Hong Kong marketers are making more considered decisions about which media agency they choose, but are opting for short-term relationships rather than retainer deals, industry watchers say.
Clients are increasingly switched on to the value of good media buying to the success of a campaign and many are looking for their media agency to drive the creative side. However, they are swapping agencies less frequently and, chastened by the lingering economic uncertainty, when they do switch they tend to do so for short-term contracts.
The fast food and soft drink categories are among the few to have had major movements in the past 12 months and the city's biggest spender, McDonald's, was the most significant account to change hands last year.
Worth an estimated HK$300 million in billings, the account went to OMD, which also won the prized PepsiCo account from its rival ZenithOptimedia this year.
Jennifer Ma, the director of sales and marketing at the marketing information network admanGo, says the rise in the number of pitches for these categories is probably because of new products hitting the market. "There were a few new beverage brands launched in Hong Kong during the past year, including Qoo from Coca-Cola, Wahaha, a tea product from Vita, and another Chinese drink from a new company," she says.
OMD is widely regarded as leading Hong Kong's media sector. Not only does the agency's work attract awards, it also boasts an impressive list of recent new-business wins.
Greg Paull, who heads the consultancy R3, a specialist in agency relationships, cites examples such as OMD's roadside "filling stations" built into bus shelters for Exxon, and bus panels that were converted into wooden courier crates for FedEx. "Obviously, these things involve the creative agencies as well," he concedes. "But the media agencies are taking much more of a lead in the client-agency relationship."
ZenithOptimedia and MindShare round out Hong Kong's top three media agencies and all three have enjoyed significant account wins in the past year.
ZenithOptimedia snatched Hang Seng bank, worth an estimated US$10 million, from MindShare, and Sony AOR, also believed to be worth US$10 million, from Maximise, Bank of China from MediaCom, and a new account for the prestigious Cyberport development.
MindShare beat OMD in pitches for both Wing On Travel, worth HK$30 million, and Kowloon Motor Bus, worth HK$20 million.
Of the smaller operators, Universal McCann is seen as strong, maintaining a relationship with Cathay Pacific and recently winning Colgate.
The independent agency Carat, meanwhile, has not had the success in Hong Kong that it has enjoyed in other Asian centres, where acquisitions of profitable local agencies have given its client list a head start. But, despite having fewer than 20 staff in Hong Kong, Carat has recently won accounts from Mandarin Hotels and Philips.
Among the media owners, the local station TVB remains the dominant force in free-to-air services, with the Chinese-language Jade and English-language Pearl channels outstripping ATV's offerings, Home and World. Movies are the top-rating programmes on English-language channels, with variety shows, drama, game shows and football drawing most viewers on the Chinese sides.
Surveys by Nielsen Media Research reveal that the most popular weekly titles are Next Magazine and Sudden Weekly, both tabloid-style, celebrity-led current affairs publications. Among daily newspapers, the Chinese-language Oriental Daily News, Apple Daily and Ming Pao are strongest, while the South China Morning Post remains ahead of The Standard in the race for English-language readers.
As clients across all sectors look for ways to increase the value of their media spend, most media agencies are seeing retainer relationships.
A survey by R3 of major marketers found that only 15 per cent of media agency assignments are retainer-based in Hong Kong - the lowest rate in Asia.
"Hong Kong's the only place in the world with that number of tactical-based assignments," Paull says. Ma believes the figures are skewed by the vast amount of residential real-estate advertising in Hong Kong in recent years. "Properties in Hong Kong are often co-developed by several developers on a project basis, so they look for a different agency to handle their ads every time," she says.
She says that thrifty clients have been using project work with cheaper agencies to cut costs, adding to the proportion of one-off deals being assigned. "With the tough economic situation in Hong Kong right now, one often hears clients cheat by stealing ideas from their retainer agencies and letting smaller agencies handle the execution on a project-by-project basis to save money."
Paull adds that Hong Kong clients are also less likely than their counterparts across Asia to use the same agency for media buying and creative - with less than a quarter using aligned agencies, compared with 38 per cent across the region.
He says it shows a healthy growth in understanding the significance of media buying. "Often your best creative partner is not your best media partner," he says. "It's a good sign that Hong Kong marketers are looking at media as an independent area rather than going with the flow."
CHRIS SKINNER - Director, OMD Hong Kong
What is the most influential brand in China?
Both Legend (computers) and Haier (white goods) are two local brands that have developed a modern, international approach. Of the international brands, I would say Pepsi. Other influential brands are White Cat and Diao Pao, which both spend enormous sums on media across China, CCTV (the national TV station) and, of course, the Communist Party.
What has been the most talked-about campaign this year?
Campaigns in China tend to be talked about because of the size of their budget and the last big one was Motorola.
What's the must-see TV show?
CCTV1's 7pm evening news. However, given it is still seen very much as the government station, it is more the "must say I watch" TV show.
Which media personality gets the most column inches?
In the international media, it is Chris Walton from MindShare, although I was recently recognised by a local taxi driver after a TV interview.
What's been the biggest media pitch of the year?
Motorola (estimated US$30 million, currently taking place).
Where's the best place to meet clients?
International clients: Face Bar, O'Malleys and the Noodle Bar at Shanghai Hongxaio Airport. Local clients: KTV and the Annual Provincial TV Conference.
What is the biggest single issue facing the media industry in China?
A culture that generates a "master/servant" philosophy; an education system that teaches through repetition; a society that doesn't encourage risk taking; clients who don't value marketing services; a buying system that discourages transparency; diminishing agency remuneration while costs (staff and research) escalate; rampant media inflation and a market that in its scale and complexity makes controlling all the above virtually impossible. Oh, and finally, few quality, experienced staff to help one through all this. Take your pick.