COME next year, smartphones are expected to play a significant role in terms of its contribution to the country’s digital and mobile advertising expenditure (adex) amid more campaigns designed for mobile usage and higher penetration of smartphones in the market.
“I think digital platform is increasingly playing a bigger role, even among its own various platforms. Time spend on the bigger screen now is higher but within a year or so, I reckoned smartphones will overtake laptops.
“Most of our campaigns formats are now designed to be mobile friendly as well,” Leo Burnett Malaysia chief executive officer Tan Kien Eng tells StarBizWeek in an interview.
The trend is also supported by higher smartphone penetration as telecommunication companies in the country have invested substantially to ramp up their 4G network.
For instance, Maxis smart-phone penetration stood at 65% in the second quarter, while Digi’s smartphone penetration reached nearly 50% last year.
The increase in smartphone penetration will also drive demand for data, apps and services such as mobile TV, location-based services and social media.
Tan also admits that a huge portion of adex in Malaysia that is traditionally controlled by telecommunication companies, will be shifting over to mobile technology devices manufacturers.
“For many successful campaigns, the game changer for advertising industry now is to be out there through various virtual channels, besides having strong fundamentals in public relations and content creation,” he says.
Virtual channels such as FaceBook, Twitter, mobile apps for smartphone and tablet, news portal websites, Youtube, amongst others, formed an integral component in adex planning.
Virtual ads campaigns also could be in many forms including banners, buttons and videos. (interactive and static).
Although the overall value of digital adex has yet to be known, mainly due to the complexity of various digital platforms especially in the virtual world, it is surely gaining its grounds due to the “dilution” of the conventional adex.
Advertisers spent RM14.06bil last year on domestic media space or airtime (excluding Internet and outdoor media) according to Nielsen, reflecting a growth in the tune of 5% last year, against the country gross domestic products growth of 6%.
For the first half of this year, adex stood at RM6.84bil, compared with RM6.82bil in the previous corresponding period. July adex, meanwhile, slipped to RM1.17bil from RM1.32bil previously.
In terms of cost, Carat Media chief executive officer Bala Pomaleh says, generally, the entry cost for digital advertising is much lower since the client can decide the magnitude of the campaign in terms of targeted audience profiles or geographic location. This helps avoid wastage unlike when using conventional media such as TV airtime or newspaper.
Nevertheless, in terms of cost-per-thousand people, digital is more expensive,” he says,
Bala predicts that in the absence of digital adex even out-of-home adex value could be the contributor of the flat adex growth recently.
But, Bala is not denying the fact that the dampened consumer sentiment prior to the implementation of the goods and services tax in April and now the falling of ringgit also play their roles in the lacklustre adex so far this year.
“Even at 10% (local currency depreciation), it is a huge amount for companies that imports raw materials.
“Adex-to-profit ratio range for most clients is between 5% and 10%. But it is usually 5%,” says Bala.
Checks reveals that the US dollar has strengthened against the ringgit more than 21% year-to-date. Bala cites that in mature economy such as Hong Kong, digital adex commands about 15% of the total annual amount.
“I think we will able to track our country’s thriving digital adex by next year or so. I heard that plans are in the pipelines,” he says.
On outlook for pitches for the rest of the year, Tan says at this point of time under the current environment in Malaysia, it is similar to crystal ball gazing.
“But, when consumer and consumption become stronger, the outlook for adex and pitches should be stronger.
“Interestingly, in the first quarter of this year, luxury automotive brands such as Mercedes-Benz, BMW and Audi have shown their strength in their own market as their adex is pretty good compared with their more economical counterparts in the sector which staged a declined trend,” he says.
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