HONG KONG: A slowing economy and a growing number of companies
relocating to China have prompted a new round of belt tighening among
Hong Kong ad agencies.
D'Arcy and J. Walter Thompson have each reduced their head count by
10.
Euro RSCG axed 20 positions about two months ago amid fears that the US
economy was slipping into a recession.
More blood-letting is feared in the coming months as agencies, which
over-hired last year, are hurting because clients have become more
cautious.
Several categories have also failed to perform as strongly as last year
- dotcom spend is a fraction of last year's exuberant level, while
mandatory provident fund and telecom advertisers have tightened purse
strings.
They are among the growing ranks of companies that are waiting to see
which way the economy turns before they begin spending again.
The position of some agencies have also been aggravated by major account
losses - JWT lost two flagship briefs, San Miguel and One2Free this
year, while D'Arcy's loss of the Australian Tourist Commission account
last week will not help. Euro felt the pressure for a while after it
parted ways with Philips regionally. But the agency claimed it has
bounced back with several wins, including One2Free.
Euro Hong Kong managing director, David Morgan, said: "A lot of agencies
are driving for operational efficiencies and the staff cuts we hear
about are a reflection of a flattening market. And, as more of our
clients move to the mainland we have to reflect this by cutting in Hong
Kong and adding in China, where -on a head count basis - there is no net
gain or loss."
D'Arcy Greater China chief executive Ken Wright said that his agency has
about 50 people on Procter & Gamble's Whisper, Crest toothpaste and
Tempo brands in Guangzhou. "We moved the P&G account to China in the
last year but with the staffing we have there, there's no sense in
allowing a duplication to exist in Hong Kong."
The advertising community is clearly moving towards a strategic
restructuring, as China's strengthening economy pulls in companies which
previously ran their China operations out of Hong Kong.
