During the past year it has grown increasingly difficult for many advertising agencies in Taiwan to do business. Not only is it hard to get new clients, profit margins are also shrinking throughout their businesses.
As Manufacturers Drift Overseas, Many of the Top Talents in Advertising Are Following Them
Taiwan is a relatively mature market, and mainland China's surging economy lured many businesses to cross the Taiwan Strait during 2005, further marginalizing the state of the advertising industry in Taiwan. Multi-national corporations are turning their attention - and their capital - more and more to mainland China, and com-panies in Taiwan are setting up shop there as well. This shift in momentum has had a definite negative effect on the vigor of the market in Taiwan and the scale of advertising industry.
At the same time, the slowdown in Taiwan's economic growth has led advertisers to take a long look at the return on investment (ROI) offered by their ad spending.
Advertisers are giving advertising agencies smaller budgets to work with while granting shorter time frames and less room for creativity. These and other demands have put agencies in a real bind, forcing them to resort to moves like 'downsizing' in order to remain competitive, and even larger agencies are scrambling to grab new business as it appears.
Leo Burnett Climbs to Second Spot
Yet even the harshest times produce heroes, and in the pall of heated competition a few advertising agencies stood out during the year.
After finishing fourth in 2004 in advertising revenues, Leo Burnett's gross income pulled in NT$442 million, an increase of 15 percent, to jump to second place in 2005.
Leo Burnett has managed double-digit growth for three years while going virtually without the need to pitch an account. The agency focuses on turning clients into brand leaders, with particular attention to below-the-line marketing, an approach which has been particularly effective for them.
Saatchi & Saatchi was a dark horse during the year, rising from seventh in 2004 to fouth in 2005 by increasing its gross income by 17% to NT$386 million. They are another solid, resourceful agency that has grown largely as its clients have grown. Most of the agency's growth last year came through increased investment by Carrefour as well as new clients including Starbucks and Vibo.
Unfortunately the other agencies in the top five had very little to smile about last year.
JWT, the pre-eminent player in the market for the past few years, managed to stay atop the rankings in 2005 with NT$447 million in gross income, about as much as the agency took in during the previous year. Although HSBC increased its ad spending to become the agency's second-largest account after Ford, the agency did not add any significant clients while losing Aso Shoes and a number of other accounts. However, JWT did win praise for the quality of its services, taking top honors as 'Agency of the Year' for 2005 in Brain Magazine's Communications Excellence Awards.
Third-ranked agency was Taiwan Dentsu. Its gross income dropped by 4.66% to NT$389 million in 2005. One of the reason was TOYOTA decreased their ad spending last year.
McCann-Erickson also held steady in its gross income with NT$390 million for the year, placing it fifth in the rankings. Increased ad spending by KYMCO made up for lost income from some of its multi-national accounts.
In an atmosphere of increasing competition, some agencies cut back on overhead and tightened up their operations by winnowing their ranks, cutting expenses to the bone and tenaciously holding on to existing accounts.
Another trend brought on by the loss of ad spending by multi-national accounts was heightened interest in developing home-grown clients. Many agencies believe that the key to remaining competitive lies in intergrated marketing communications. This means that in addition to conventional above-the-line mass media advertising they must also offer tools such as internet marketing, public relations, event marketing and direct marketing……etc. In addition, many local clients expect their ad agencies to help them develop marketing strategies and even help them to seek out and exploit new opportunities in the market.
As advertising agencies decline in importance in the marketing and communi-cations schemes of advertisers, a number of local agencies have adapted by changing the way they operate, taking complete responsibility for the marketing and communications activities of clients. They play the role of problem-solver in communications, but leave the execution of advertising production, media services and public relations services to contracted agencies.
This approach harks back to the role played by advertising agencies in the days before media service and PR service agencies appeared on the scene to take over many of these functions. But in today's world with its sophisticated media environment, how many people command the wide range of knowledge and skills needed to handle all of these tools? Do they have the know-how to keep up with dedicated specialists in media and marketing? This is the greatest challenge facing advertising agencies today.
Perhaps one of the alternative is for agencies to leave Taiwan and help migrating companies ease into the China market, or at least to look for areas where they can compete in China.
Although the choices are daunting, they also represent opportunities for Taiwan's advertising agencies to improve their make-up and operations; and agencies which do make it past this trying period will find themselves much stronger for the effort.
《資料來源：動腦雜誌359期/2006年3月》
