It's happening a continent away, but agencies in Asia are
nevertheless nursing a bad case of deja vu.
The late '90s collapse of the Thai baht and its domino-like impact on
other regional currencies has returned with frightening clarity. And
with it, shivers that a slowing US economy will drag the region
down.
Not that the US today is anywhere near Asia's crisis scenario of the
previous decade, but jitters in the US have started infecting the still
buoyant agency mood in this part of the world.
So what's in store for Asia? Will the region's recovering economies have
enough momentum to drive the turnaround? Or will the recessionary bug,
which appears poised to draw blood from the American economy, do the
same to Asia?
Anecdotal evidence suggests this may already be happening.
Regional titles have been looking thinner than usual. Publishers have
however insisted that this has less to do with the US bug, but more to
do with ad booking patterns that are in keeping with historical first
quarter performance.
Indeed, the feeling is that anyone talking about a slowdown only makes
him or herself the target of ridicule. But is this nothing more than
hubris?
They may spout some of the most bullish lines around, but it is apparent
that ad agencies have started toeing a more cautious line, staying well
within budgets as they watch events in the US unfold.
With lessons from the late 90s - highlighted by the dramatic collapse of
BBDO's Hub - seared in Asia's collective memory, agencies don't want to
be caught napping this time around should things take a turn for the
worse.
After all, it was only a year ago that Asia began its spectacular
recovery from the slump.
On the one side, ACNielsen and MindShare are optimistic that the
region's adspend levels will continue to grow, albeit at more moderate
rates. The worst case scenario calls for China to grow by just 20 per
cent, down from 60 per cent last year.
But doomsayers believe more harrowing times are in store for Asia.
And their arguments do also carry plenty of weight. The last recession
was Asia-created and it was the US which rescued Asia from a prolonged
slump.
This time round, the recession is likely to be US-created and there is
no white knight to mount a similar rescue of the US or any other economy
that falters in its wake. Which makes it imperative for companies here
to look within the region for growth momentum.
Admittedly that may sound like mission impossible.
Japan is still tanking; its finance chief finally admitted that the
economy was again creeping into recession. Despite several pump-priming
initiatives, consumers have been unwilling to spend and this thrift
mentality is not expected to change anytime soon.
But surely, there is more to Asia than Japan. China appears relatively
healthy, as do Hong Kong and Singapore. Korea has its problems, but
vital signs are again relatively strong.
So while it pays to be cautious, hopefully agencies and clients won't
let the gloomy build-up affect them too much.
Or we may find ourselves in a situation similar to the US, where
perception more than reality is driving the economy to the brink.
