It's axiomatic in Asia that when times get tough, spending goes in-market. There's a perception among many clients and agencies that, in straitened circumstances, they can no longer afford the luxury of high-end, pan-regional media and are better off focusing on local outlets, which have far larger audiences.
And so, with the Sars outbreak sending the region into paroxysms of panic and its developed economies already on a gentle downward slope, things aren't looking so hot for Asia's regional TV operators.
Mabel Leung, the general manager of Starcom MediaVest Hong Kong, who manages regional clients including UBS Warburg and Hyatt, thinks that the effect of Sars will be particularly bad, given the importance of the travel category to pan-Asian broadcasters. "A lot of pan-regional media rely heavily on the travel industry, and so Sars really doesn't help," she says. "Lots of travel-related advertisers are pulling their ads. Generally, it's not looking good for the pan-regional players."
The war in Iraq, by contrast, felt fairly remote in east Asia, Turner International's Asia-Pacific senior vice-president for news advertising sales, Nick Morgan, says. He adds that the war was something most clients had planned for before it started: "All of our customers had factored in the war as something that was manageable, that would go on for a matter of weeks. They're all long-term players with ongoing brand strategies, and they expect things like this to happen from time to time.
"We're less clear about Sars - we don't know how bad it's going to be. I don't think our customers have a reference point, and neither do we."
It's not all doom and gloom, though - as the grip of Sars finally weakens, there's the possibility of a bounceback effect, Morgan says. "Every downside is an opportunity as well, and there will be some players who do well.
You have to rebuild your business if there's a setback - planes can't sit empty. You're not going to cut your way to growth; you have to market your way out of a situation like this," he adds.
And some categories are holding their own. Leung says that financial institutions are currently among the highest spenders - in particular investment banks: "To our surprise, they've not been as affected as other categories. In an economic downturn, people are more conscious of their money."
A Mediaedge:cia managing partner, Tess Caven, says that IT, business and finance, travel, consumer electronics and automotive have accounted for around two-thirds of regional TV's overall income for the past few years, and some of those categories are still going strong: "I think you'll see some of the big corporates who pulled out coming back, in areas like finance and IT."
And at the top end, people are still spending. Steve Garton, the media director of Synovate, which publishes the PAX audience survey, says that its respondents - especially the type of high-end consumers who typically constitute much of the regional players' audiences - haven't been as affected by the Asian economies' downturn over the past few years as one might expect. "There was a dip in travel spending between the start of 2001 and the third quarter of 2002, but it recovered a bit. Other categories didn't decline at all," he says. "These are people at the top of the market and they can afford to indulge in escapism and cocooning. People are making themselves feel as good as they can."
He adds: "I think that advertisers would be ill-advised to cut back on spending in international media. You've still got to get bums on seats. There are fewer bums, but that means you have to work harder to get them.
"Regional media still provide a high degree of selectivity and a good way to get to desirable targets; with local media there's a lot of wastage."
The problem is that local TV stations have an overwhelming viewership advantage. Caven says that while regional TV is holding up well against other regional media, the real test of its mettle will be its ability to compete with single-market TV. "Our sense is that TV is taking more and more share from the print side," she says. "Regional TV has only really been around for ten years, and it's grown to claim more than 30 per cent share of the regional market. But it's still peanuts compared with in-market spend."
And according to the ESPN Star Sports managing director, Rik Dovey, the situation isn't improving. "The emerging trend is that regional budgets have slowed while local market spends are on the increase," he says.
Nonetheless, there are success stories. Media planners point in particular to CNN, Discovery and MTV as examples of broadcasters who have got elements of the recipe right: carriage on local cable operators; a strong programming offer, localised to individual markets as far as possible; and flexibility in terms of the packages they offer to advertisers.
"There are players who have really got their act together, such as CNN and MTV. They put together pretty good integrated packages," Caven says.
"Discovery has come on a lot in the last year in terms of what it offers and how it sells it - it had a good story before, but it wasn't taking full advantage of it. Now it's very flexible - it is really going beyond spot and space," she adds.
Discovery tops the viewership PAX numbers, with around 2.35 million weekly viewers across nine top Asian markets. CNN tallies a healthy 1.8 million, and it's doing well in terms of revenue, according to Morgan. Like Caven, he says that offering advertisers innovative packages has been the key to success: "We've become very adept at providing marketing ideas to people, rather than just flogging TVCs. The challenge was to evolve - it's easy if you're number one to just keep on doing the same thing, but you have to change to stay ahead."
In particular, Morgan says, CNN has pushed cross-media solutions, incorporating online elements and partnerships with print publications including Time magazine, for clients such as Singapore Airlines, Cathay Pacific and Toyota. "With each advertiser, we created specific content, the campaigns had TV and online elements, and we worked with other parts of AOL Time Warner."
Another reason for the broadcaster's growth in Asia, he adds, is business from developing markets such as Indochina, the Philippines and Indonesia: "Business has grown rapidly as those countries have tried to promote themselves internationally."
And the downturn hasn't necessarily been bad news for all regional broadcasters, Morgan claims: "When the downturn started to bite and people cut the number of media they used, from four or five to maybe one core and one or two peripheral, a lot of them turned to us as their core media."
This view - that clients focusing more sharply on key media can actually strengthen the hand of the leading players - is backed up by Leung. "Budgets have gone down a lot, and when it comes to selecting the channels to work with, people will go for the highest viewership," she says.
Like anywhere, programming is key to pulling in the viewers. But distribution also plays a massive role; any increase in the size of the market as a whole is largely attributable to broadcasters getting new landing rights with local cable operators. Distribution, Leung says, is quite even in Asia right now: "Most of the well-known channels are doing OK, but no-one is really spending any money on expansion at the moment."
She adds, though, that those channels which aren't carried by local cable operators are the ones suffering the most. It's an issue that could soon rear its head for a whole raft of channels operating in India. A major cloud looming on the horizon for the Asian TV industry is the introduction into the massive Indian cable market of a set-top box-based conditional access system, which will allow viewers to pick which individual channels they want to receive. The problem is that the set-top boxes required for the system, which will hit the country's four biggest cities in July, are likely to be in short supply. According to some estimates, up to 95 per cent of Indian cable customers may suddenly be unable to receive any channels - and the situation could take as long as a year to be remedied.
"Imagine any other market around the world where the entire pay-TV offering was switched off overnight," Dovey, for whom India is a major market, says. "That's what we face. We are all for conditional access, but we expect the switch-on to see 200,000 set-top boxes being available to markets of six million-plus."
Where India has a largely self-contained cable TV industry, with country-specific programming, in east Asia many channels have traditionally been content to pump out the same material across the region. But increasingly, they're scrambling to localise their offering so they can compete on a more even footing with single-country broadcasters for massive local budgets.
Morgan says CNN "has invested heavily in programming from and about Asia", and Dovey says that one word sums up how ESPN Star Sports is differentiating itself from the competition in such a difficult market: content.
Caven says that a good local offer is what distinguishes the strongest players: "Where they've succeeded is in going after local budgets. But that puts them up against some people with big audiences."
To compete in that sort of company, regional TV players need solid audience figures to back up their sales pitches. Reach and frequency data were introduced into PAX in March 2002, and the survey is now updated daily.
That, Turner International's Asia-Pacific vice-president of research, Duncan Morris, says, makes it as useful as an EMS or a Europe 2003. "Now the surveys here talk about reach and frequency, we can talk to clients about things like return on investment," he comments.
PAX is complemented by the likes of the International Air Travellers' Survey, which interviews travellers at nine airports throughout the region; and the Asia-Pacific Hotel Guests' Survey, which makes its debut in Asia this year.
"Clients get fed up with lots of different media owners all saying: 'We're number one.' We say: if you want to know about our audience, we can tell you what they're spending on travel, finance, electronics or whatever, and we can back it up with evidence," Morgan says.
The continent's regional broadcasters need every tool they can to help them sell. The most common hope is that travel advertising will return sooner rather than later. With the recent announcement of a £75 million injection of cash from the Hong Kong Tourism Board earmarked for global marketing, you can imagine the travel operators following suit and appealing to potential travellers via pan-regional TV.With travel advertisers back on board, the successful broadcasters can prove they can still cut the mustard.
PAST 7 DAYS VIEWERSHIP AMONG AFFLUENT ADULTS (9 Markets*)
PAX Q3 2002 PAX Q3 + Q4 2002
Animal Planet 611,552 582,503
AXN 711,476 680,654
BBC World 748,853 713,924
Cartoon Network 746,963 694,834
Channel NewsAsia 392,581 393,168
Channel V 556,832 550,284
CNBC 490,639 470,897
CNN 1,699,891 1,588,993
Discovery Channel 2,107,652 2,124,523
ESPN 1,106,849 1,040,890
HBO 1,746,391 1,720,007
MTV 1,252,873 1,207,238
National Geographic Channel 1,736,738 1,740,028
NHK 374,407 332,914
Phoenix Chinese 472,562 460,955
STAR Movies 1,286,517 1,242,316
STAR Sports 966,797 914,147
STAR World 576,512 500,019
*9 markets include Bangkok, Hong Kong, Jakarta, Kuala Lumpur,
Manila, Singapore, Taipei, Seoul and India.
CNBC includes CNBC Asia, CNBC India, MBN-CNBC, CNBC Singapore
and CNBC Hong Kong.
WATCHED ANY CABLE OR SATELLITE TV (9 Markets*)
Q3 2002 Q3 + Q4 2002
Yesterday Past 7 Days Yesterday Past 7 Days
Bangkok 200,409 388,244 193,158 69,049
Hong Kong 400,071 738,604 435,148 754,971
Jakarta 53,762 106,146 46,948 109,157
Kuala Lumpur 159,810 234,522 161,783 235,183
Manila 247,775 335,998 235,691 331,621
Singapore 297,907 458,117 292,845 461,491
Taipei 727,727 980,300 709,704 977,662
India 881,117 1,097,392 859,717 1,100,659
Seoul 421,809 752,561 471,113 825,845
Notes: Total PAX universe: Q3 2002: 4,995,163; Q3 + Q4 2002" 5,083,704.
Affluent adults: Q3 2002 4,628,384; Q3 + Q4 2002 4,683,610.
*9 markets include Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila,
Singapore, Taipei, Seoul and India.