Whisper it softly, but adspend may finally be turning the corner. A series of figures released in recent weeks suggest that there may be cause for hope when it comes to media budgets.
In Taiwan, one of the markets hit hardest by the downturn , second-quarter spend was up slightly, according to Nielsen, and ad rates are already soaring on the expectation of a strong summer. Year-on-year prices increased by 20 to 50 per cent depending on the TV channel in July, according to media industry sources.
In Hong Kong, another badly hit market ; there was more good news. Second-quarter spend figures from admanGo were marginally negative, but those for June were up 1.6 per cent year on year.
So can the region’s agencies and media owners finally look forward to an ad recovery? That may be premature, but there is a growing feeling in some countries that the market has hit bottom.
“What appears to be clear is that the worst is over,” says Kenneth Tsang, CEO of Universal McCann Singapore. “Two market trends are giving us hope: the stock exchange index has improved and the manufacturing sector is performing well. Consumer sentiments are also improving. The economy is certainly moving in a positive direction, but we need to watch it long-term before we can be sure.”
In Hong Kong it was FMCGs and pharmaceuticals making the big ad splash. Jennifer Ma, director at admanGo, says: “Industries that traditionally spend more such as banking, food and retail have decreased their spend significantly this year, while industries such as toiletries and cosmetics have actually increased media spend.”
Winnie Lee, China MD at OMD, is equally optimistic about the situation in China, saying June witnessed a “booming recovery” in adspend fuelled by faster growth in beverages and foodstuffs and supported by recovery in pharmaceuticals and toiletries.
However, it’s the Taiwanese resurgence that has come as the biggest surprise. “People who have been in the industry for 10 or even 20 years are saying they’ve never seen anything like this,” says Vince Cheng, managing director at MEC in the market. According to Robert Hsieh, CEO of ZenithOptimedia, current spending levels are “almost double” those for February and March. But the Taiwanese situation also underlines the precarious nature of the current ‘recovery’; Hsieh anticipates another slowdown in prices by September.
That caution is shared elsewhere. Rahul Thappa, CEO of Mindshare Malaysia, warns that some of the figures showing an upturn may not even be accurate: “Adspend figures would have us believe that spend is holding at levels of 2008. That is incorrect, as Nielsen figures are based on rate cards and not actual spend.” Thappa believes spend in Malaysia is still decreasing (five per cent on average) and points out that spend is shifting from measured media to (and between) media that are either not measured in their entirety or not measured at all, such as digital, activation, outdoor, point-of-sale and pay-TV.
In Japan, Kevin Ramsey, president and CEO of McCann Worldgroup Asia-Pacific, says there is very little evidence of recovery. “We are estimating a decline in adspend in the vicinity of 15 per cent in 2009. There are no signs of improvement, in fact we currently envisage a further decline in the region of five per cent in 2010.”
Ramsey attributes this to Japan being hit by weak domestic demand and big declines in exports for major Japanese manufacturers. “Because of Japan’s labour practices, which make it very difficult to retrench staff, Japanese corporations tend to take a far more aggressive approach to cutting costs other than staffing,” he says.
And even when media spend does recover, agencies should not count on seeing any of it, says Andrew Cawte, MediaCom’s Greater China strategic planning director.
“For the past year or so, clients have been demanding lower fees or putting business up for pitch. Consequently there’s been a mad round of pitching and fees have been reduced. Because we generally work on fees rather than commission these days an increase in adspend does not necessarily lead to an increase in fee. Rebates might well be affected, but not the fee.”
Got a view?
Email [email protected]
This article was originally published in 13 August 2009 issue of Media.
In Taiwan, one of the markets hit hardest by the downturn , second-quarter spend was up slightly, according to Nielsen, and ad rates are already soaring on the expectation of a strong summer. Year-on-year prices increased by 20 to 50 per cent depending on the TV channel in July, according to media industry sources.
In Hong Kong, another badly hit market ; there was more good news. Second-quarter spend figures from admanGo were marginally negative, but those for June were up 1.6 per cent year on year.
So can the region’s agencies and media owners finally look forward to an ad recovery? That may be premature, but there is a growing feeling in some countries that the market has hit bottom.
“What appears to be clear is that the worst is over,” says Kenneth Tsang, CEO of Universal McCann Singapore. “Two market trends are giving us hope: the stock exchange index has improved and the manufacturing sector is performing well. Consumer sentiments are also improving. The economy is certainly moving in a positive direction, but we need to watch it long-term before we can be sure.”
In Hong Kong it was FMCGs and pharmaceuticals making the big ad splash. Jennifer Ma, director at admanGo, says: “Industries that traditionally spend more such as banking, food and retail have decreased their spend significantly this year, while industries such as toiletries and cosmetics have actually increased media spend.”
Winnie Lee, China MD at OMD, is equally optimistic about the situation in China, saying June witnessed a “booming recovery” in adspend fuelled by faster growth in beverages and foodstuffs and supported by recovery in pharmaceuticals and toiletries.
However, it’s the Taiwanese resurgence that has come as the biggest surprise. “People who have been in the industry for 10 or even 20 years are saying they’ve never seen anything like this,” says Vince Cheng, managing director at MEC in the market. According to Robert Hsieh, CEO of ZenithOptimedia, current spending levels are “almost double” those for February and March. But the Taiwanese situation also underlines the precarious nature of the current ‘recovery’; Hsieh anticipates another slowdown in prices by September.
That caution is shared elsewhere. Rahul Thappa, CEO of Mindshare Malaysia, warns that some of the figures showing an upturn may not even be accurate: “Adspend figures would have us believe that spend is holding at levels of 2008. That is incorrect, as Nielsen figures are based on rate cards and not actual spend.” Thappa believes spend in Malaysia is still decreasing (five per cent on average) and points out that spend is shifting from measured media to (and between) media that are either not measured in their entirety or not measured at all, such as digital, activation, outdoor, point-of-sale and pay-TV.
In Japan, Kevin Ramsey, president and CEO of McCann Worldgroup Asia-Pacific, says there is very little evidence of recovery. “We are estimating a decline in adspend in the vicinity of 15 per cent in 2009. There are no signs of improvement, in fact we currently envisage a further decline in the region of five per cent in 2010.”
Ramsey attributes this to Japan being hit by weak domestic demand and big declines in exports for major Japanese manufacturers. “Because of Japan’s labour practices, which make it very difficult to retrench staff, Japanese corporations tend to take a far more aggressive approach to cutting costs other than staffing,” he says.
And even when media spend does recover, agencies should not count on seeing any of it, says Andrew Cawte, MediaCom’s Greater China strategic planning director.
“For the past year or so, clients have been demanding lower fees or putting business up for pitch. Consequently there’s been a mad round of pitching and fees have been reduced. Because we generally work on fees rather than commission these days an increase in adspend does not necessarily lead to an increase in fee. Rebates might well be affected, but not the fee.”
Got a view?
Email [email protected]
This article was originally published in 13 August 2009 issue of Media.
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