hktdc.com - Marketing Services

Advertising and Related Services	Dec 2006	Dec 2008	%change
Number of Establishments	4,654	4,648	-0.13
Number of Persons Engaged	18,289	19,776	8.13

Sources: Quarterly Report of Employment and Vacancies Statistics

Range of Services

Hong Kong offers a full range of marketing services (advertising, brand/image consulting, event organising, public relations/corporate communications and market research). Large Hong Kong-based companies are able to provide one-stop solution to clients. Hong Kong has a highly developed consumer market, which offers an excellent testing bed for marketing concepts and techniques. Hong Kong companies are thus sophisticated users of marketing services.

Advertising: Advertising agencies initiate, manage and implement advertising campaigns. In general, advertising agencies provide three major types of services, namely account management, creative services and media planning. Those that provide all three services are traditionally called full-service agencies. Some bigger multinational agencies also provide related services such as sales promotion and public relations, while smaller ones may only provide a more limited range of services. Many advertising agencies spin off their media planning department as specialist companies.

Brand Consultancy: There is growing awareness of the importance of branding and corporate identity by enterprises as an essential component of business success, especially among those that would like to expand beyond home market. Agencies which specialise in brand consultancy have become increasingly high-profile players. Services provided include brand strategy, brand extension and expansion, brand communications and planning and internal branding.

Event Organising: Being the premier trade fair capital in the region, Hong Kong is the host to a wide range of trade fairs and international events. In general, the larger international event organisers tend to provide a one-stop-shop solution by organising conferences, seminars or other side events as a supplement to the exhibitions and have a wide variety of shows. By contrast, the smaller organisers tend to specialise in organising similar shows in different locations.

Market Research: Market research involves studying people as buyers, sellers and consumers, examining their attitudes, preferences, habits, and purchasing power. Market research is also concerned with the channels of distribution, promotion and pricing, and the design of the products and services to be marketed. A large portion of the work performed by most market research firms is commissioned by specific companies for particular purposes. However, some firms also routinely collect a wide spectrum of data and then attempt to sell some or all of it to companies that may benefit from such information. Market research may be quantitative, qualitative, or a combination of both.

Public Relations: PR professionals help clients to develop communication and understanding with the target audiences. Services include media relations, marketing, copy-writing, press office, sponsorship, events and conference management etc.

Service Providers

Hong Kong has a developed marketing services market which is dominated by the multinational agencies. Many multinational marketing services companies have a strong presence in Hong Kong and have their regional headquarters set up here to take care of their regional business. There are also a large number of smaller companies / consultants.

Exports

Advertising, Public Relation Services and Market Research	2005	2006	2007
Advertising, market research & public opinion polling services (HK$ mn)	4,117	4,292	4,770
Year on Year Growth %	--	4.25	11.1
Contribution to total services exports (%)	9.5	9.1	8.8
Business & management consultancy & public relations services (HK$ mn)	14,238	16,992	20,159
Year on Year Growth %	--	19.3	18.6
Contribution to total services exports (%)	33.0	36.2	37.1

Source: Report on Hong Kong Trade in Services Statistics for 2007, Census and Statistics Department

Major services exported include: creative advertising, media buying, direct marketing, graphic design, marketing consultancy, customised market research and sales of research data. Other related exports include Hong Kong-based crew producing advertisements on behalf of overseas clients.

Industry Development and Market Outlook

The financial tsunami which emerged in the third quarter of 2008 has slowed down global economic growth and the market prospects for marketing services have also become less constructive for 2009. This would negatively affect Hong Kong's exports of marketing services in 2009, after seeing strong growth during 2005-2007.

According to ZenithOptimedia, Asia-Pacific's advertising spending is expected to drop 3.4% in 2009, though this would be a smaller fall compared to -6.9% expected for the worldwide market, where the advertising expenditure would shrink from US$487 billion in 2008 to US$ 453 billion in 2009. By contrast, China's advertising expenditure is likely to show a positive growth of 5.4% in 2009, after surging by 18.8% in 2008. In the lead up to the Beijing Olympics, advertising spending posted a 17% year-on-year increase to RMB245 billion in the first half of the year.

China became the world's second biggest advertising market after the US in 2007. China's swift moves to introduce a number of fiscal and monetary stimuli to offset the negative repercussions of financial tsunami are expected to bolster the economy, with the Chinese government targeting a growth of 8%. In addition, the medium term outlook for China's advertising market looks bright in view of the upcoming events like the 2010 Asian Games (Guangzhou) and 2010 World Expo (Shanghai), reminiscent of the positive contribution to advertising spending of the Beijing Olympics, which was successfully held in August 2008.

Top 10 countries by advertising expenditure, 2007

Rank	Countries	US$ million
1	USA	163,260
2	China	76,675
3	Japan	38,529
4	UK	29,915
5	Brazil	26,640
6	Germany	24,306
7	Mexico	19,036
8	France	14,595
9	Italy	12,257
10	Canada	11,313

Source: World Advertising Research Centre

According to Nielsen, China's total advertising spending on traditional media, including newspapers, magazines and television, reached US$69 billion in 2008, a 17% increase from 2007.

Advertising Spending in China

Media Outlet	2008 (US$mln)	2007 (US$mln)	% Change
TV	56,867	48,195	18%
Newspapers	10,414	9,293	12%
Magazines	1,523	1,275	19%
Total	68,804	58,762	17%

Source: Nielsen AIS

Although online advertising spending amounted to only US$1.44 billion or about 2% of the global total in 2008, YoY growth was impressive at 50%. In the case of China, online advertising spending in China will reach US$1.7 billion in 2009, rising further to US$3.5 billion in 2012 or an average annual growth rate of 24% from 2007, according to ZenithOptimedia and Bernstein Research.

In Hong Kong, advertising spending rose 10% YoY in 2008, with newspapers comprising the largest potion (34%), followed by television (30%). The highest growth lied on radio, with its advertising spending leaped up by 54%. In 2008, the leading advertiser was retail, rising 11% YoY. The advertiser recording the fastest growth was toiletries, up 20% YoY, whereas property showed the sharpest decline of 16% in advertising spending.

Online advertising spending accounted for only 1.2% of the total, reaching HK$702 million in 2008. Despite the onslaught of the financial tsunami, online advertising expenditure showed a quarter-on-quarter increase of 33% in Q4 of 2008 to HK$276 million. Top online advertisers were the finance, computers and electrical sectors. The use of online media in advertising is expected to grow continuously over the medium term.

The demand for Hong Kong's quality marketing services, from MNCs as well as established companies on the Chinese mainland, has been rising in light of a more competitive post-WTO environment.

With more foreign companies entering the mainland market, fierce competition drives up the demand for spending on marketing services.
Hong Kong companies with manufacturing facilities on the mainland focus more on domestic sales and distribution. Hong Kong marketing services companies are old partners to work with.
More and more mainland companies come to understand the importance of advertising, brand building and corporate identity building. Increasing competition and more sophisticated consumers will necessitate mainland enterprises to pay more attention to market intelligence.
There is increasing demand for public relations service from mainland companies that are going "global". They will need advice from communications professionals with experience and expertise. Given the language and cultural proximity and the fact that such mainland companies usually have a base in Hong Kong, they are more likely to entrust Hong Kong marketing services firms to advise on achieving a quick and seamless integration with the international community.

Hong Kong's marketing services companies are first-movers in the mainland market. Mainland business has also become an increasing source of income for Hong Kong marketing services companies. The CEPA agreement further facilitates Hong Kong marketing companies' expansion in the mainland market. For instance, Hong Kong companies were permitted to establish wholly-owned advertising firms on the mainland as early as 2004. As of April 2009, 98 advertising companies had obtained Hong Kong Service Supplier (HKSS) certificates.

CEPA has also helped Hong Kong companies engaged in trade mark business to enter the Chinese mainland market. Supplement I to CEPA signed in 2005 stipulated that HKSS are permitted to set up limited liability corporations in the form of joint ventures on the mainland, undertaking a range of trademark-related business, including the provision of legal advice, and acting as legal consultants on trademark laws. As of April 2009, a total of 7 HKSS certificates had been issued.

Supplement I to CEPA also stipulated that Hong Kong residents with Chinese citizenship can take the National Qualification Examination for Patent Agents and practice in a mainland patent agency after passing the examination and completing a year of apprenticeship, handling patent-related business including consultation services.

Hong Kong Industry Profiles