Traditional media keeps advertising advantage

PUBLISHED : Wednesday, 27 June, 2007, 12:00am
UPDATED : Wednesday, 27 June, 2007, 12:00am

Traditional media owners around the world have been worried for a long time about the impact of the internet on their bottom line, with some doomsayers predicting the end of newspapers and magazines.

But things might not be as bad as first thought in Hong Kong, with new data showing the city's television stations and newspapers still enjoy a big advantage over their online competitors in terms of advertising dollars.

According to online media monitoring by NetRating's AdRelevance, the city's advertisers spent HK$117 million on internet display advertising in the two months ended May. The monitoring began only in April so no comparative figures are available from 2006.

In a clear sign that traditional media is still king, this accounted for only 1.2 per cent of total advertising spending, before discounts, of HK$ 8.2 billion in the same period.

In the two months surveyed, Hong Kong's top internet portals and websites ran 1,376 advertising campaigns from 599 advertisers with more than 3,000 banner ads at a cost of HK$117 million.

The education sector was the biggest supporter of online advertising.

More than 88 advertisers contributed 22 per cent to total spending during the period.

Global financial giant Citicorp was the largest single online advertiser in May, accounting for 9.8 per cent of the total. It had 10 marketing campaigns, with 62 banner ads appearing on 13 websites., a local computer institute, was the second-biggest spender, accounting for 7.2 per cent of total online ad spending. The company launched 17 marketing campaigns with 31 banners ads.

PCCW, Dell and Nokia were among the top 10, accounting for more than 8 per cent of online advertising.

Print and TV reach more

So how do Hong Kong's electronic and print media maintain their advertising dominance in one of the world's most wired cities?

Online advertising spending in Hong Kong is insignificant compared with the mainland and Britain where industry watchers say online advertising makes up more than 10 per cent of total ad spending.

Hong Kong's traditional media simply are doing a better job attracting clients, explained Marcel Fernez, PricewaterhouseCoopers' Asia-Pacific media and entertainment leader.

Market watchers also say local advertisers still believe that traditional mass media can reach a bigger audience, even though the costs may be higher.

Moreover, advertising agencies rely on audience and readership data and as yet there is still little in the way of that for the internet.

PwC estimated that aided by the Beijing Olympics, Hong Kong advertising spending will grow by 5.6 per cent next year to US$2.3 billion and 9.7 per cent in 2008 to US$2.5 billion.

'Free newspapers, new magazines and a strong economic environment will stimulate circulation which in turn benefits advertising,' said Mr Fernez.

Reuters in mainland deal

Reuters, the Britain-based newswire service, will boost its exposure in the mainland by offering online video content to a mainland portal.

Reuters has reached an agreement with VODone, a mainland-based video streaming portal, to deliver ready-to-use video clips directly to VODone's website. VODone will package the content in the format of an online financial news channel for users to view on the site.

The reports will include major markets in Europe and the United States, top news and trend stories in Asia, global technology news, macro-economic stories, regional market wrap-ups, newsmaker interviews, company profiles and consumer finance topics.

Since a foreign news service provider may not be allowed to offer news directly to a mainland portal, market watchers said the move could be sensitive. But as a Reuters spokesperson put it, Reuters merely would be selling the business online content to VODone, which 'has the licence for web service in China'.