HK agencies cut head count as spend slows

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