Media costs soar as Asia recovers from downturn

<p>Media inflation across the Asia-Pacific region has returned to </p><p>levels last seen in 1996 and 1997 before the financial crisis swept </p><p>through the region; however, a warning bell has been sounded to </p><p>television media owners. </p><p><BR><BR> </p><p>According to a MindShare study, no country will see the cost of media go </p><p>down this year. </p><p><BR><BR> </p><p>Last year, deflation was reported in Japan and Thailand while Malaysia </p><p>held steady. </p><p><BR><BR> </p><p>Media inflation in the key markets of Hong Kong and Singapore are </p><p>forecast to increase five per cent this year, compared with 2.5 per cent </p><p>and three per cent respectively in 1999. </p><p><BR><BR> </p><p>Television is the main factor fuelling the rise and this has forced </p><p>advertisers to shift to a more diverse media mix. </p><p><BR><BR> </p><p>This is most evident in Hong Kong, where TVB - the territory's largest </p><p>terrestrial television broadcaster - introduced two new prime time rate </p><p>classes, which effectively raised prices by up to 28 per cent. </p><p><BR><BR> </p><p>The new rates, which go into effect in October, sees the highest price </p><p>for a single 30-second spot jump from HK$250,000 to HK$320,000 (about US$32,000 to US$42,000). </p><p><BR><BR> </p><p>The hike, fuelled by surging demand for airtime by dotcoms and mutual </p><p>provident funds, took the market by surprise because TVB normally </p><p>adjusts its ratecard at the end of the year and not during the summer or </p><p>autumn months. </p><p><BR><BR> </p><p>However, while advertisers are unhappy with the situation, there is </p><p>little they can do about it other than spread their advertising dollars </p><p>more evenly among the different media. </p><p><BR><BR> </p><p>AXA Insurance China region general manager, corporate affairs, John </p><p>Snelgrove said he won't be pouring additional money into television </p><p>advertising although he acknowledged that "we'll be running out of </p><p>bullets quicker". </p><p><BR><BR> </p><p>"We're now in a situation where we will have to take a closer look at </p><p>media as a whole, because not only is traditional media like television </p><p>becoming more expensive, it has become very cluttered so the watchword </p><p>in future is to be selective and innovative," he told MEDIA. </p><p><BR><BR> </p><p>Mr Anthony Lau, the chairman of the 2As, said that rate hikes in the </p><p>middle of the year could cause chaos to advertising campaigns unless </p><p>media owners gave sufficient notice for planning purposes and that any </p><p>increases be undertaken with proper rationale, such as higher </p><p>circulation or viewership. </p><p><BR><BR> </p><p>"What we don't want is unexplained hikes, which can be very annoying," </p><p>said Mr Lau, who is also HSBC's senior advertising and sponsorships </p><p>manager, group public affairs department. </p><p><BR><BR> </p><p>Advertisers across Asia are facing the first increases in media rates </p><p>since the economic slowdown, and in Hong Kong, agencies and clients </p><p>alike are voicing concerns about "unexplained" hikes. </p><p><BR><BR> </p><p>However, it looks as if they will have no choice but to accept the </p><p>increased cost involved. </p><p><BR><BR> </p><p>According to Ms Maggie Choi, Optimum Media Direction managing director </p><p>for Greater China, "A lot of advertisers are very upset and frustrated, </p><p>but they are trying to find ways around it." </p><p><BR><BR> </p><p>Zenith Hong Kong managing director Alice Lam added: "High costs will </p><p>penalise the low-spending categories because TVB works on a bidding </p><p>system - the highest bidders get the airtime, the unlucky ones get </p><p>pre-empted. </p><p><BR><BR> </p><p>But if prices continue going up, it will be harder to justify the cost </p><p>of television to clients." </p><p><BR><BR> </p><p>MindShare Asia-Pacific chief executive officer Kelly Clark said his </p><p>agency's latest forecast shows that Asian economies were firmly on the </p><p>road to recovery. </p><p><BR><BR> </p><p>This was reflected in adspend surging in the first six months of this </p><p>year, from 10 per cent for New Zealand to a high of 45 per cent for </p><p>Indonesia, according to ACNielsen Media International. </p><p><BR><BR> </p><p>"Much of the cost inflation we are now experiencing is being driven </p><p>simply by increased advertiser demand for a finite supply of TV </p><p>airtime," he said. </p><p><BR><BR> </p><p>"It does not necessarily reflect an increase in the quality of TV </p><p>programming or audience ratings performance, and that should sound a </p><p>loud warning bell." </p><p><BR><BR> </p><p>Mr Clark added that TV stations were assuming the good times would </p><p>continue: </p><p><BR><BR> </p><p>"We're not convinced that will be the case. Advertisers in almost every </p><p>category are considering alternative channels," he told MEDIA. </p><p><BR><BR> </p><p>"So TV media owners should consider pricing policies carefully and, just </p><p>as importantly, look for new ways to demonstrate their contribution to </p><p>marketing programmes. </p><p><BR><BR> </p><p>"Otherwise, their revenue base will increasingly be challenged by other </p><p>media channels." </p><p><BR><BR> </p><p>Mr Clark added that the outdoor medium was becoming a viable alternative </p><p>to TV, depending on communication objectives. </p><p><BR><BR> </p><p>Another market suffering from high television media inflation is </p><p>Indonesia. </p><p><BR><BR> </p><p>Ms Christine Barki, president director of PT Metropolitan Retailment, </p><p>which runs Metro Department Store, described the television scene as </p><p>going "haywire" since the economy stabilised. </p><p><BR><BR> </p><p>"It's come to the stage where it is very difficult to plan long-term </p><p>campaigns, she said. </p><p><BR><BR> </p><p>Although dotcom companies have been grabbing the headlines this year for </p><p>their contribution to advertising expenditure growth, MindShare's </p><p>research showed that 'New Economy' advertisers were not the key drivers </p><p>of expenditure growth and inflationary increases. </p><p><BR><BR> </p><p>Categories such as pharmaceuticals and telecommunications are </p><p>contributing greater growth in advertising spend, putting further </p><p>pressure on media supply and the resulting cost inflation. </p><p><BR><BR> </p><p>MEDIA AND CONSUMER INFLATION 1998-2001 </p><p> 1998 1999 2000 2001 </p><p> (Actual) (Actual) (Forecast) (Forecast) </p><p> % % % % </p><p>Hong Kong Media 2.5 2.5 5.0 5.0 </p><p> Consumer 2.6 -3.3 -1.6 2.3 </p><p>Taiwan Media 4.0 9.0 9.0 9.0 </p><p> Consumer 1.7 0.2 1.4 2.2 </p><p>China Media 13.0 12.0 7.0 7.0 </p><p> Consumer -0.8 -1.3 0.5 1.9 </p><p>Japan Media -2.3 -0.7 2.7 3.1 </p><p> Consumer 0.6 -0.3 -0.5 -0.1 </p><p>Thailand Media -12.0 -6.0 6.0 7.0 </p><p> Consumer 8.1 0.3 2.3 4.0 </p><p>Singapore Media 6.0 3.0 5.0 7.0 </p><p> Consumer -0.3 0.5 1.6 2.0 </p><p>Malaysia Media 0.0 0.0 6.0 5.0 </p><p> Consumer 5.3 2.8 2.7 3.2 </p><p>Vietnam Media 22.0 15.0 13.0 13.0 </p><p> Consumer 8.9 4.3 0.0 4.5 </p><p>N Zealand Media 2.0 1.0 2.0 2.0 </p><p> Consumer 1.6 1.1 2.1 1.9 </p><p>Australia Media 7.5 3.9 8.0 5.0 </p><p> Consumer 0.8 1.5 4.9 3.5 </p><p>Indonesia Media -2.0 40.0 19.0 17.0 </p><p> Consumer 57.6 20.5 5.8 6.8 </p><p>Philippines Media 15.0 17.5 18.0 18.0 </p><p> Consumer 9.7 6.7 5.5 5.4 </p><p>South Korea Media 9.8 16.0 14.2 14.4 </p><p> Consumer 7.5 0.8 2.1 2.8 </p><p>Sources: MindShare, EIU. </p><p>ASIA-PACIFIC ADEX </p><p>JAN-JUNE 2000 </p><p> PRINT </p><p> TV Newspapers Magazine Radio </p><p>Australia </p><p>(AUS$000's 1,390,154 524,605 204,964 263,276 </p><p>China (RMB000's) ****** 24,101,984 8,446,507 328,146 - </p><p>Hong Kong </p><p>(HK$000's) 5,566,698 4,840,529 1,589,808 477,737 </p><p>Indonesia </p><p>(RPdollars Million's) 2,645,251 778,766 185,968 - </p><p>Korea </p><p>(Won$000's) 1,003,433,681 1,729,834,393 132,799,785 102,941,553 </p><p>Malaysia </p><p>(Rt$000's) 385,787 855,384 54,392 41,165 </p><p>New Zealand </p><p>(NZD000's) ******* 530,639 164,396 57,490 58,205 </p><p>Philippines </p><p>(Pesos 000's) 18,236,540 3,513,360 1,079,310 4,757,130 </p><p>Singapore </p><p>(S$000's) 248,735 353,528 30,796 35,465 </p><p>Thailand </p><p>(Bt$000's) 14,435,962 8,889,525 1,168,637 2,420,358 </p><p>Vietnam </p><p>(US$000's) 31,510 11,855 3,694 - </p><p> Cinema Other Total YOY % </p><p>Australia </p><p>(AUS$000's 18,135 39,209 * 2,956,075 14.75% </p><p>China (RMB000's) ****** - - 32,876,637 44.07% </p><p>Hong Kong </p><p>(HK$000's) 6,030 379,255 ** 12,860,057 20.41% </p><p>Indonesia </p><p>(RPdollars Million's) - - 3,609,985 45.63% </p><p>Korea </p><p>(Won$000's) - - 2,969,009,412 35.21% </p><p>Malaysia </p><p>(Rt$000's) 4,514 14,234 *** 1,355,476 29.09% </p><p>New Zealand </p><p>(NZD000's) ******* 3,391 - 814,121 10.25% </p><p>Philippines </p><p>(Pesos 000's) - - 27,586,340 17.37% </p><p>Singapore </p><p>(S$000's) 11,318 34,954 **** 714,796 28.36% </p><p>Thailand </p><p>(Bt$000's) 144,380 736,067 ***** 27,794,929 26.84% </p><p>Vietnam </p><p>(US$000's) - - 47,059 37.98% </p><p>* Others - outdoor </p><p>** Others - LRT, sound ads, airport, MTR, KCR </p><p>*** Others - Rediffusion, video, point of sale </p><p>**** Others - Rediffusion, busbacks/Top, posters </p><p>***** Others - billboard, bus shelters, Bus Body Impact, busback & bus- </p><p>sides </p><p>****** China: Year 2000 figures are based on 1999 media coverage : 219 </p><p>TV channels and 180 newspapers and 47 magazines </p><p>******* New Zealand: excludes direct mailing </p><p>Note: AdEx is an estimate based on published rate cards. No discounts </p><p>are taken into consideration. </p><p>Source and copyright: ACNielsen Media International. </p><p><BR><BR> </p>