Zenith Optimedia predicts that online adspend in Hong Kong and Singapore will rise to US$48m in 2008, an increase of 30 per cent on 2007.
Last year, with local online spend estimated at US$20 million Hong Kong was home to no more than six online reps. Over the course of this year, however, with spend estimated to have risen by five per cent, that figure has more than doubled.
But does the region have the capacity to support so many online adv companies? Kevin Huang, CEO of online sales house Pixel Media thinks not. For Hong Kong, he draws a parallel between the present situation and the online bubble period (1998 to 2001), which entertained a similarly large number of online sales houses.
The difference, he notes, is that the majority at that time were international, whereas many current players are local, sometimes one-man shops, catering to just one site.
From a regional perspective, they can succeed with just one client, says Adrian Toy, interactive director at Universal McCann. However, most are currently operating on a local basis. Indeed, Pixel was the only agent left standing after the bubble burst and following the DoubleClick acquisition in October 2002 the company went public last year.
The danger for marketers lies in misrepresentation, largely because setting up as a media rep is easy, requiring little or no experience in media planning and buying.
“Some irresponsible sales houses may persuade publishers with little familiarity with the local industry to commit to long term contracts with no hope of there being sufficient quality in the sales team to deliver on those promises," says Nick Fawbert, Asia Pacific COO of Aktivgroup in Singapore.
Fawbert summarises the requirements for an effective online advertising proposition as being centralised media planning delivering effective reach across the region, competitive and user-friendly pricing systems, up-to-the-minute technology for ad serving, tracking and reporting, flexible targeting, and for optimisation of campaigns through insight and analysis.
Huang notes an absence of industry standards in the Asia Pacific region, in contrast to more developed markets such as the UK, where reps subscribe to the Internet Advertising Sales House Code of Conduct. The poor practice visible today risks tarnishing the industry, he says.
Will the boom last? Huang suggests that in Hong Kong, there is too much supply for too little money.
George Foo of iHub Media in Singapore agrees, noting that the majority lack a clear business model.
“Hong Kong can only support two or three good companies.” As for Singapore, Fawbert says there is no shortage of aspiring companies, but taking into account salaries, technology, overheads and publisher revenue share, he says in order for a sales house to survive, they need either ten to fifteen regional publishers, or an international “heavyweight” such as MSN to support their business.
