Dotcoms spend goes on despite shake down

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