TR EMERITUS

By Michael Liedtke from Associated Press After bogging down in the recession, Internet advertising is regaining the momentum that has made it the decade's most disruptive marketing machine. The signs of an online revival are emerging even while advertising in print and broadcasts remain in a slump that has triggered mass layoffs, pay cuts and other upheaval. Internet advertising was just about the only bright spot in the third-quarter reports of two major newspaper publishers, Gannett Co. and McClatchy Co. Meanwhile the companies still are dealing with steep declines in print ads — an imbalance most analysts predict will take years to address. The harsh reality is that much of the advertising in long-established media, particularly in the classified sections of newspapers, will never rebound to pre-recession levels, said Lauren Rich Fine, a longtime media analyst who is now a professor at Kent State University. That grim outlook contrasts with the fact that advertisers are increasingly allocating more of their budgets to the Web. That's where their customers are spending more of their free time. On top of that, Internet ad rates are less expensive, and the returns on online ad investments are easier to quantify. Even when they buy time in other media, advertisers are realizing they need to be promoting their wares on the Internet too. "You can draw a straight line from the time when people hear an ad on the radio or television to when they search for that company on the Internet," said David Karnstedt, chief executive of Efficient Frontier, which helps manage ad campaigns on search engines. These trends will give Internet advertising 19 percent, or nearly $87 billion, of the worldwide ad market in 2013, up from just 4 percent, or about $18 billion, in 2004, according to PricewaterhouseCoopers and Wilkofsky Gruen Associates. That would make the Internet the third-largest marketing medium. Television is expected to remain on top, with $168 billion, or 36 percent of the global ad market in 2013, up from 35 percent in 2004. Newspapers would still be No. 2, but their $92 billion in advertising revenue is projected to account for 20 percent of the global ad market, down from 28 percent in 2004. For now, though, some types of Internet advertising — real estate, travel and help-wanted, in particular — remain in the funk they fell into in the first half of the year, when U.S. ad revenue on the Web fell 5 percent. (That was still far better than the 12 percent to 29 percent declines suffered by U.S. newspapers, radio stations and television broadcasters.) David Hallerman, a senior analyst at eMarketer, thinks it's too early to conclude the entire Internet advertising market is on the upswing. "It's more like the patient had a 105-degree temperature and now it's down to 100 degrees," he said. EMarketer expects Internet ad sales in the U.S. to fall by nearly 3 percent in the second half of this year, slightly less than in the first half. The research firm expects a 6 percent increase next year followed by a 7 percent gain in 2011. The most compelling evidence for an online recovery is being made by Google Inc., whose search engine powers an online network that has grown from $411 million in worldwide ad revenue in 2002 to more than $22 billion annually now. The company's ad revenue rose 7 percent in the third quarter, the fastest pace so far this year, and Google's executives indicated they are gearing up for even more rapid growth in the months ahead. Google could be an anomaly because its specialty — selling ads tied to online search requests — tends to be the last thing cut from marketing budgets and the first thing to attract more money in the early stages of a recovery. The reason: Search requests have proven to be a highly effective way to identify consumers shopping for a specific product or service. And the ads typically cost advertisers only when the links are clicked on. For instance, a Google ad tied to a search request containing the word "shoes" currently costs about $6.80 per click, while an ad generated by a request with the term "car parts" costs just 48 cents per click. Buying ads in major newspapers or on TV can easily cost thousands of dollars with no assurance the investment will deliver customers. Besides the Internet's lower prices, the Web's tracking technologies make it easy to measure whether a search ad campaign is yielding adequate sales to justify the expense. If their online spending isn't paying off, advertisers typically can pull the plug more quickly than in print and broadcast, which often require financial commitments that last several months. The greater flexibility online makes it easier to gauge the mood of consumers by buying Internet search ads before ramping up spending in other areas, Fine said. "I think a lot of (advertisers) are experimenting right now, hoping they can stimulate a little more demand," she said. "Some of this could be wishful thinking." It might take longer to see an ad rebound at Yahoo Inc., which runs the Internet's second-most widely used search engine. Yahoo's forte is "display advertising" — online billboards and other more visual forms of marketing. Companies still seem reluctant to spend on those more elaborate campaigns, partly because they tend to be more expensive and not as well-aimed as search ads. The reticence is the main reason Yahoo reported its third-consecutive quarterly decline in ad sales Tuesday. Yahoo's ad revenue fell 12 percent after declining 13 percent in the first half of the year. Even so, Yahoo isn't being hit as badly as newspaper publishers; McClatchy's print advertising, for instance, plunged 32 percent in the third quarter. Its online ad sales, on the other hand, increased 3 percent. - AP  Read More →

By Harsh Raghuvir By definition of classical liberalism that much of the politically aware Singaporean youth pledge allegiance to, it seems ironic that we adopt a more conservative view of matters such as immigration. The current wave of immigration that Singapore is experiencing today can be explained by simple economics as more of a necessity of our burgeoning economic growth than anything else. Yet somehow the Singaporean society that I entered into in 1997 was much more different in its social fabric than an incoming immigrant in 2009 would experience. Perhaps I can draw best from the examples of my own Indian community and the stark shift in the dynamics of immigrants. The new age Indian immigration started its first large wave towards the mid to late 1980s and ended somewhere towards the late 90s. This was an age in Singapore where international schools for Indians neither existed nor were required. As a foreigner back then, my preference to join a neighbourhood primary school was obviously weighted to my non-citizenship. Nevertheless, I was admitted to a school nearby – and – having gone through 6 years of primary schooling as first a foreigner and consequently as a PR (Permanent Resident), I have never felt any different from my 2nd or 3rd generation Singaporean classmates. As a matter of fact, there was a point of time where I identified myself more with Singaporeans than my other immigrant friends. I still remember the civics and moral education textbooks of the late 90s and primary school racial harmony day concerts. I adopted the Singaporean Creole and even the Singaporean-Accented Tamil (For non-Tamil speakers, yes there is such a thing). As isolated and personal as this might sound, my primary school had dozens of immigrants from China and India who all had similar if not identical experiences and at the end of our PSLE exams, as I went on to what you may call a “Top School”, I retained friends who went on to Normal Streams and Vocational institutes to this very day. Such was the power of integration into Singapore society back then – without any artificial GRC planned activities or void-deck get-together barbeques. Now honestly my Singaporean friends, can you expect this from immigrants coming in today? Still not convinced you say. My second example draws upon personal relationships from Indian immigrants from the second wave, from say 2005 onwards. Along comes 36 year old Mr. Raj from New Delhi, a successful investment banker with his wife and 6 year old son. Raj Junior is enrolled in an expensive international school, tuition partially funded by Raj’s company. In a homogenous environment for the duration of Raj’s temporary life in Singapore, Junior has no necessity or the opportunity to mingle with Singaporeans his age. Orchard Road enclaves frequented during weekends and gated pool parties in the condominium unfortunately does not better the situation by a large margin. After 10 years and a million dollars in profits, goodbye Singapore and hello new nation where the Singapore dollar appreciates. As exaggerated as this might seem, unfortunately this is a growing reality in Singapore, not just for Indians. The rate at which immigrants come into Singapore is almost on par with Singapore’s birth rate and naturalization rate combined. Despite our government’s efforts of integration, this seems to have worked more in the past and today has become a contrived effort. The glimmer of hope still remains nonetheless. Immigrants have just a right to be in Singapore, isolated or not, as long as they pay taxes just like the rest of us. The problem surfaces today when immigrants and foreigners compete with locals in areas where Singapore citizenship should very clearly hold preference. I have heard of school balloting exercises in Primary Schools where this hierarchy is often ignored. Singapore also seems to be offering a high proportion of its university seats to foreigners. In countries such as the United States, international students’ population are capped at about 10% maximum, even when the college seats for Americans are saturated. In Singaporean colleges, international students make up to 20% of the seats. This does not seem to tie in with the central agenda of making Singaporeans more competitive locally and internationally. More students should be entering universities and this high cap – if a cap exists at all – serves not to the betterment of Singapore students. In countries such as Switzerland, the government has an obligation to allow every Swiss citizen into a government funded university. If Singapore prides itself on comparing itself to countries with high HDIs like Switzerland, Norway and Sweden, such issues have to be addressed.  Singapore is one of the few countries left in the world where a Singapore citizenship does not yield an overtly significant advantage for a citizen than a foreigner. In fact from an alternative viewpoint, it just means you have to serve 2 years in the army for men. I know countless cases of my friends who cancel their PR as they approach age 16 and fly back to their country of origin. Today most of them are a year or two ahead of me in university. Moreover I know of cases where families come to Singapore, falsely declaring a job and an income – they pay their hosts the 7% income tax and for production of false employment certificate. Are we really that desperate for such people?  One has to draw the line between competition to make Singaporeans more competitive and protecting the welfare of our citizens. For the record, Singaporeans are rated as one of the most competitive employees and students. A list of the most represented international students in top US and UK universities would yield Singaporeans in the first three countries. If I wanted to get the red passport for visa-free travel, I would have long gone to some Caribbean country and obtained it. I am a naturalized immigrant myself, expecting to go on to serve the army. I am definitely not anti-immigration. In fact I would love for more people like myself to come to Singapore, contribute to society, pay their dues and go on to serve the army (for men). The age old American argument of “this nation is founded on immigrants”, still very much stands today. Nevertheless, over the century, Singapore has forged an identity for itself and its citizens and the mass wave of immigrants today may find it difficult to amalgamate completely into the social framework that exists. The same immigrant who comes into Singapore cannot expect to go to, say France, and live in absolute isolation. Yet this gated lifestyle is completely possible in Singapore. Today we are building more and more international schools for students who, 10 years ago and even today, would have no problem studying in a Singaporean system (which by the way ranks in the very top as one of the world’s best education systems). Is this more of the immigrants’ fault or our system’s? I am neither being didactic nor offering a solution here. Singaporeans would have to choose whether they can compromise identity and welfare for economic growth. It might seem a rational gamble or perhaps not. This article merely paints a picture from the viewpoint of an immigrant who can arguably see better than a 2nd or 3rd generation Singaporean, the changes in immigration today and yesterday.   About the Author: Harsh Raghuvir is a graduating JC student in Singapore who is a naturalized Singapore citizen after living here for more than 12 years.  Read More →

OPINION On Christmas Day 1989, the Bank of Japan raised its benchmark interest rate by half a percentage point. Nine months later, the Nikkei stock market index had fallen by nearly half, and by 2001, it had shed 70 per cent of its value. Land prices followed suit 80 per cent between the end of 1989 and 2002. With inflated asset prices went Japan's inflated growth. Between 1992 and 2003, growth averaged less than 1 per cent a year. Japan experienced what became known as the Lost Decade. What went wrong? In the 1980s, when Japanese companies appeared destined to conquer the global economy, the country had become convinced that its miraculous breath-taking growth will never end. The result of such thinking - that economies always grow, property prices and stocks always rise - created an exuberance that proved irrational, not quite unlike what Singapore is going through right now. Japan's conviction in its own invincibility had caused a rise in asset prices that endangered the economy. Like Singapore, land is scare in Japan and land prices escalated through the 1980s. Based on these inflated values, Japanese banks were willing to lend to buyers larger and larger amounts. Some of the money borrowed was used to speculate on land and stocks. Property and share prices pushed each other to loftier and loftier, and less and less rational, heights. Japan unknowingly entered a bubble economy with disastrous results when it burst. Today, Japan's real estate is still more than 50 per cent below its peak value in 1991. Is Singapore entering the same property bubble as Japan in the 1980s? Since its recovery in 2006, Singapore's previously lackluster property market has been on a bull run saved for a minor blip in the first half of 2009. According to the latest figures, property prices have rebounded strongly in the third quarter with the private sector increasing by as much as 15 per cent. Though Singapore is out of a recession, the global economy has still not quite recovered. Even the government admits that growth is likely to be sluggish for the rest of the year till 2010. The official cautious mood is in stark contrast to the ebullience on the ground where the sellers, agents and media conspire to whip up a speculative frenzy which saw Singaporeans flocking back like sheep to new launches. Unlike Japan, the Singapore government has a huge stake in the property market through the HDB which builds more than 85 per cent of the island's public housing and hence it is in a unique position to influence the direction of the market through policies and price controls. The price of HDB resale flats hit a record high in June 2009, surpassing its previous peak in the fourth quarter of 1996. It is expected to rise by a further 2 to 3 per cent by the end of the year. As the prices of new flats are pegged to resale flats, they skyrocketed too. Under free market conditions, the prices would not have escalated at such a rapid rate. The government is partly responsible for the price inflation through its immigration and housing policies. In a bid to increase Singapore's population via immigration, the government has opened the floodgates to foreigners to study, work and live in Singapore. Singapore's population has reached the 5 million mark of which 36 per cent are foreigners, many of whom are encouraged to become Permanent Residents. PRs are permitted to purchase resale HDB flats. A recent ERA report revealed that 40 per cent of resale flat buyers are PRs. Needless to say, these newcomers are instrumental in causing the prices of resale flats to rise in the face of a limited supply. HDB has started to reduce the supply of new flats in 2000s. Under its Build-to-Order (BTO) scheme, buyers will have to select their flats first before they are built and ready to move in 3 to 4 years later. For those who cannot afford or are unwilling to wait that long, they will have no choice but to purchase a flat from the resale market. It is obvious that the demand for flats has far outstripped the supply. In less than 2 weeks since HDB announced the sale of balanced flats, there are already over 20,000 applications for some 2,100 flats. As the value of flats continue to climb, banks are lending buyers at greater and greater amounts. The tenure of the loan is now increased to 35 years. Is it possible for prices to continue rising forever? Common sense tells us that what goes up must come down. It is inconceivable that the prices of HDB flats will continue to grow at the same rate every year while the wages of the average worker remain stagnant. Unfortunately, most Singaporeans still do not recognize the danger. Partly influenced by the relentless government propaganda that rising prices help to generate wealth for them, they are under the false belief that property prices will always rise, like the Japanese in the 1980s. Home-owners try to capitalize on their asset values by selling them with exorbitant COVs in order to upgrade to a condominium. Few realize that they will have to take out a much larger bank loan in order to finance their new purchase. Young couples fresh out of school are willing to fork out 20 to 30 per cent of their household income to finance a HDB flat without realizing that they may not have sufficient savings for their retirement needs, not that they have much of a choice anyway. Singapore is entering a property bubble or is in fact in one. With an election looming ahead, the government is unlikely to take tough measures to cool the property market out of fear of incurring the wrath of those who bought them at high prices which means that prices are likely to continue rising way into 2010. Since public housing is a basic necessity in Singapore, buyers will be forced to take up higher loans to purchase a flat. They have to pray hard that prices will not drop or crash for the banks will ask them to make up the difference in the valuation should it materialize. Given Singapore's over-reliance on the export economy and foreigners, as well as its insipid domestic economy dominated by gigantic state-linked companies with no world-class brands, it is not a question of if but when the property bubble will burst. In the next one to five years, the Singapore economy will find it increasingly harder to compete heads-on with the emerging giants of China and India with their creative and talented entrepreneurs and well-run firms like Lenovo and Wipro. What will cause the bubble to burst? Find out more in Part 2 of the article.  Read More →