FOCUS: YEAR-END REVIEWS - Concerns of media inflation, pricing policies at year-end

<p>The past year has been a good one generally for the Asian </p><p>advertising industry. </p><p><BR><BR> </p><p>Most of the region's economies experienced sustained growth, with </p><p>marketing budgets returning to pre-crisis levels. </p><p><BR><BR> </p><p>Linked to these developments, however, we have seen troublesome media </p><p>inflation trends this year in many countries. </p><p><BR><BR> </p><p>Our annual inflation report showed that media cost increases are now </p><p>significantly outpacing consumer inflation in most Asian markets, with </p><p>television inflation being the key driver. </p><p><BR><BR> </p><p>Our key concern as 2000 draws to a close is that runaway media inflation </p><p>- coupled with renewed worries about a slowdown in the US economy - </p><p>could quickly put the brakes on marketing and media spend growth in </p><p>Asia. </p><p><BR><BR> </p><p>As we pointed out some months ago, it appears that many media owners are </p><p>assuming the good times will roll on. </p><p><BR><BR> </p><p>We're not convinced that will be the case. </p><p><BR><BR> </p><p>Most advertisers cannot tolerate media cost increases that are double or </p><p>triple the rates of their own business growth projections. </p><p><BR><BR> </p><p>Nor should they. </p><p><BR><BR> </p><p>Advertisers in almost every category are evaluating alternative channels </p><p>to the so-called traditional media or moving budgets from one channel to </p><p>another to take advantage of pricing efficiencies and greater </p><p>accountability. </p><p><BR><BR> </p><p>We see many marketers building increased flexibility into their media </p><p>investment plans as well in the event of a slowdown. </p><p><BR><BR> </p><p>Our advice to media owners is that they consider pricing policies </p><p>carefully going into 2001. </p><p><BR><BR> </p><p>Marketers are looking for the best possible return on their media </p><p>investments, and value is a key component of that equation. </p><p><BR><BR> </p><p>Increasing costs without increasing value is a no-win scenario for </p><p>marketers, agencies and media owners alike. </p><p><BR><BR> </p>