respondents cited Internet and interactivity as the areas to have the biggest impact on businesses next year. Further, 19 of the more than 30 agencies responding to the survey said the Internet would continue to be key, with the focus on gearing up and putting the Internet more into perspective as part of a broad media spectrum. The report added that interactivity was at varied stages of development in different parts of the world, but would be the fastest growing medium in the US, UK, Australia, Japan, Austria and Switzerland. Contrary to Mr Cohen, Smee's Advertising president Mr Anthony Smee said clients were beginning to understand the Internet's good opportunities, as well as its "wasteful parts". "This gives much better clarity on the client's Web strategy, as it links into the rest of the business and as advertising communication companies work out strategies for those clients. More effective Web design and ecommerce is going to come out of it. "For Europe, the fact that America has been the learning curve/standard has helped, and the gap between the US and Europe has become much closer on the Internet." Other areas likely to have an impact on agencies include integration of services, difficulty of recruitment of qualified staff and economic slowdowns or political turmoil in certain countries. The company said its 74 agencies in 44 countries generate billings of USdollars 3 billion. ICom has 13 member agencies in Asia-Pacific. It was originally founded as the National Federation of Advertising Agencies and later became the International Federation of Advertising Agencies.

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