Declining spending on advertising and tighter marketing budgets have forced online marketing media firm Lemon Asia to reduce operations and lay off 26 people, about half of its staff. Lemon chief executive Neil Runcieman said it cut back the size and scope of Lemon to match market conditions. 'We need to do this . . . to reduce costs during a period when there is not only very little work left in the marketplace, but also no expectation of a turnaround in the short term,' he said. Mr Runcieman said some of Lemon's largest customers had either dramatically slashed marketing budgets or had not got anything to spend. 'Many are just taking the attitude of getting into the bunker and waiting out the storm,' he said. In September, the company picked up some contracts and intellectual property of Mercatela Hong Kong which had gone out of business that month. Mercatela's most prized contract was with British Airways. The deal, originally estimated to be worth about US$5 million, was passed on to Lemon. Mr Runcieman said the company still had the contract with British Airways though the value was no longer as large. Many early Lemon clients were dotcom companies, such as AdSociety, which have gone out of business. All existing Lemon customers are bricks-and-mortar companies. Mr Runcieman said the company now offered 'a total corporate-communications package, including traditional media instead of a Web-only approach'. This refocus took place six months ago, when management realised that more companies were seeking 'an integrated approach to marketing a brand or a message using all the resources and tools available', he said. Lemon's new business plan puts it in competition with the Hong Kong interactive arms of global marketing communications companies including Ogilvy & Mather, Dentsu and BBDO.