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[Tokyo] The one-two punch of the Asian currency crisis, followed by the collapse of Japan's Yamaichi Securities Co., is shattering hopes of maintaining the region's torrid growth in ad spending.

Opinion is divided over whether Asia faces disaster or is simply undergoing a short-term correction to overheated economies -- and will still grow faster in advertising than most other regions. But in the short term, at least, Japanese ad agencies are nervous and shops in other Asian countries are suffering.

Gone are the days of 20%-plus annual growth rates for ad agencies in Asia's "tiger" economies.


In Indonesia, M. Gunawan Alif, editor of trade magazine Cakram, predicted that the nation's ad industry will grow by only 5% or 10% in 1998 rather than the usual 35%. Vichien Linchongsubongkock, president of the Advertising Association of Thailand, said the Thai ad industry's usual 20% growth rate will be down to 5% this year.

The agencies in Thailand, where the Asian currency crisis began, are perhaps the hardest hit.

"Many agencies [in Thailand] will go out of business -- merging, dying, falling by the wayside," said Tim Isaac, Hong Kong-based regional director-worldwide client service at Ogilvy & Mather Worldwide. "And international agencies will be looking around for cheap purchases. . . . In other markets [outside Thailand], everyone's holding their breath."


In Japan, the world's second-largest ad market, 1997 ad budgets still are expected to top last year's record-breaking $47.7 billion. But the news of Yamaichi's collapse, along with the threat of more bankruptcies plus a prolonged economic slump, has even giant agencies such as Dentsu worried.

"Japanese advertisers have been looking forward to a substantial increase in advertising expenditures from the financial sector thanks to the 'Big Bang' deregulation of Japan's financial system, but the fear of this crisis has and will continue to discourage such domestic firms not to take advantage of the opportunity to advertise," said Koichi Sonoda, a senior manager in corporate communications at Dentsu.

He added that Japan's economic quagmire may make consumers more cautious with their money, and "That, in turn, may definitely influence overall advertising expenditures in Japan."

The aftershocks have been much more severe in Thailand. The Advertising Association of Thailand has set up a working committee to deal with crisis-related problems including agencies slashing the commissions they get from advertisers to as low as 3% from the previously standard 17.65%, and media suppliers offering airtime directly to advertisers.

O&M's Mr. Isaac said his agency's profits in Thailand will be cut in half this year by the economy's tailspin and will lose another 30% from the impact of currency devaluation.

"Local clients are completely frozen," he said, though "our international business is unaffected."

In the current account pitch for Thai Airways' $8 million account, several of the seven agencies competing have chosen to pitch only the international portion, fearing the domestic account will not be profitable.

Thai media are increasingly desperate. TV channels started slashing daytime ad rates 20% to 50% in September, and some are following up with discounts of up to 30%.

Regional English-language media are faring better, though publications report local circulation revenue plunging in weakening currencies and advertisers seeking -- but not getting -- rate protection from the escalating cost of buying ads priced in U.S. dollars.


For Time Warner, however, the Thai crisis is an opportunity. Thailand's Board of Investment, with assistance from several Thai marketers, is spending up to $4 million on a global image-building campaign, and it's using four Time Warner magazines and three commercials on CNN International between September and mid-December. No ad agency was involved.

"We want the world to know what Thailand's problems are, what medicine we are taking and what our expectations are for the future of our nation," said Staporn Kavitanon, secretary general of the Board of Investment.

Elsewhere, business continues but at a slower rate. General Motors Corp. re-entered the Philippines in October after a 10-year absence, and Philippine Airlines is in the midst of an account review. Ammirati Puris Lintas Philippines, Manila, is the incumbent.

Hong Kong's currency is still strong and China's booming economy is keeping that country's ad industry buoyant.

Hong Kong, however, is suffering a fall in tourism and retail sales as other Asian visitors are priced out of their usual quick shopping trips to Hong Kong. Cathay Pacific Airways is doing its biggest-ever promotion by offering two tickets to Hong Kong for the price of one from 37 cities around the world. Cathay hoped to draw 20,000 visitors to Hong Kong, and 35,000 had signed up seven days after the ads from McCann-Erickson Worldwide, Hong Kong, broke Nov. 17.

"We believe there'll be a relatively significant drop this year [in Asia], but expect recovery in six months to two years" depending on the market, said Matt Asinari, CEO of Dentsu, Young & Rubicam in Asia. "It's almost a cleansing process. The strong will become stronger."

Contributing: John Clewley in Bangkok, Scarlet Cheng in Hong Kong, Rebecca A.

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