Asian Blue

NEW YORK For several years, Asia has been one of the fastest-growing ad markets on the planet. But new research by marketing consultant R3, which has offices in China, Japan and Singapore, shows that many advertisers in the region are planning ad budget cutbacks for next year.

The data has raised questions about whether ad growth in the region, led by booming economies in China and India, will be as resilient to the global financial downturn as many had thought.

The survey, conducted by the firm two weeks ago, consisted of more than 50 marketers, over 90 percent of whom said the global financial crisis would prompt their companies to reduce their 2009 ad budgets. The marketers surveyed covered 100 of Asia's top 500 brands and the group included multinational and local companies in China, Korea, Taiwan, Singapore, Thailand, India and Malaysia. Twenty-one percent of those surveyed forecast a reduction of more than 20 percent from initial '09 budgets, while 73 percent predicted declines of more than 10 percent.

R3 had surveyed the same group of marketers in September and the results then were a lot rosier, with 62 percent saying they anticipated higher budgets in 2009.

"All that has changed now," said R3 co-founder Greg Paull. "The events of the last two weeks have hit marketers hard. There will be significant reductions in the coming year, even in typical growth markets such as China and Taiwan."

Forecasters at PricewaterhouseCoopers and WPP's GroupM agree that the region will encounter some softness in early 2009, but believe its long-term ad growth prospects remain positive.

Marcel Fenez, managing partner of PWC's global entertainment and marketing practice, who also oversees the Asia-Pacific region, says it's hard enough to get consensus on the second half of 2008, let alone through 2009.

"It's still pretty mixed with respect to the remainder of 2008," he said. "A lot of companies are obviously going to be cautious. The first half [of 2009] will inevitably be soft, but it is still uncertain what will happen in the back end."

He noted that even before the financial meltdown, PWC was predicting softer growth for Asia given the lift that the Beijing Olympics gave to the 2008 figures, but that the long-term growth trend remains unknown. The second half of next year "shouldn't be written off yet," he said.

Indeed, marketers in the region, concerned about growth prospects for next year, may not even release second-half ad budgets until they get a better fix on their first-half revenue outlook.

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