Festivities to help push up ad spend despite slowing economy
ALTHOUGH there are some bright spots in the advertising expenditure (adex) outlook for this year, the remaining second half of 2016 will not be spared with challenges impacting its growth underpinned by a slowing economy, declining consumer sentiment and geo-political factors.
Dentsu Aegis Network Malaysia chief executive officer Nicky Lim says year-to-date spending on traditional media advertising has dropped by 9% compared to the same period (January-April) last year but foresee a slightly better second half of the year.
He attributes this to advertisers seasonally spending more, partly due to the various festivities such as Hari Raya Aidilfitri, Deepavali and Christmas.
“On average only 30% of the national adex is spent up to the month of April. If historical averages hold true, traditional media adex is projected to only decline by 3.5% in 2016 compared to last year.
“However, this projected loss will be moderated by continuing growth in projected ad spending in out-of-home (OOH) and digital media. OOH adex is projected to grow by 3.9% in 2016 and digital adex is projected to grow at 10.9%. Therefore, in total, we forecast a slight 0.7% decrease in ad spend for 2016 compared to last year,’’ Lim tells StarBizWeek in an e-mail query.
He says although the growth of digital media will continue to outpace that of traditional media, going forward, the latter has not gone “out of style” and is still very relevant today, considering the fact that Malaysian advertisers generally allocates about 70% of their advertising budget for traditional media.
“This lion’s share may continue to diminish but it will take many more years before it reaches the level where its relevance is considered moot. Right now, I don’t think we have reached the critical point where all demographics have moved towards digital media as a source of all possible content. Print media, for instance, still commands a high following across the spectrum of readers, and logically, advertising support follows the mass audience.”
Any media can be effective if properly used to engage with the consumers, he notes.
“The young are indexing high on digital media because they were born in the digital wave. The older generation, in contrast, are more familiar with the traditional platforms. Both are effective platforms for advertisers – it’s just a matter of who are you addressing it to and how,’’ Lim explains.
Based on Nielsen’s latest figures, total ad spend for the first four months (January-April 2016) stood at RM2.26bil compared with RM2.43bil in the same period last year.
On a month-on-month basis, total ad spend by medium for April 2016 was about RM571mil against RM604mil in the same month of last year.
Lim: ‘If historical averages hold true, traditional media adex is projected to only decline by 3.5% in 2016 compared to last year.’
In terms of ad spend by medium, cinema grew the largest by 47.1% year-to-date in April 2016 (January-April), followed by in-store media 12.9% and radio 4.8% during the same period.i
For ad spend share, newspapers led the pack with 53.4% share in the first four months (January-April), followed by free-to-air television with a share of 38.7% in the same period.
Sharing similar views with Lim, Association of Accredited Advertising Agents of Malaysia (4As) president Datuk Johnny Mun says despite the rapid growth in the digital space, he believes traditional media still has a place and function to provide for the hardcore users.
“While the digital arena is making waves, there may be a huge amount of ‘interruptions’ that users may not want. This will mean that the users will still prefer hard copies of their favourite reading materials. There may be a slight drop in subscription but there will be a time when traditional media will find and settle at a real level. In short, it’s still relevant,’’ he stresses.
Meanwhile, RAM Ratings has maintained a “stable” outlook on the Malaysian media sector this year, underscored by its sustained importance to advertisers and buoyed by the growth of Internet adex as well as the widening array of online advertising platforms, albeit with a marginal drop in expected adex.
According to RAM’s estimates, overall real adex (TV and newspaper) contracted 7% year-on-year in 2015 due to advertisers holding back on adex amid muted consumer sentiment after the implementation of the goods and services tax (GST) and weaker earnings against the decelerating economy.
The contraction in adex was largely driven by a decline in the newspaper and free-to-air TV segments. Moving forward, adex is expected to continue facing challenges this year, given the persistent weakness in consumer sentiment, the rating agency says.
Nevertheless, it says some upside may stem from major sporting events in the second half of the year, such as UEFA Euro 2016 and the Rio 2016 Olympics.
“Despite factoring in some recovery, we expect real adex to remain pressured, with a 3%-5% decline,” explains RAM’s head of consumer and industrial ratings Kevin Lim.
Media Specialists Association (MSA) president Andreas Vogiatzakis says traditionally, ad spend will grow in the second half of the year but a weak economy and continued low consumer and business sentiment will hamper adex growth in the second half.
Besides economic slowdown and low consumer sentiment, Vogiatzakis says brain drain and lack of talent as well as lack of digital talents to cope with the industry’s needs are some of the challenges in the ad and media industry this year.
Malaysian Advertisers Association (MAA) vice-president Chan May Ling says as the consumer market appears to be softer, revenue realignments will most likely be re-looked among key brands and adex may be one of the things that will be impacted.
Commenting on some of the challenges, she notes: “We have to start moving away from liner ad/media thinking and start looking at campaigns with more modularity. Business modules and talents need to adapt towards an agile mindset to cope with the changing consumer consumption.”
Mun says the non-availability of funds, which could be due to financial institutions tightening their lending, leaves consumers with little disposable income. This could impact sales and as a result, marketers will have to cut down on their ad spend, he says.
The ability to measure media performance accurately and consistently is one the challenges facing the ad and media industry. “Not having one reliable metric of tracking and measuring observations across media is currently what’s putting the media planners in a tailspin,’’ he adds.
Media agencies and industry players currently wants a single TV audience measurement system instead of the current two systems, as the move to have a single methodology will eliminate time wastage, confusion and promote innovative media solutions.
The present system uses two methodologies from two research companies – Nielsen and UK-based Kantar Media – in evaluating TV audience.
*Source from The Star – 4th June 2016
