Asia Rising

Asia rising: surging economies brings sweeping change to media.
by
David Kilburn

A new generation of middle-class consumers across the Pacific--in China, Korea, Taiwan, Hong Kong and India--are spending money on products traditionally associated with the advanced economies of Japan, Europe and the U.S. With the region's new prosperity come marketing opportunities for both multinational and indigenous Asian marketing companies and an important media challenge for agencies: how to reach consumers efficiently, especially now that deregulation makes it easier to launch competing ventures in print and broadcast.

"There's a media revolution under way in Asia," says Kevin Clarke, regional media director of J. Walter Thompson, Hong Kong. Clarke points to phenomenal growth in advertising expenditures, fueled by economic expansion; a marked lessening of government controls over the media, which creates a better climate for investment, whether in a new cable TV service or publishing a newspaper; and the push of technology. "Asia is skipping media life cycles; we are seeing cable, satellite and new interactive media all arriving at the same time," he says. "One result is, we are seeing the door slowly opening to foreign investment, with foreign media companies gaining a foothold in Asia. Change is coming to Asia later than elsewhere, but now Asia is catching up [with the West], and even shooting ahead."

Change is lapping at the shores of Japan, hitherto sealed to foreign media entrepreneurs. Deregulation, the spread of satellite broadcasting and Asia's economic growth have thrust Japan into the mainstream of global media change. Recently revised broadcasting laws allow foreign broadcasters to transmit directly into Japan, which had previously been prohibited.

A new joint venture between Rupert Murdoch's News Corp. and Tokyo's Softbank Corp. marks the beginning of change for media in Japan. The two have acquired Obunsha Media Co., whose sole asset is a 21.4 percent share in TV Asahi, one of the nation's five commercial TV networks. The deal gives Murdoch the largest share any single foreign company has in a major Japanese media company and the Japanese support he needs to launch JSkyB, a 100-channel digital satellite broadcasting service, in Japan in 1998. Meanwhile, Murdoch's Star TV created a new channel, Star Plus, for Japan on April 1. It had 400,000 subscribers by late June.

"Sometimes [in Japan], we need a typhoon to provoke change. Things will never be the same here again," comments Hideo Ishikawa, an associate director of Hakuhodo, the country's second-largest advertising agency.

Though it continues to be Asia's largest advertising and media market, Japan's share is dwindling. By 1997, less than half of Asia's advertising will be Japanese, compared with 78 percent in 1990 and 85 percent in 1983, according to a forecast by Leo Burnett. All Asian markets are growing, but it's China making the Great Leap Forward from less than i percent in 1991 to almost 8 percent last year, doubling to 16 percent in 1997, and possibly doubling again by 2000.

China's economic growth fuels not only advertising but media, too. "In 1978, when China began its reforms, there were only 32 television stations across the country," says Zhu Xinmin, general secretary of The People's Daily, in Beijing. "There were 2,300 in 1995, a 70-fold increase. Over the same period, the number of newspapers has soared from 186 to more than 2,200, and the number of magazines climbed from 900 in 1978 to 8,100 last year."

New media channels, both print and broadcast, are proliferating throughout Asia. For example, in Korea, the number of daily newspapers has grown to 125 today, from 60 in 1988. Over that same period, the number of television channels has grown from three to four terrestrials, plus 26 cable services and one satellite broadcaster.

In Taiwan, 278 newspapers have been registered since 1988. By the end of last year, more than 150 new radio stations had joined the 33 broadcasting in 1993. Cable Tv;, "legalized" in 1993, now reaches about 60 percent of households, which can now select programs from more than 50 channels, with many more to come. And Japan, the largest market, will gain more than 200 new television channels in the next two years, plus an additional 200 by 2005, says the Government Information Office. The growth of TV has not eclipsed newspapers and magazines. Nor will it. Almost 30,000 consumer magazines and more than 2,000 newspapers are published in Asia, and more titles are launched each year. Even so, it is undoubtedly the rise of regional satellite broadcasters, whose programs can be distributed either direct to homes or via cable, that is having the greatest impact.

Take India. Like many Asian countries, it had a state-controlled television broadcaster, Doordarshan, when Star TV was launched in 1991, introducing market forces. Suddenly, small entrepreneurs around the country were stringing wires over telephone polls and adding impromptu film channels by feeding Western and Indian films from VCRs into their mini-cable systems. The fledgling cable broadcasting industry was "lawless," and the phenomenon spread like wildfire.

Star TV has also siphoned Doordarshan's advertising revenues. In 1993, Star TV and Zee TV (partly owned by News Corp.) took about 20 percent of India's TV advertising, estimated at $184 million. Today, some 28 private-sector satellite channels, from local companies to well-known names (CNN, MTV), are also wooing viewers.

An increasing number of satellite services cover the whole of Asia, including many foreign broadcasters. Hong Kong's Star TV,, the best known, now reaches more than 53 million homes in 53 countries. Using three satellites, it broadcasts 15 program services in 10 languages. Over the next 18 months, the number of Star channels is set to double. "Star has developed a range of services, all of them country-specific variations of key programming categories--sports, music, movies and general entertainment," says Lachlan Murdoch, Star vice chairman and potential successor to his father, Rupert. "That means the Star service for India is different in language and content to what we deliver in Southeast Asia, China or Japan."

To win viewers, Star has had to radically change its formula since its 1991 launch. At that time, the service had five channels, four in English, which targeted an elite, English-speaking market. "Even as a package of mostly Western material, Star responded to long-standing but unsatisfied demand [for higher-quality programming]. Very quickly, local entrepreneurs realized they could compete with us in their markets--at that time they could respond more effectively to local demands than we could," Murdoch says. Star's strategy began to change when News Corp., in Sydney, Australia, bought two-thirds in 1993. Since then, Star has invested heavily in local production facilities throughout Asia to broadcast programs made by Asians.

Spurred by all this activity, many of Asia's TV nets are trying to become regional broadcasters. Hong Kong's leading station, TVB, is one example. Successful in Taiwan, it has announced deals in Thailand. Even formerly torpid broadcasters, like China's CCTV and India's Doordarshan, are becoming satellite services and trying to compete with better programming.

"We're seeing the rise of technology, which is multiplying media choices and putting greater control in the hands of consumers," says Andre Nair, regional media director of Hong Kong's Ogilvy & Mather. "For example, in Hong Kong, a viewer might have only watched Chinese TV because he only understood Chinese, but NICAM [Near Instantaneously Companded Audio Multiplex] digital sound tracks allow him to watch [dubbed] English-language programs."

Proliferating media services and sweeping social change in Asian societies make media selection a challenge. What are the best ways to reach new generations of middle-class consumers? For agencies, media is now a strategic battle as never before. "Ten years ago, Asia's media environment was incredibly stable," Nair says. "It was very slow to change, and there was only limited media choice--both for consumers and advertisers. Today, we have volatile, dynamic media environments where media choice is expanding almost exponentially."

In July, Ogilvy launched and branded the media departments of its Asia/Pacific agencies as "the network." "The media environments both in each country in the region and the region as a whole are getting much more sophisticated. The pace of change is also very fast," explains Nair, president of "the network" in Asia/Pacific. "So there are many more variables we must consider in planning and buying. Most markets have moved from being monopolistic and non-negotiable to less monopolistic and increasingly negotiable. There are so many more opportunities as a result. This environment calls for a more focused approach to media, and so we are launching 'the network,' the Ogilvy media company; it's a separate business altogether. We are doing this in every market in Asia/Pacific, and we are introducing both new technologies and new systems that will help take advantage of the new environment, as well as meet the various needs of our clients."

In Taiwan, Ogilvy and JWT combined their media buying operations to form The Media Partnership, giving them enhanced purchasing power in a highly fragmented market. "It's been a success in Taiwan, and it's one potential model for elsewhere," says JWT's Clarke. "But it's not a magic formula."

Creating new organizational structures is one reaction to change, but it's only a partial response. Planning and research are priorities, and the volume of data is always growing. Media research in Asia is dominated by SRG Nielsen, which measures viewing patterns, mainly with Peoplemeters, in virtually all markets to deliver records of 30 million minutes of viewing data a day. Multinational agencies are adopting Optimizer programs, such as Super Midas and X*Pert, which SRG is bringing to Asia to help allocate media budgets. Agencies also have developed proprietary systems, such as O&M's Shape; JWT's Sesame (System for Estimating Setting and Evaluating Media Expenditure); and Burnett's Comet. a brand portfolio tool used in AOR management.

"The media environment is becoming so much more complex," says Gary Brown, Leo Burnett's regional media director. "We must make sure our people have the best possible tools, not only to help them plan and evaluate but also to take care of administrative and executional details, so they have more time for strategic thinking."

Yet the markets are changing and growing more quickly than the data flows. In the last few years, Leo Burnett has invested more than $500,000 in setting up consumer panels in China to monitor lifestyles, values, purchasing and media exposure. Even checking that a campaign takes place across the whole of China can be a challenge both for advertisers and agencies--which presents another kind of opportunity. Facing this problem at P&G, Jeff Xu left in 1994 to start X&L, a media company in Guangzhou, China. Xu employs people in 57 cities to monitor the major 121 TV channels and will shortly cover the print media, too. Agency clients--Bates, Bozell, BBDO, Saatchi & Saatchi, DY&R, Grey, JWT and O&M--get details of which ads run when and where as part of the service.

Regional buys in Asia used to be print-only affairs using Time, Newsweek and other English-language publications reaching society's upper strata. Star TV has changed all that, reaching millions of middle-class consumers in their languages. JWT is currently the largest agency spender with Star, owing to deals for Nike, DeBeers and Ford. "Nike is key to their media strategy of association with key sports throughout Asia and is building interest in sports such as basketball," says Clarke. JWT also has done deals for Citibank and Motorola on CNN, Asian Business News and CNBC.

AOR business is on the rise throughout Asia, bringing with it Europe's media independents, especially CIA and Carat. They may find the going tougher than it was on the Continent. "We are all much better prepared, better equipped than before," says Brown. "All the agencies learned lessons. Media in Asia is intensely competitive, and it will be hard to start from scratch."

Yet not everyone can be a winner. Who are the weak links in Asia? With their own media market buttressed against change for so long, Japan's giant agencies have grown insensitive to market forces and the pace of change. When Nielsen introduced Japan's Peoplemeter service in 1994, Dentsu vowed never to use the data. Asked more recently about Optimizers and other media tools, the giant replied, "But what are they used for?"

PACIFIC HEIGHTS

1990: More media is bought in Japan ($41.1 billion) than in any other Asian country. Korea comes in at $2.6 billion, Taiwan at $1.7 billion. China's ad spend is $243 million. Total media buys (including Australia and New Zealand): $52.8 billion.

1991: Japan owns 77% of Asian market share ($42.2 billion), a 1% decrease from the previous year. Hong Kong ($978 million), Thailand ($572 million) and Malaysia ($381 million) continue to grow steadily. Total media buys: $54.6 billion.

1992: China's ad spend rises to $773 million, while Korea ($3.5 billion), Taiwan ($2.4 billion), India ($630 million) and Singapore ($454 million) grow apace. Japan's dollar figures ($40.3 billion) decline for the first time in the '90s. Total: $55.2 billion.

1993: Japan's market share dips to 68% ($37.5 billion); it's onward and upward for Hong Kong ($1.5 billion), Thailand ($1.1 billion), India ($718 million) and Malaysia ($540 million). Vietnam sees its first buys ($15 million). Total: $55 billion.

1994: Asia begins a period of explosive media growth, especially China whose share nears 5% ($2.8 billion); Korea ($4.8 billion) 8.1%; Taiwan ($2.9 billion) 4.8%; Hong Kong ($1.8 billion) 3.1%; Thailand($1.4 billion) 2.4%. Total: $60 billion.

1995: While Japan's media dollars increase to $39.1 billion, its market share continues to decline (59.2%). China, nearly doubling its growth (to $5.1 billion) in one year, leaps near Korea ($5.7 billion) and over Taiwan ($3.2 billion). Total: $66 billion.

1996: Media spending is up in every nook and cranny of Asia: Indonesia ($883 million); Singapore ($832 million); Malaysia ($819 million); Philippines ($502 million); Pakistan ($130 million); Vietnam ($67 million). Total: $72.6 billion (estimated).

1997: Estimates point to a big year for all, notably China ($13 billion, at 15.7%); Korea ($7.7 billion, 9.4%); Taiwan ($3.5 billion, 4.3%); Hong Kong ($3.1 billion, 3.7%); Thailand ($2.9 billion, 3.5%). Japan's market share falls to 49.2%. Total: $82.5 billion.

Originally published in ADWEEK Eastern Edition, August 19, 1996 vol 37 no 34 p22