An International Monetary Fund (IMF) report recently published online stated that Asia is far from the epicenter of the global crisis, not just geographically but also in the sense that it avoided the financial prac-tices that led to serious problems elsewhere. The good news is that before the crisis, Asia was in sound macroeconomic shape. The bad news is that the impact on us has been swifter and sharper.
The report said the impact of the global crisis on Asian economies is explained by the region’s exceptional integration with the global economy. The spillover has been amplified by Asia’s product mix, because the region specialized in sectors particularly hit by the credit crunch – high-and medium-technology manufacturing exports (motor vehicles, electronic goods and capital machinery).
Overall, the IMF expects growth for Asia to decelerate to 1.3% in 2009 from 5.1% in 2008 and to return to 4.2% – still below potential – in 2010.
An online Asian Development Bank (ADB) report is similarly bleak. “Today’s crisis is broader and deeper than the Asian financial crisis of 1997–1998. It is also more complex. [That] crisis arose from structural weaknesses in financial and monetary systems at home. This time the damage has come from financial and economic meltdowns in the advanced countries. Asia tumbled from its impressive peak of 9.5% in 2007 to 6.3% in 2008. In 2009, the Asian Development Outlook sees another steep fall to only 3.4% likely be only 3.9% in 2009. During the earlier Crisis (1997-98), healthy growth and demand in the developed world helped support Asia’s recovery. This time, however, the US, Japan, and Europe are in recession and their business confidence and consumption, on which the region has long depended, are in decline.“
Numbers don’t lie, particularly those from the IMF and the ADB. There is cause for, maybe not alarm, but concern. The Confed-eration of Asian Advertising Agency Associations (C4As) tackled these issues head-on during a press conference for their annual membership meeting in Manila in late March.
Among the CAAAA leaders who met with the press were Chairman Yutaka Narita (Dentsu Japan), Vice Chairman Srinivasan Swamy (RKS BBDO India), Secretary Anthony Kang (Singapore), Treasurer Harris Thajeb (Indonesia). Also present were representatives Kwang-Kyu Han (Korea), Romy Chen and Eddy Fu (Taipei, China) and Yusuke Kuroda (Japan).
They all agreed that the rest of 2009 may prove challenging for Asia’s ad industry. They said that if you compared Q4 2008 to Q1 2009, there was a noticeable decline in terms of expense across the region. Vice Chairman Srinivasan Swamy pointed out that even when Q1 2009 wasn’t a bed of roses, there was a small but significant upward trend, though ad spending is expected to decline as the year progresses. Some were quick to point out that we might still see some growth in bigger economies like China and India, just enough spending in countries like Indonesia and Thailand, marginal growth in neutral Malaysia but a possible continued decline in adspend in Singapore. Indonesia could perform better than its neighbors, but only because it’s election year. Treasurer Harris Thajeb chose to keep his outlook positive, “I would probably think that overall in Asia, we are a lot better than in the United States and Europe. So I think actually for Asia there would still be a growth.”
Some opined that what can help Asia keep afloat is a change of mindset— advertising as an investment and not a cost. Agencies must find ways to use the advertiser’s budget more efficiently and effectively to make it go a longer way – the principle of added value. It should also be pointed out to clients that less ad spending translates to less clutter – which makes it more affordable to be seen and noticed. Media will also be offering better deals. Most of them pointed out that during past Asian crises, clients who kept advertising (sparingly but judiciously) recovered faster than those who stopped advertising out of a shortsighted prudence.
They also pointed out that the time could be right for agencies to broaden their vision beyond strictly above the line advertising. Digital, online, viral, and word-of-mouth advertising may provide the efficiencies that clients demand. Secretary Anthony Kang shared that about two months ago in Singapore, they conducted a survey among the 4As members. They found out that most, if not all, full service and media agencies projected a downturn of about 30%, but digital agencies did not suffer any loss in revenue. He also said that the survey showed that digital media is key: while print and TV revenue projected a downtrend, online media remained vibrant. There’s also CRM, events, direct marketing and other out-of-home media; the point is to expand one’s repertoire and find creative ways to keep your clients’ brands top-of-mind. In advertising, absence does not make the heart grow fonder and out of sight means out of mind.
Some members even suggested that a review and possible restructure of charging might be in order. Vice Chairman Swamy disclosed, “At CAAAA there’s been serious discussions to whether we should call ourselves “advertising consultants” while others just call us “advertising agents”. We want to evolve the value chain. We believe that our value is undervalued. Because we believe that advertising is the only thing that can deliver disproportionate returns on marketing investments, and we need to take a share of this disproportionate results. That is something that we are striving for. We believe that this platform [is] available to actually move up the value chain and call ourselves consultants. We should certainly move up the value chain so we could demand higher remuneration.”
The CAAAA officers, representatives and delegates compared notes, traded experiences and collectively labored to think of ideas to soften the blow. And they did point out that the world looks to Asia with hope. While they caution each other and ask the industry to brace themselves, they remain positive. CAAAA Chairman Yutaka Narita cautioned the media from their tendency to dwell on the dark side: “I have been in this business for 50 years! I have gone through a lot of crisis, like the oil shock many years ago but we remained strong and we overcame all this crises.” To Mr. Narita, an 81-year-old industry ’wise man’ who was part of the ad industry that helped rebuild Japan’s postwar economy from zero, ‘crisis’ is surely relative.
CAAAA Secretary Anthony Kang sums the role of the organization succinctly, “We want as a group to come up with a standardization in the ad associations in the region. Things like pitch fees. For education we will be working with governments to issue a degree in Advertising. In the future we want to establish an Advertising Leadership Institute. C4As will be establishing a website soon. Asia will be the blooming region. We are diverse so we have to teach people trans-cultural management. This is why we are coming together and reaching out."
The ADB report seemed to agree, pointing out that “ regional cooperation proved its value during and after the 1997-98 Asian financial crisis and should be strengthened now to prepare for potentially larger shocks ahead."
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