Sluggish economy puts squeeze on marketing campaigns

Advertising spending drops month on month to HK$3.4 billion for the first time since 2009 as leading firms respond to weakening sentiment

PUBLISHED : Thursday, 25 July, 2013, 12:00am
UPDATED : Thursday, 25 July, 2013, 3:58am

Advertising spending fell last month from May - the first time since 2009 - after major companies cut their marketing budgets because of the sluggish economy.

Data released yesterday by media-monitoring firm admanGo showed advertising expenditure last month was about HK$3.4 billion, down from HK$3.6 billion in May but steady from June last year.

That resulted in a 9 per cent increase in advertising spending to HK$19.9 billion in the first half of this year from HK$18.2 billion a year earlier.

In contrast, advertising expenditure in the first half of last year rose 13 per cent because of promotions that largely targeted mainland shoppers in the city and marketing initiatives tied to the London Olympics.

Jennifer Ma, the director of sales and marketing at admanGo, told the South China Morning Post: "Certain industry categories, such as retail, cosmetics and skincare and electrical appliances, cut their budgets because they may not be doing as well as last year.

"There is also no significant international sporting event like the Olympics for big advertisers [to latch on] this year. "If business does not pick up over the summer or during the October holidays, ad spending will probably remain stagnant for the rest of the year."

A survey published in February by the Hong Kong Advertising Association and market-measurement firm Nielsen found that marketers saw only a modest increase in advertising expenditure this year, as concerns remained about the lingering economic uncertainty.

Last month, half of all media categories recorded a year-on-year drop in advertising. The hardest hit were the more than 20 traditional newspapers regularly circulated in the city, which saw advertising revenue fall 13 per cent to HK$588 million.

By comparison, advertising revenue of the seven free newspapers rose 13 per cent to HK$486 million. Online advertising revenue also climbed 13 per cent, to HK$244 million.

The industry category which recorded the biggest year-on-year decrease in spending last month was the camera, photography and optical instruments sector, which dropped 56 per cent to HK$32 million.

But other advertisers continued to boost their campaigns. The top advertiser was L'Oreal. The Paris-based company, the world's largest supplier of cosmetics and beauty products, increased spending 43 per cent to HK$65 million.

It was followed by smartphone giant Samsung Electronics, which raised its expenditure 30 per cent to HK$61 million.

AS Watson Group, a subsidiary of Hutchison Whampoa, ranked third. The world's largest operator of health care and beauty retail stores spent 13 per cent more at HK$57 million.