CREATION: Investment houses slash regional online adspend predictions

Two major investment houses have cut online adspend forecasts for Asian markets, with one warning that the region faced the same woes as its US counterpart. Nikko Salomon Smith Barney lowered previous forecasts of online adspend in Japan for 2003 by a sharp USdollars 700 million to total just USdollars 2 billion. It also noted 2001 revenues and earnings would not meet previous forecasts. However, it added the online adspend problems in Asia were significantly different to those experienced by large dotcoms, such as US-based Yahoo. Internet firms in Asia have only one-half of one per cent of the advertising market, compared to two or three per cent in the US, the report said, adding that the level of online ad spending per person in Asia was insignificant compared to the United States. Another investment house, Credit Suisse First Boston, said overall ad spending per person in China amounted to just USdollars 3 in 1998, compared to USdollars 437 in the United States. The growth of online advertising for Asia, excluding Japan, was USdollars 175 million in 2000, and was expected to reach USdollars 387 million in 2001, according to Nikko Salomon Smith Barney. Merrill Lynch also cut its forecasts for online ad spending in China from USdollars 120 million to USdollars 80 million for 2001. Analysts noted the Asian online advertising industry was at an infant stage. As the Internet matures in the region, advertisers would become more aware of the Web as an effective tool for gathering market data. However, despite all the bad press, Jupiter Media Metrix said online advertising, including word-of-mouth publicity and direct marketing and promotions, were still successful in attracting new visitors to websites. The Jupiter report found the majority of the top 25 new websites last year were pure play business, lacking the backing of "big-name" companies. It added that websites were adopting varied techniques to boost traffic, such as requiring new visitors to register on sites in order to collect email address for direct marketing purposes.

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