PETALING JAYA: The outlook of the advertising industry for the second half of the year looks challenging as in the first half.
Much of the advertising expenditure (adex) would be dictated by the state of the economy and consumer sentiment.
However, not all is doom and gloom in the ad and media space as advertisers and agencies are positive that some of the sectors would still shine in terms of ad spend in spite of the external headwinds.
Many foresee digital adex to rise while the traditional platforms may experience some bumps but its relevancy and quality, especially for the print segment, would remain as the hallmark that would attract advertisers and consumers to this channel.
Bala: Whether consumer optimism translates into spending remains uncertain and would impact adex overall. We are forecasting flat to minimum growth in adex this year.
IPG Mediabrands Malaysia CEO Bala Pomaleh said typically, spends in the second half of the year tend to be higher as marketers are more comfortable releasing their budgets.
However, he expected 2019 shaping up in a more volatile way due to several major macro and microeconomic factors, all of which may affect spends.
The US-China trade war, a possible war in the Middle East and increasing political tension across other countries are contributing to adverse effects globally, he noted.
“Our local economic and political climate has also yet to stabilise. Issues on viewability, ad fraud and brand safety prevail as key concerns for marketeers, lending to cautiousness in digital media investments.
“On a positive note, Malaysia’s Consumer Confidence Index scored 115 points in the first quarter of this, suggesting optimism, with Malaysia ranked 6th in a list of 64 monitored countries.
“Whether consumer optimism translates into spending remains uncertain and would impact adex overall. We are forecasting flat to minimum growth in adex this year,” he told StarBiz.
Bala said digital media would continue to fuel adex spends in the coming years and selected out-of-home (OOH) formats, especially digital OOH, would continue to grow from a media investment standpoint.
He said the agency also expected over-the-top content providers that distributed streaming media like Viu and iflix would broaden opportunities for brands to reach out to consumers.
Media owners, Bala said, are highly encouraged to think about innovating and putting more “skin” in the game to protect their turf. Focusing on exposure metrics like viewership, readership and listenership alone would soon not be enough as demands of clients increase.
Vogiatzakis: We need to see media in terms of relevancy and context that enable us to meaningfully connect and tell our story to customers.
Clients wanted marketing results and partners who could support business outcomes, and those who fulfilled these needs would have an advantage, he stressed.
Digital and OOH (including cinema) seemed to be the only growing media in 2019, he said, adding that traditional media spends are dropping but expected to stabilise over time.
“We believe each medium will still have its role in the ecosystem but a change of mindset is required from the publishers. Print, for example, will continue to play an important role in terms of content and will remain critical for credibility as speculation and fake news abound in the digital space.
“There is great opportunity for the local print media industry to build credibility and evolve into more opinion-based reporting – akin to The Economist, The Atlantic and The Guardian, rather than news updates. This is an area where digital news portals can deliver and reach more efficiently than traditional print,” Bala noted.
Maxis Bhd head of brand and marketing Tai Kam Leong felt that adex for the second half of the year would not significantly differ from the first half and would be flat.
However, if there is a difference where traditional adex has found difficult to size accurately, it is in the momentum of digital investments for marketing that showed little signs of slowing, he said.
“As consumers become increasingly savvy and demanding for personal and relevant experiences, the primary beneficiaries of that behaviour would be social media, influencer marketing, digital video and other digital advertising avenues,” he added.
Tai noted that consumer confidence would be the biggest single factor of adex growth as it affected spending, consumer outlook and the marketer’s optimism at large.
Hasnain: Our forecast shows that digital will be the leading channel, taking almost a third of total adspend and surpassing print for the first time.
On an organisational level, it is likely that better accountability and attribution to business success may influence adex decisions, he said.
“Media owners need to play a pro-active and collaborative role in this, and not rely on one-size-fits-all metrics,” he added.
On the print media, for example, Tai said that in an age where fake news is pervasive, print media has legacy equities in authoritativeness and credibility which could be turned into a differentiated and powerful advantage.
“Print is still seen as a source of truth and influence and distributed via digital means such as podcasts, social posts, videos, apps and more. So it is still important,” he noted.
Havas Media Malaysia CEO Andreas Vogiatzakis, who is expecting a flattish adex for the year, said the trend on digital ad spend would continue but foresee the print and other traditional platforms strengthening on relevancy by increasing their meaningful connections with customers
“If we truly put consumers first, then we need to understand their media journey and consumption, understand the relevancy of the media platforms in their lives, and employ strategically and tactically the ones that enables us to connect better in meaningful ways with them.
“We cannot see media in isolation. We need to see them in terms of relevancy and context that enable us to meaningfully connect and tell our story to customers. This will be the winning recipe in the current tough economic environment,” Vogiatzakis noted.
Based on Nielsen’s adex figures for January-May 2019 (excluding pay-TV, outdoor and digital media), total ad spend for the first five months of this year declined by 13.8% to RM2.075bil compared with RM2.409bil in the same period last year.
On month-on-month basis from January to May, the month of May recorded the highest ad spend as advertisers took the opportunity to boost advertising activity for Ramadan and Hari Raya Aidilfitri.
Commenting on the adex growth, Nielsen Malaysia head of media Jon-Paul Best said: “If we look at like-for-like spend among free-to-air TV, print, radio, cinema and in-store, it will be a challenge for adspend to grow in 2019.
“One of the main reasons for this is that 2018 was an extraordinary year, given that we had the FIFA World Cup, the 14th general election and the ‘tax holiday’, all of which had a significant impact on adspend last year.
“Looking at the first five months of this year versus 2018, adspend is down by 14%, so we can already see a significant shortfall,” he added.
CIMB Group chief marketing officer Mohamed Adam Wee Abdullah opined that the second-half adex trends would differ according to sectors.
For example, retail and travel would likely plan for an increase in adex in the second half due to annual recurring seasonal opportunities related to consumer spending patterns.
“Brands operating in these sectors will typically compete harder for share of wallet, based on these seasonality. Given the diverse nature of the banking business, adex tends to trend more steadily throughout the year with activities that are always on.
“However, it is also typical to see an increased level of marketing activities towards the second half in our consumer banking business. In general, adex for the banking sector has been trending down over the years as banks invest in technologies powering its own platforms to reach and engage its customers more cost effectively in a more secured manner,” he said.
He added that new sectors or categories opening up would also trigger topical spikes in spending. However, he said the proliferation of media would dilute the share of adex for media owners.
To retain this, he said media owners would need to constantly innovate and keep the platforms exciting as adex are fluid and would follow where the audiences are.
Amplifi Malaysia managing director Hasnain Babrawala expected about 3% contraction in adex growth this year.
He said although adspend showed a negative growth, it is not necessarily an indication that total marketing budgets are shrinking.
He said the agency saw increasing investments in areas like martech, point of sale advertising, data management platforms, customer data platforms, CRMs and so on, but these are not measured via any single source or reliable third-party research organisation.
“Our forecast shows that digital will be the leading channel, taking almost a third of total adspend and surpassing print for the first time, and we’re expecting this trend to continue into 2020.
“With Malaysia’s Internet penetration rate hitting 80%, naturally media consumption shifts from traditional mediums like print to digital channels. Within digital, mobile is the dominant platform and is forecast to capture close to 80% share of total digital spend.
“TV has shown a lot of resilience and top TV channels are slowly getting their content curation strategy right, which gives viewers fresh appealing content swiftly. We’re also bullish on programmatic – investment into programmatic is showing no sign of slowing down,” Hasnain said. Amplifi is Dentsu Aegis Network’s media investment arm.
Holding a bullish view, Unilever Malaysia channel communication manager Javed Jafri said as the post-election euphoria should be over by the second half, he expected advertisers would start spending judiciously to attract consumers.
Adex growth, he said, would come from sectors like finance, fast-moving consumer goods, new technology products, apparels and household products. Even housing and household products would also see witness a positive trend in the adex space.
However, Javed felt that there would be a few other sectors that may continue to experience stress like pharmaceutical, office and business equipment. Data companies, he said, in the likes of Iflix, and Netflix’s heavy investments in digital-out-of-home would drive adex growth.