Media costs soar as Asia recovers from downturn

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

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