HK ad agency billings slide 6pc in rocky '01

DDB held on to its second spot for the third year despite a five per cent slump to $1.214 billion, while McCann-Erickson Guangming put in a strong performance, jumping three places to the third spot with an almost nine per cent increase in billings to $905.6 million.

The difficulty of 2001 was underlined by the steep drop in the cumulative income of 4A agencies to $10.068 billion.

Hong kong 4as income report - 2001

CHINA
Agency                              Capitalised    Total Gross
                                       Billings         Income
Saatchi & Saatchi Great Wall      1,276,637,887    191,399,983
Ogilvy & Mather China             1,180,676,710    177,013,000
Leo Burnett - China                 920,099,820    137,946,000
McCann-Erickson Guangming           809,340,848    121,340,457
Bates China                         806,082,660    120,851,973



HONG KONG
Agency                              Capitalised    Total Gross
                                       Billings         Income
Ogilvy & Mather Hong Kong         1,146,214,420    212,326,000
DDB Worldwide                     1,214,076,108    182,020,406
McCann-Erickson Guangming           905,593,904    135,771,200
Bates Hong Kong                     876,865,707    131,464,124
J. Walter Thompson                  828,699,616    124,242,821

Source: HK4As

Among the top 10 agencies, only O&M, McCann and Grey recorded an increase in billings. Joseph Wang, group managing director of O&M, said: "Last year, most of our income came from multinational advertisers. Local advertisers were either cutting their spending or holding back their ad dollars."

McCann Erickson Guangming Hong Kong managing director, Rosanna Yu, said a string of new account wins had propelled the agency up the ranks. Last year, McCann snagged Yellow Page, Caltex and Towngas. Additional project work from its large existing clients such as PCCW and Dah Sing Financial Group also helped drive its billings growth.

Bates Asia regional president Jeffrey Yu, also the chairman of the 4As, said the terror attacks on the US and the economic slowdown were key factors behind the tough operating climate, which forced a majority of member agencies to cut head count.

Only three agencies - O&M, McCann and J. Walter Thompson - hired staff last year, while all other shops cut payroll. "Last year, we acquired Mexx Marketing which is a marketing company, so that the number of our staff increased, said Wang. "However, we didn't really hire more people."

He told media that O&M would continue its acquisition drive as it looks to further strengthen its ability in delivering a complete branding service.

"We want to buy some companies which are very strong in retail marketing and point of sale, said Wang.

JWT said new business wins had allowed him to recruit staff. But, this may not be the case in 2002. Its chief executive officer, William Lau, said: "The industry in 2001 was bad and for this year, will likely remain very gloomy. There are two key operating factors for agencies - people and rental. 4A agencies cannot reduce rental costs as most of them have long-term contracts with their landlords. Thus, the reduction would come from other areas, from trimming back the workforce through various means."

Lau added: "When talking about cutting the workforce, the painful part is to look seriously at head count and how one person can do the work of two. This year, all hiring plans will likely be frozen unless the existing business required it."

Yu predicted that prospects for the rest of this year would be stable, but he did not expect a strong bounceback.