Dotcoms spend goes on despite shake down

Despite the recent spate of layoffs and reports of excessive marketing spending in the dotcom sector, Internet-related companies across Asia-Pacific continued to spend substantially on advertising during the first half of this year. Dotcoms in Hong Kong spent more than HK$400.5 million (about US$51.4 million) in advertising during the first quarter of this year, compared with about HK$122 million in the last quarter of 1999, representing a 229 per cent increase in ad spending. Expenditure during the second quarter of 2000 increased steadily to an estimated HK$466 million. The findings by ACNielsen also illustrated a 118 per cent rise in advertising expenditure by dotcoms in China between the first and second quarter of 2000. While Singapore also saw more than a 100 per cent increase in spending during the same period, it was Malaysia's dotcoms that led the region with a 425 per cent boost in ad spend during the same period. The dotcom sector, which has been plagued with layoffs and company closures, further helped fuel an overall HK$12.8 billion advertising boom in Hong Kong during the first six months of the year. Industry analysts, as well as venture capitalists, have questioned the marketing figures of dotcoms. Consider Renren Media, which posted a net loss of HK$47.84 million for the first six months of the year. The company spent a total of HK$30.5 million on marketing during the same period. Meanwhile, Tom.com spent HK$74 million on marketing and advertising during the first six months of the year. Both companies had earlier laid off workers in an effort to cut costs. Since June, hundreds of employees from other prominent Hong Kong-based portals, including nextmedia.com, appledaily.com and SCMP.com have been laid off. However, according to Mr Steven Yung, president of ACNielsen Media International, with the digital economy gradually taking shape, this spending could spell a bright outlook for the ad industry. "Growth so far this year has been outstanding - the advertising market in Asia-Pacific continues to outpace economic growth. In the first six months, the Asia-Pacific market earned close to US$13 billion, with key markets like China, South Korea, Hong Kong and Australia all showing strong gains. "The outlook is bright for the rest of the year. The regional economy is on course for a steady recovery, and we expect to see more dotcom advertising as the new economy takes shape, giving added momentum to the industry," he said. According to figures released by ACNielsen AdEx, the Hong Kong advertising market grew 20 per cent to US$1.6 billion in the first half this year. The China market led the region with 44 per cent growth at US$4 billion, while South Korea experienced 35 per cent growth at US$2.7 billion. Thailand was the largest market in Southeast Asia, presenting a 27 per cent increase to US$723 million. Mr Yung said, "The majority of spending by dotcoms has been on traditional mainstream medium, which makes sense. Dotcoms need to establish a brand name ... but the challenge is that with heavy spending the dotcoms now don't have much revenue. "The Internet is still young and this is a learning process for the dotcoms. Venture capitalists feel spending on brand building will be worthwhile. They are still learning which type of advertising works best on the Internet ... So there will be some mistakes along the away." DOTCOM ADVERTISING EXPENDITURE - ACNIELSEN Country Oct-Dec '99 Jan-Mar '00 Apr-Jun '00 Q1 '00 vs Q1 '00 vs dollars dollars dollars Q4 '99 Q2 '00 000's 000's 000's % change % change Hong Kong (HKdollars ) 121,688 400,567 466,048 229.2 16.3 China (RMB) 64,220 83,389 181,682 29.8 117.9 Singapore (Sdollars ) 5,020 12,254 25,433 144.1 107.5 Malaysia (Rtdollars ) 549 1,622 8,513 195.4 424.8 Thailand (Btdollars ) 127 43,821 73,170 34,404.7 67.0 Taiwan (NTdollars ) 430,786 538,599 - 25.0 174.1

Sign In

Trouble signing in?

Reset Password: Click here

Contact Customer Support at

Customerservice@campaignasia.com