Adex seen flat ahead as advertisers cautious until GST implementation

Khoo: ‘In November and December, things should pick up a little bit.’

PETALING JAYA: Malaysian advertising expenditure (adex) is expected to remain flat over the next few months, as advertisers are expected to remain cautious leading up to the implementation of the goods and services tax (GST) next year.

Malaysian Advertisers Association special adviser Khoo Kar Khoon said he did not expect a big jump in ad spend in the next few months.

“With the GST next year, we doubt many companies will be launching new products or be too adventurous,” he told StarBiz.

“Until after the GST has been implemented, adex could be quite flat,” Khoo said.

Year-to-date, October adex for the country (inclusive of pay-TV) grew 7.8% to RM11.63bil from RM10.78bil in the previous corresponding period, according to Nielsen Malaysia.

Adex growth was led by cinema, in-store media and pay-TV, which rose 25.8%, 15% and 13.6%, respectively. Ad spend for newspapers and free-to-air television grew 4.3% and 5.1%, respectively.

The product/service categories with the highest ad spend in the first half of the year were local government institutions, women’s facial care products, haircare products, mobile line services and dental care products.

The top-three advertisers were Unilever, Nestle and Colgate-Palmolive.

According to Nielsen, adex slipped 3.9% to RM1.22bil from RM1.27bil in the previous corresponding period.

Khoo said this was within expectations.

“In the months of September and October, it was post-Raya, so things would have been a bit quiet. In November and December, things should pick up a little bit.”

A media analyst said he expected adex in December to be boosted by various year-end sales.

AmResearch in its report, meanwhile, noted that adex in the second quarter was affected by the MH17 tragedy, adding that corporate and Government agencies had toned down the Hari Raya and National Day celebrations as a sign of respect.

AllianceDBS Research in a recent report also said it expected adex to remain soft until at least the first half of next year.

“We expect softer adex in the next two quarters, as consumer sentiment would be dampened further by the subsidy rationalisation measures, Bank Negara’s credit tightening and the introduction of the GST by April next year.”