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https://scmp.com/business/article/2039044/hong-kong-ad-spending-continues-fall-amid-sluggish-economy
Business

Hong Kong ad spending continues to fall amid sluggish economy

The advertising industry in Hong Kong could be headed for its worst year in more than a decade, as spending on campaigns fell for the third consecutive quarter at the end of September.

Data published by media-monitoring company admanGo on Thursday showed that total advertising expenditure in the city was down 13 per cent year on year to about HK$10 billion in the third quarter.

That followed a 14 per cent year-on-year decline to HK$9.9 billion in the second quarter and 13 per cent tumble to HK$9.4 billion in the first quarter.

“This is the worst period we’ve gone through in the past 15 years, even worst than the situation during the financial crises and the Sars outbreak,” Kevin Huang, chief executive at digital advertising agency Pixels, told the South China Morning Post on Friday.

“While Sars and the financial downturn hurt the market, the impact of those crises lasted just several months each time. The current drop in advertising spending is likely to continue into early 2017.”

The local advertising industry’s performance now seems a far cry from earlier predictions of modest growth this year, as marketers conducted more digital and mobile campaigns.

An industry study published in February by the Hong Kong Advertisers Association and market measurement firm Nielsen showed 29 per cent of the 100 major marketers in the city who were surveyed said they would increase advertising expenditure this year, 35 per cent would keep it unchanged and 36 per cent would cut their spending.

Cherry Lau, senior director at Nielsen in Hong Kong, said in February that the big difference this year would be marketers allocating more resources to digital campaigns than previously.

The soft retail market in Hong Kong and a decrease in inbound tourists have directly impacted the decline in advertising spending this year Kevin Huang, Pixels chief executive

Such optimism apparently stemmed from the record high HK$49.9 billion in advertising spending last year, when leading industries increased their online and mobile campaigns.

“The soft retail market in Hong Kong and a decrease in inbound tourists have directly impacted the decline in advertising spending this year,” Huang said. “This has been exacerbated on a macro basis by the uncertainty of the economic and political situations in the city and around the world.”

Huang, who heads the largest digital advertising agency in Hong Kong, said the fall in advertising spending has already led some traditional print publications to close down certain magazines or consolidate a number of titles into one magazine.

“Advertisers are seeing greater options for their digital ad investments and we expect that segment to continue growing,” he said.

But Jennifer Ma, director of sales and marketing at admanGo, said in a report that all media categories, except for free newspapers and radio, saw a year-on-year decrease in advertising spending over the past three quarters.

In the third quarter, free newspapers cornered 17 per cent of advertising expenditure, up from 15 per cent in the same period last year. The 4 per cent share of radio last quarter was unchanged from the previous year.

Television remained the top media category for advertising campaigns, with a 30 per cent share in the third quarter. Paid newspapers and outdoor media each had a 14 per cent share, online had 10 per cent, magazines 7 per cent and mobile was at 3 per cent.

Pan-Asian retailer Dairy Farm International, part of the Jardine Matheson Group, was ranked by admanGo as the top advertiser in the third quarter, with a 12 per cent year-on-year increase in marketing campaigns to HK$165.6 million.

British pharmaceutical giant GlaxoSmithKline climbed from No 28 a year ago to become the city’s second-biggest advertiser, with a 160 per cent jump in spending to HK$146.2 million.