Can media independents replicate in Asia their success in Western Europe, where about 70% of all time and space are now bought through specialist media shops? 

Carat, Europe’s largest media independent with a 12% share, was driven to Asia by Volkswagen, one of its major European clients, who appointed them for the region in February 1996. From its one office in Hong Kong, Carat Asia Pacific currently uses local affiliates to help execute plans. It’s just a first step. "We’ll be announcing a number of additional Asian offices within the first quarter. We are looking not only at start-ups, but also at acquisitions and joint ventures," says Ms. Kate Stephenson, regional client services director. 

CIA Medianetwork, number two in Europe, opened in Hong Kong in November 1993. In February last year a second office opened in Singapore as a joint venture with Batey Ads. As well as providing media services for Batey, CIA also pitches for business in its own right. It is a strategy similar to Europe where CIA grew initially via partnerships and affiliations with local shops. Clients include LVMH, Alfred Dunhill, Hyundai, Mercedes Benz, Sony, Visa, and Tag Heuer. Luxury goods distributor LVMH, CIA’s largest client in Asia, will spend US$30 million this year on Celine, Christian Dior, Christian Lacroix, Hennessy, Louis Vuitton and Moet & Chandon. CIA’s chairman, Chris Ingram states their aims succinctly, "our aim is to be in the top 6 media buyers in each market where we are present." 

More Media Choices 

The arrival of Carat and CIA comes at a time when Asia’s media scene is undergoing radical change. New Satellite broadcast and cable channels are eroding the large audiences of traditional terrestrial TV channels. New magazines and newspapers are adding to the clutter of print advertising. 

For example, in South Korea, the number of daily newspapers has grown to 125 today, from 60 in 1988. Over the same period, the number of television channels has grown from three to four terrestrials, plus 26 cable services and one digital 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, authorized in 1993, now reaches about 60 percent of households that can now select programs from more than 50 channels, with many more to come. 

In 1978, when China began its reforms, there were only 32 television Today there are 2,300, a seventy-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. Most of the growth has come in the last five years. 

And Japan, the largest market, will gain more than 200 new television channels in the next two years, plus a further 200 by 2005. 

Plus more research data and better tools 

At the same time, more and better media research is available than ever before across the region. For example, Hong Hong-based SRG Nielsen provides peoplemeter measurement of TV viewing in nearly all markets, as well as a Media Index survey that tracks readership and viewing behavior. There are also computer-based tools to help analyze the data flows, evaluate planning alternatives, and build schedules. Most agencies and media specialists have their own suites of these. At Ogilvy, for example, these include: Max Z - a direct response media analysis system; Super Midas - a TV buying optimizer which provides the optimum combination of channels or day-parts; Shape - a planning optimizer providing the ideal plan in terms of when and how much media to use; and SMART - a geographic budget allocation model. 

It’s a sharp change from how media was practiced as recently as a couple of years ago. "Until about two years ago, agency media service in Asia was a booking and paperwork shuffling job. It was not a strategic function, and it wasn’t hi-tech. This has changed very, very rapidly. Advanced computer planning and buying tools have been introduced into the region. Our clients are demanding that we become much more strategic in our media thinking," explains Guy Forestier-Walker, regional managing director of Grey’s MediaCom unit. 

Agencies unbundle 

Grey were the first agency network to open a media specialist in Asia. "We started MediaCom in Asia in anticipation of a change in advertisers’ attitudes. But now growth is client driven. Our own clients are paying much more attention to media than before. One reason is that media in Asia is no longer cheap. Value is key - either in terms of planning smarter or buying cheaper, or both," explains Walker. MediaCom now have branches in all markets where Grey is represented except Taiwan, Philippines, Singapore, and Thailand (to be launched shortly). 

Another major step in the elevation of media skills in Asia came last June, when Ogilvy & Mather gave birth to ‘ the network’ out of the media departments of their agencies throughout the region. Though not incorporated as a new company, the network has its own P/L and reports to its own president, Andre Nair. Aims included not only enhancing service to existing clients, seeking new media-only assignments, but to spike the growth of the European independents. 

"We created the network because we believe media is too important a business not to be treated as a business. In Asia, we wished to pre-empt the arrival of the independents as any kind of significant force. We can see that there are a number of clients who are looking at unbundling, and that represents an incremental business opportunity for us. Most important of all is the need to understand that we set up the network as a planning and buying company - a total media company. This is because we believe that the buying-only independents devalue the strategic role of media in the communication and understate the quality component in their offering," explains Miles Young, Ogilvy’s president for Asia/Pacific. 

Since June last year, the network has won 22 additional media only accounts across nine countries. These billed over US$40 million in 1996 and included media buying AOR’s for Unilever in New Zealand and for Bristol Myers Squibb in China, and Malaysian Airlines planning & buying for Latin America, reports Nair. 

A few months after the network’s launch, Cordiant took a more radical step and restructured Bates Worldwide and Saatchi & Saatchi Advertising to expand the Asian network for Zenith, the group’s media specialist. Media departments from both agencies’ offices in Hong Kong and China were brought together last October to form Zenith Media Greater China with billings of HK$ 1.6 Billion with offices in Hong Kong, Beijing, Shanghai and Guangzhou. These offices, plus one started earlier in Malaysia and a Sydney office opening in February, are the foundation of another new regional media network. "Our model for Asia is that media planning and buying should be in Zenith, not in the Agencies," says Antony Young, Zenith’s president Asia/Pacific. 

As in Europe, there’s speculation that that WPP might take equally radical steps with the Ogilvy and JWT networks in Asia. Miles Young and John Steedman, JWT’s regional media director agree that prospects for increased co-operation are good and will increase. " . . but talk of one rigid global solution being imposed is not true. Rather we explore a number of alternative models, in a number of different countries. Tranli [a joint media buying company] in Taiwan is one such. In China, we are looking at a looser buying alliance. In Japan, we buy through a range of agencies, including JWT. The critical point is that these experiments relate to the commodity side of the business i.e. how to deploy weight to extract buying advantage. Whatever the particular solution, the network remains the O&M media brand, and one of its strengths is that we can pick and choose the most appropriate buying vehicle for both the market and our clients," comments Young. 

J. Walter Thompson, considered one of Asia’s strongest agencies for media is not restructuring as radically as Ogilvy, but it is opening new media shops. MaxMiz, a JWT media specialist opened in Indonesia in January last year. Another, Media Vision opened this January in India. " . . and we are looking at doing similar in a number of other Asian markets," says Steedman. 

In Japan, JWT is expected to spin off its media department later this year, possibly under the Media Vision name. "One reason is that Unilever would like to see planning and buying for the brands Ogilvy and Thompson handle placed under the same roof," said Gus Iizuka, president of J.Walter Thompson Japan. 

Most other agencies are following similar paths. 

Dentsu, Young & Rubicam are rolling out their own media specialist company, 'Total Media' currently operating only in Thailand, across Asia with the possible exception of Japan. " The structure of a Total Media depends on the market; it can replace or supplement agency media departments. In Thailand it supplements (buying for DY&R clients) but in a number of others, it will probably replace. In either case, pursuing media-only clients/AOR business will be a key element in the business plan," explained John McClure, regional media director. 

Last December, DDB Needham announced the "unbundling" of its media department for Greater China to form Optimum Media, which will be run as a separate brand within the agency, and will eventually service independent clients. 

At DMB&B, Asia Pacific Chairman Roger Winter expects to announce the opening of media specialist subsidiaries in at least three Asian countries within the first quarter of this year. 

Bozell’s joint venture with CIA, 20/20, is also expected to arrive in Asia this year, initially in Hong Kong and Singapore. 

The French agency Euro-RSCG are exploring a variety of options for opening a media specialist network in Asia this year. One possibility would be to bringing Mediapolis, their European media joint venture with Y&R to Asia. 

FCB are also evaluating alternatives and expect to announce their own course before mid-year, according to Harry Reid, president international. Under the True North name, FCB will shortly open a media buying shop in Australia in conjunction with Mojo. 

Asia’s own agencies have developed their own media specialists. Dentsu, Japan’s largest agency and the grandaddy of media clouting owns Sydney-based AIS Media, Australia’s largest media shop, billing $365 million in 1996. 

Taiwan’s largest agency, United Advertising established The Media Buying Center to provide media planning, buying, and buying services both to the agency’s own clients and other advertisers. Competition comes from Tranli, a JWT/Ogilvy joint buying service set up in 1995, and two local companies. "These changes are not really to our advantage as an agency since our commission goes down. However we are at least able to win incremental media business that compensated to some extent," comments Raymond Lai, a divisional director at United. 

Bucking the trend 

But not all agencies are unbundling media. Leo Burnett have no plans to spin off media as a separate business but do nonetheless run a media P&L by market. McCann Erickson also intend to keep media within the agency, "where it can be more tightly integrated into all aspects of planning for our clients," says Garry Titterton, McCann’s Business Development Director for Asia. 

Local Competition 

But whether they keep media in-house or unbundle, both the agencies and the European newcomers must compete with a growing number of local media independents across the region. 

In Thailand, former JWT managers started Media Innovation, that country’s first independent. "The Thai advertising industry is at a crossroads," says founder Prasert Eamrungroj, " advertisers are exploring the value of working with a traditional full service agency versus creative and media independents. In addition to media planning and buying, we’ll also be exploring new ways to use media and getting involved in syndication and sponsorship." Media Innovation’s initial clients include Motorola and Chopard. 

In a few markets, local media shops have been going long enough to have built their own reputations. When Margaret Lim started MediaBase in Kuala Lumpur in 1991, she found it necessary to take on some creative work simply to gain accreditation. Today she has three competitors (Zenith, MediaCom, and Media Partners - a local media independent) and billings of Rs 48 million. Clients include many local clients and advertising agencies, one of which is Dentsu’s local agency, Dentsu Mandate. 

Watch Australia . . . look out for Korea 

In Australia, where specialist media shops started in the late 70’s, they have captured about 40% of the market, estimates David Baker, ceo of ais media in Sydney. Baker, who founded ais in 1978 and sold the company to Dentsu in 1989 foresees further growth. "With the abolition of accreditation requirements in Australia on January 1^st [this year] , specialist media shops should see their aggregate share increase to a level similar that achieved in Europe," he says. Newly formed Zenith is reckoned to be market leader in Australia with a 12% share, followed by ais with 7%. 

In contrast South Korea, Asia’s second largest advertising market, is insulated from changes sweeping the region by government regulations. A government agency, KOBACO both sets the prices and acts as exclusive sales agent for all terrestrial broadcast advertising time. KOBACO also allocates chunks of air time to advertisers following its own bureaucratic criteria. Without the rapid introduction of computerized booking and allocation procedures, agencies reckon KOBACO will become increasingly unable to meet advertisers needs. 

Even Japan is changing 

Back home in Japan, Dentsu dominates buying in the world’s second largest market with about a 40% share of prime time TV and a 25% overall share of main media. The focus on buying has left planning skills undernourished and created opportunities for hungry newcomers. 

"Japan is a huge untapped market, but there’s still need to educate about the importance of planning skills. Dentsu is simply focused on sheer buying power," says Young. But even in Japan, change is under way. Since it opened in July 1995, Strategic Planners International, a company formed by former Bates executives has won business from a number of major Japanese advertisers and agencies looking for smart planning which media wholesalers like Dentsu can execute. 

"We hired SPI, because we wanted an external point of view. Our agency, Dentsu, works in a certain Japanese way. We needed some people to help them look at media from a strategic point of view, and help find innovative solutions," said Christophe Bezu, president of adidas Asia/Pacific. 

There’s an awakening interest in better ways to plan media in Japan. Yomiko Advertising, the joint venture partner for both the Saatchi and Bates agencies in Tokyo is interested in the prospects for Zenith in Japan. Meanwhile Grey Advertising are launching MediaCom. "The light has gone on in Japan. It is going to be a very different kind of media market both here and across Asia, and in the not too distant future," says Grey-Daiko president Steve Bretschneider. European media shops will undoubtedly find the going tougher in Asia than is was in Europe 20 years ago. But Asian advertising markets are growing in value twice the pace of Europe and the USA. And so there are opportunities for all. But for the moment at least, Asia looks like becoming a market where smart planning can create more and better value for clients than pure buying clout. 

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