Business Media MMHK December

Asia, as an emerging market, has until now been considered relatively safe from the financial storm. But ask any business media operator what the future holds and they will tell you they are worried.

In recent years business media in Asia has flourished as burgeoning capitalism created new, wealthy classes with money to burn. But will advertisers continue to flock to regional business press and how long, realistically, can the good times last? Nikki Maclennan asks.

Regional business media in Asia is one area of the media sector that has good things to talk about. Global advertisers have flocked to Asian business media in recent years for exposure to this highly valuable market; while regional companies are using this sector to aid expansion, both in and outside of Asia.

But the global economic crisis has ravaged international markets in recent months and left many companies, from banks to car manufacturers, either floundering or bankrupt.  While Asian audiences are surging towards business media in a bid to gain some sense of the chaos, the reality is that the advertising dollars on which these media rely will come under pressure in the worsening economic climate.

The big boom

For the third year in 2007, Asia Pacific took five of the top 10 spots for highest growth markets of high net worth individuals (HNWIs), according to Merrill Lynch's Asia Pacific wealth report. China was second only to India, recording a 20.3% increase in HNWIs - individuals with more than $US1 million in net assets, while Singapore soared 15.3% to rank fifth. While admitting "growth prospects in the near term may be compromised by the global economic slowdown", the report insisted "the long-term potential of the Asia Pacific HNWI marketplace remains strong". By 2012, APAC is projected to replace Europe as the second-largest regional repository of HNWI wealth.

As the wealthy have multiplied, an abundance of business media - both local and regional - have scrambled over themselves to provide news, analysis, and constant financial information, and suggest, through advertising, how to spend their wealth: luxury homes, goods, financial services and travel.

The Singapore and Hong Kong markets tend to differ slightly in terms of the advertisers they offer. William Hsu, VP advertising sales at CNN Asia Pacific says "Hong Kong tends to be more corporate advertising while Singapore leans towards being a product-driven market for regional advertising".

Angela Mackay, executive director & head of APAC at the Financial Times, says the paper's client profile is similar but Hong Kong is the bigger market, however the FT's Singapore revenues have doubled over the last three years. For The Economist's Andrew Au, marketing manager of Asia Pacific, Hong Kong skews more toward financial advertisers while Singapore tends to be consumer, travel and tourism oriented.

The closely-watched US presidential election and the global economic crisis have fertilised this healthy business media landscape, providing an abundance of editorial fodder and a growing market of readers with which to lure advertisers. The Wall Street Journals' online page views in Asia were up 35% month-on-month in October; CNBC Asia Pacific recorded a 291% spike in viewer numbers in just one week in September. CNN.com enjoyed a 584% surge in traffic from Hong Kong in the week of the US election; and The Economist has credited recent global events with a 4.5% increase in regional newsstand sales. The Financial Times says it now attracts more than 13,000 new registered users per week, with page views growing at 70% year-on-year.

Advertising revenues are more of a mixed story. For the full year 2007 vs 2006, Forbes Asia led the business media pack with the largest leap in ad sales - up 30.9% - according to CMR International. Asia Money posted an 18.2% increase in ad revenue in the same period, with Wall Street Journal Asia close behind on an 18% surge. The Financial Times, (up 13.1%), Business Review Weekly (up 9.4%), Business Week China (up 8%) and The Economist (up 7.7%) all posted impressive ad revenue gains in the same period.

But the most recent CMR figures (Jan-Aug 2008) paint a slightly less rosy picture. Forbes Asia posted a 19.4% increase on the previous corresponding period. The Economist (18% up); Wall Street Journal Asia (11.1%); Time Asia (up 9%) and Asia Money (0.5%) also posted increases - but for many, less than 2007 vs 2006. And the FT (-4.6%) and Fortune (-8.1%) have posted decreases in ad revenue. Could this be a sign of things to come as the global downturn bites?

The gatekeepers view

Media buyers feel things are "fine" for business media at the moment, but tough times are ahead. "They are faring OK I think, as far as my clients are concerned," James Smyllie, regional account director at Carat Hong Kong, says.

Smyllie believes circulation surges can sometimes provide value not currently accounted for on rate cards - but warns huge jumps in online traffic can have a negative effect on ad bookings. "We buy guaranteed impressions... so if you're a sloppy online buyer, it could mean your campaign only lasts a few days when all the impressions are delivered quickly and unexpectedly."

Jessica Ho, general manager of OMD International, says Asian business media are "fine" at the moment, but thinks launches will be scarce next year. Currently, she says, everyone is worried "because businesses everywhere will inevitably be affected by the current economic climate", even though Asia is a little more resilent.

She believes those with sound business strategy could claim additional share in a recession, as most advertisers will continue to spend. However, Ho says advertisers will: "Probably focus on, say, two media options instead of five. The two best media vehicles that deliver the highest reach, present the most creative ideas and offer the best value will most likely emerge the winners."

What's growing, what's slowing?

As Carat's Smyllie says, when it comes to measuring confidence amongst  business media operators "it is a mixed bag". Some are confident, saying they ride out recessions fine, while others are more concerned."

Toby Hayward, CNBC Asia Pacific's senior VP of ad sales, says there have been "no major effects on our advertising revenue over the last few months", and "most of our deals are on a long-term basis".

Hayward admits "there is some concern about the impact of a tightening global advertising market", but says China and India will continue to grow, as will "some of Asia's better-managed economies", and as will government-funded advertising across the region.

Joe Spitzer, director of corporate communications for Dow Jones, publisher of The Wall Street Journal Asia, says thus far WSJ's ad sales in the region have been strong but he remains cautious.

"Undoubtedly the business environment is going to become considerably tougher for our industry".

Spitzer doubts an economic downturn will change the profile of WSJ's advertisers: "We still have many financial advertisers, whose messages may be changing to reflect developments."

The Economist's Au says he has not seen cutbacks in ad revenue recently - in fact, he says the group continues to see increased advertiser demand. Au adds the publication is witnessing growth in advertising from the regional development and FDI sectors, and says like any business he is concerned as 2009 looks set to be a challenging year.

"We remain confident that marketers will still pay a premium to reach an engaged audience, which we have in abundance," he adds.

CNN's Hsu says while there has been a general slowdown in the ad market: "My conversations with advertisers indicate that it's more of a precautionary nature than budget cuts.

"We've been through three downturns in the last 15 years and CNN has actually done well in those environments," he says.

The FT's Angela Mackay says the pipeline for bookings has become "opaque".

"On the upside, we have had very few cancellations and just as many RFPs as usual. We expect fourth quarter 2008 to be slightly behind fourth quarter 2007," she says.

While Mackay is concerned about recent economic events, to her the title's positioning seems to be insulated from the worst of the downturn.

"Luxury brands, like other companies, are cutting their budgets and becoming more selective with their media spend, but there are still opportunities".

According to Mackay there is still growth in the luxury sector, mainly in emerging markets such as China and India. "China's projected 30% average annual growth, for example, suggests optimism for the long-term luxury outlook, pushing China's luxury sales over $5 billion before 2010."

While Carat's Smyllie says luxury "seems to be doing ok, actually, going by our luxury accounts and their plans", OMD's Ho believes "we will probably see a shrinking luxury sector... while the rich still remain rich, the large middle class market is going to be more prudent in their spending."

Survival of the fittest

Spitzer says advertising in a recession actually has positive effects on consumer attitudes, creates loyalty and shows investment in one's brand. While this refrain is to be expected from media reliant on advertising, Spitzer backs it up with a McGraw-Hill study of 600 industrial companies in 1985, showing companies that maintained or increased their ad spend during the recession of 1981-82 showed average sales growth of 275% over the preceding five years. Those that cut their advertising posted average sales growth of just 19%.

So what are the business media doing to continue growth and encourage other advertisers to spend their way through the crisis?

Online is friend, not foe

BBC.com recently surveyed the cross-media behaviour of an upscale Asian audience sample of over 14,000, revealing this group spends far more time online than offline. On average, those surveyed spent more than 22 hours a week online, just six and a half hours reading and 14 hours watching TV.

Stephen Forshaw, Singapore Airlines VP of public affairs, says while the airline currently advertises in publications such as Time Asia, Fortune, Forbes and The Economist, and on channels including BBC and CNN, online advertising has become "increasingly relevant as more of our customers take to the internet... it is a channel we cannot afford to ignore".

OMD's Jessica Ho says business media are fuelling growth by "beefing up" their online offerings. The FT.com and WSJ.com are two sites that have recently relaunched.

"They have all done a great job,' Carat's Wyllie says. "In this climate I think online is the best media, due to its measurability and the way it can be so highly targeted."

Smyllie praises the introduction of pre-roll video advertising as "a nice new development [that] combines the emotive nature of TVC's with the measurability of online", citing HSBC Premier's recent activity on BBC.com as a good example.

"As owners of the world's most successful paid news website, we don't view online as a threat," says Spitzer of WSJ.com, adding WSJ will be launching a new Asia-specific site early next year, opening up new advertising opportunities.

Mackay says digital channels are often more cost-effective and new online products also offer routes to engage with different, new and younger audiences. "Our print revenues have actually grown in the first nine months of 2008, along with online", she adds. CNN's Hsu says "people are using both services but at different times. CNN.com is also driving a new audience to our linear channel."

Diversify and conquer

Almost all business media in Asia are diversifying their offering, in a bid to grow audiences and maintain relevance for advertisers. CNN recently launched CNNmobile.com in the region, offering live streaming mobile TV, video content on demand, and breaking news via SMS.

Forbes Asia president and publisher William Adamopoulos says beyond delivering "high level eyeballs" through Forbes' strong affinity with regional tycoons, Forbes Asia is also creates opportunities for high-level handshakes at bespoke events including the recent 2008 Forbes Global CEO conference and the upcoming Forbes "Best Under A Billion" award ceremony.

The FT is focusing on a strategy of platform-neutrality, and products like the new Alphaville community on FT.com provide marketers with innovative ways to target niche communities, like asset managers and professional investor communities, Mackay says.

CNBC has branched out by launching CNBC Life, a selection of premium programming covering executive travel, luxury lifestyle, sports (Rolex has sponsored golf programming), entertainment, personal finance and current affairs. Hayward believes CNBC provides high value to advertisers by reaching into areas such as production.

 "We already provide integrated marketing solutions and produce effective TV commercials and programmes for many of our clients," he says.

The outlook

At the moment, cautious confidence from both advertisers and media is doing battle with a global economic rollercoaster that threatens to derail even the best-laid plans.

As this story went to press, The Economist had accelerated plans to restructure its operations in Asia-Pacific thanks the economic situation, resulting in three senior redundancies, including regional advertising director Rupert Harrow. Could this be the first of many restructures aimed at managing an impending advertising downturn?

Singapore Airlines' Forshaw feels while the economic uncertainty means "we will take steps to ensure our advertising budget is managed carefully", the company's focus is on the long term, "and we view advertising more as an investment rather than an expense".

This attitude, and the news that other advertisers such as Standard Chartered and Citibank intend to increase or at least maintain ad spend in the region will hearten business media, as they attempt to navigate the current global crisis.