Sluggish spend rise hints at woes ahead

The worse is yet to come for the Asia-Pacific advertising industry, which reported a sluggish six per cent rise in advertising expenditure to US$13.5 billion for the year to June. In the first half of the year, most markets posted single-digit growth rates - some like Korea and Australia reported sharp declines - compared with double-digit increases reported for the same period last year, according to ACNielsen data. However, ACNielsen and media directors say real growth rates could be significantly slower because of the larger-than-usual discounting going on in order to coax reluctant advertisers to spend. "Some growth markets such as China, the Philippines and Indonesia are believed to have actually experienced little or no growth due to heavy discounting which is common during tough economic times," said Forrest Didier, Asia-Pacific managing director of ACNielsen Media International. FCB regional media director Mark Pointer agreed. "In a severe downturn, media owners might have to resort to drastic measures in order to generate revenue." He also predicted that the second half growth rate would be slower compared with the January to June levels. "If six per cent was the real figure in the first half, I would be surprised if there was a six per cent growth in the second half," Pointer said. Media directors said that worries about the state of the US and Japanese economies were clouding the region's overall outlook. But they are still pinning their hopes on China, despite increasing speculation that the levels of discounting by media owners were among the highest in Asia. Excluding Japan, China emerged as the biggest advertising market in the region although the mainland's growth rate had slowed to 12.6 per cent. At US$5.3 billion, the market is now twice the size of South Korea, where adspend has declined by 6.7 per cent to US$2.1 billion, following contractions in spending over two consecutive quarters. However, spend by Asia's consumer goods and telecommunications categories bucked the overall downtrend. In the Philippines for instance, Coca-Cola, San Miguel and Mead Johnson increased their advertising spend by between 57 and 99 per cent. In China, pharmaceutical products continued to lead the advertising market. The category is likely to maintain its growth levels after the Government raised the spending ceiling for state-owned enterprises from two to eight per cent of sales revenue. Spending in Thailand and Malaysia was supported by telecom wars. In Thailand, the two main players, AIS and TAC, accounted for half of the adspend of the top 10 brands; while in Malaysia, four telecom companies - Celcom, DiGi, Maxis and Telekom Malaysia - made it into the top 10. DiGi boosted its adspend by the biggest margin - up 50 per cent. Intensifying competition between Procter & Gamble and Unilever in Indonesia helped pushed the country's adspend up on the back of higher spend in the personal care category. ASIA-PACIFIC ADEX (usdollars millions) Jan-Jun 2001 Jan-Jun 2000 YOY change (%) Australia 1,497.2 1,534.0 -2.4 China 5,354.6 4,755.4 12.6 Hong Kong 1,810.7 1,724.5 5 Indonesia 334.1 268.6 24.4 Malaysia 385.6 356.7 8.1 New Zealand 339.4 336.0 1 Philippines 632.8 528.7 19.7 Singapore 412.2 393.3 4.8 South Korea 2,126.2 2,278.9 -6.7 Thailand 573.8 526.9 8.9 Vietnam 49.1 47.1 4.3 Total 13,515.7 12,750.1 6.0 Source: ACNielsen Media International.

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