The closure of AdSociety is immediate, and will affect over 100 employees in Hong Kong, Australia, China, Japan, Korea, Singapore and Taiwan, PCCW said in a statement late this evening.
"The decision to cease operations has been made in view of the current difficult and uncertain market conditions, which may adversely affect the performance of AdSociety," according to PCCW.
PCCW owns a 79 percent stake in AdSociety, while the remainder is held by the latter's CEO Patrick Jonathan Wong.
"The decision is also in line with PCCW's previously announced strategy of streamlining the businesses of the group, and concentrating on its core business of integrated telecommunications and related broadband services," it added.
Industry watchers were expecting this outcome, but the closure came sooner than expected.
"Advertising is not PCCW's core business," according to one market observer, who expected Adsociety to go bust in four to five months.
"In addition, PCCW's wireless broadband did not make any significant headway in the wireless broadband market," he noted.
Established last June, the Hong Kong-based AdSociety aimed to provide advertising, marketing and sales services for PCCW-owned companies, including its broadband television service Network of the World (NOW).
To date, Adsociety has over 250 customers, most of them traditional advertisers, according to the PCCW statement.
Just last month, AdSociety received a full advertising agency licence in China. The licence would allow AdSociety to target the mainland's offline potential (including outdoor, wireless, radio and print advertising), and reduce its reliance on online advertising.
A once-thriving sector, the online advertising industry has been hit by the dotcom fallout since last April.
In fact, market researcher IDC Asia Pacific has lowered its expectations for the region's online advertising market (excluding Japan) in 2004 by as much as 39 percent, as advertising spending by Internet companies dwindle.
The research firm predicted that regional online advertising sales would reach US$702 million in 2004, compared with its projection of US$1.15 billion last May.
Last month, PCCW, Hong Kong's dominant telecoms carrier, reported better-than-expected first-half profits of HK$935 million (US$120 million), topping market forecasts on the strength of its core telecoms operations.
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