Sars to put brakes on Asian ad investments

Severe Acute Respiratory Syndrome is likely to put the brakes on Asian investment in adspend, which has been growing steadily since 1998, with the exception of Japan.

The WPP Group chief executive, Sir Martin Sorrell, has also indicated the virus could hinder recovery from the global advertising recession.

Spending on advertising in Hong Kong, the worst-affected market, has fallen by approximately 30 per cent, according to estimates from MindShare. The worst-hit sectors are travel and tourism, retail and entertainment.

Mark Patterson, the chief executive of MindShare in North Asia, believes the travel industry will take the longest to recover. "Sars is intrinsically linked with travel, and figures for the first two weeks in April this year compared with last year show that spend is down by about 70 per cent to about just over £1 million," he said.

The release of the film X-Men 2, to coincide with the May Day holiday, has also taken a major hit, Patterson says.

Richard Pinder, the regional managing director of Leo Burnett in Asia, believes that airline, restaurant and drinks clients are suffering declines of up to 60 per cent on revenues. "This will profoundly affect business in 2003 and it will certainly dampen overall growth. Agencies out here will see decline for the first time in two or three years," he said.

Harry Reid, the international president of FCB, agreed: "I don't see the industry being able to catch up as there's been a four-month hiatus period where budgets have been slashed. I don't think we know the extent yet of how much it will hit the bottom line; we're going to have to wait another three weeks."

The categories that are performing well in ad terms, however, are those directly relevant to the Sars virus, namely household cleaners, detergent and bleach.