Outdoor advertising market to stay buoyant

Supply and demand: Lim foresees a continued growth in both the supply of DOOH advertising space and the demand for it.

PETALING JAYA: The outdoor advertising or out-of-home (OOH) market at large is expected to remain buoyant despite a shrinking advertising expenditure (adex) with the slowing economy as marketers take a cautious stance and adopt a wait-and-see attitude.

Media analysts noted that besides the country posting its worst economic growth rate since the global financial crisis a decade ago, how much the outbreak of the coronavirus (Covid-19) may dampen ad spend in the near term would depend on how fast the pandemic is contained.

Malaysia’s economy in the fourth quarter of 2019 grew by a mere 3.6%, the lowest level since the third quarter of 2009. In spite of headwinds, the OOH market is poised for growth in 2020. AIMs Research executive director Edgar Lim told StarBiz it expects adex for OOH (static and digital) to grow by 8% in 2020, following a 3% increase in 2018 and a 6% growth in 2019.

The growth factor, he said, was largely contributed from digital out-of-home advertising (DOOH), growing by 33% in 2018 and 42% in 2019.

“We foresee a continued growth in both the supply of DOOH advertising space and the demand for it, as more and more short-term tactical campaigns find themselves utilising the wide network of digital screens in Malaysia, ” he added.

DOOH to drive growth

He foresees DOOH to be the growth driver of the OOH market moving forward. Lim said: “Traditional OOH sites on the whole has plateaued in growth, registering a minor decrease in adex in 2018 and 2019.

“This means the sole growth of the industry comes from DOOH spending. As it stands in 2019, DOOH share of adex sits at 24% of the total OOH adex, 6% higher than the year before.

In its latest findings, AIMs said in 2019, the OOH and DOOH adex was higher at RM1.4bil compared with RM1.3bil in 2018. For static OOH, there was a steady growth in terms of OOH Adex based on monitored data across past five plus years. For digital OOH segment, digital screen spending increased by 42% to RM338mil in 2019 compared with RM238mil in 2018.

AIMs was set up to meet the perpetual need for a credible and comprehensive source of information on OOH advertising expenditure in Malaysia. OOH advertising information is gathered nationwide via the monitoring of outdoor sites, covering billboards, directional signage, gantries, giant gantries, building glass panel, monorail station domination, overhead bridges, digital screens etc.

Based on Dentsu Aegis Network’s Global Ad Spend Forecasts 2020, global OOH spends are projected to grow by 2.4%, the fastest growth projected among traditional media channels. Interestingly, the report put OOH media’s share of spending at 9.1% in Malaysia – which is higher than the global average of 5% to 6%.

Spectrum Outdoor Sdn Bhd managing director Henry Low said although total adex shrank from 2017 to 2019, OOH adex had managed to hold up during this period.

For 2020, he expect OOH adex to grow by 5% with Malaysia hosting the Apec meeting. Low, who is also the Outdoor Advertising Association of Malaysia (OAAM) president, said the growth would mainly come from the conversion of static billboard to DOOH, allowing multiple revenue yield. He also expects MRT lines to add more OOH sites.

“DOOH will continue to grow as it has been for the past three years at a double digit rate. More advertisers are shifting their outdoor marketing strategies to this format due to its vibrancy, flexibility and measurement capabilities.

“The evolution of OOH to DOOH is inevitable as digital era will continue to shape the business and communication world. DOOH allows interactive engagement, better measurement of traffic data and advance creative execution, “ Low noted.

Rapport managing director Hor Jian Tsin said based on the agency’s Magna forecast OOH ad revenue is expected to grow by 3% this year from 7% last year.However, he said given current market circumstances and knock-on effects of the Covid-19 outbreak across various sectors, at best the agency expect flat year-on-year spends for OOH in 2020.”While the medium will not be spared by the increasingly conservative nature of advertisers’ overall media budget, there is a high possibility that OOH is viewed as a safe haven within traditional media.

“This is thanks to the growth of DOOH inventory in recent years. OOH as a media channel remains the last relevant traditional media format, as Malaysian consumers have not changed their travel habits much in a macro sense, ” Hor said.

Rapport is the OOH agency of IPG Mediabrands.

Malaysian Digital Association (MDA) president Serm Teck Choon felt OOH is “sexy” again because of the emergence of DOOH. OOH was used to be a very traditional medium with the giant display that needs to be replaced any single time a new ad booking coming in, he said.

“With the availability of new display technology and new content management systems, DOOH started to be in the limelight when comes to new types of advertising options.

“DOOH is not just another electronic display solution for advertising. Today, it is also connected to programmatic media buying, which allows advertisers to buy the ads via digital booking platforms, with the audience profile targeting capability. This opens up lots of opportunities for advertisers to exploit and leverage, ” Serm said.

K. Sailendra, CEO and founder of Visual Retale, said there are some advertisers who may still prefer 100% share of voice through traditional outdoor advertising.

That point of view, he said certainly does have some merit however the arguments in favour of DOOH might be rapidly chipping away at it. Production, installation and dismantling can be relatively costly and as a result, change of content becomes less frequent and this could lead to creating blind spots, he said.

“DOOH changes this. Brands are pushing beyond boundaries and experimenting with endless creative possibilities. Given this flexibility, many smaller brands are now open to coming on board as campaign buys can be shorter, flexible and more affordable.

“There are plans to have programmatic buying in outdoor, and by definition this requires the automated audience planning, buying/selling and automated and seamless delivery of campaigns in screens. I don’t know if we are there yet. When this happens, there will be an even stronger push with digital marketing budgets legitimately flowing towards DOOH, ” Sailendra noted.

Star Media Group recently teamed up with Visual Retale to flash daily trending news headlines on gigantic high resolution and state-of-the-art digital outdoor boards at three locations in the Klang Valley.

This innovative offering covers important and breaking news from The Star’s key sections like Nation, Asean+, StarBiz and StarBizWeek, is a first in the country.

Moving Walls head (product – demand) Mehul Mandalia said as the media assets are converted to digital and connected to the Internet, a common theme has emerged: OOH is being seen as another screen – an extension to mobile and desktop display or video advertising.

“Advertising technology companies have developed OOH-specific planning and buying platforms and the assets are also being made available on digital advertising platforms. This has opened up a whole new stream of revenue where digital media budgets are being spent on outdoor advertising. Traditionally, outdoor advertising has been about developing that one killer creative that says it all and leaves an imprint on the audience. Digital screens and the ability to connect to data-triggers is changing this. We have seen more brands adopt the type of dynamic creative optimisation you see online on billboards across the country, ” he added.

As some of the industries embark on consolidation, will the OOH space follow suit? Low said it would either sooner or later.

“Foreign players have made their entry into Malaysian soil. They have acquired, invest but not in a significant manner. Only KL International Airport is being dominated for the time being, whereas the main OOH/DOOH sector is still very much controlled by local media owners.

“This industry will continue to head towards consolidation, like it or not. The rule of thumb is that 20% of the major players control 80% of the market share. Consolidation of this industry should be continued with a Malaysian agenda.

“Outdoor media is an important medium for Malaysia as the penetration rate for other main mediums is still low. With the steady growth factor that OOH has, local companies should come to work together for the benefit and mutual objective and maintain the industry as a national agenda, ” Low noted.

Sailendra felt the OOH ad space is currently fragmented, adding that there are more than 300 OOH media owners in the country and about 60 of them with some DOOH sites.

There would be some pressure to consolidate, he said, noting that how this progresses remains to be seen.

“The advent of foreign media owners in our market will certainly push towards this direction. However, I think they will be selective with their targets and would probably look to create streamlined media stories, with clear segmented audiences, ” he said.

Mehul said Malaysia is attracting interest from large foreign outdoor advertising providers because of the industry’s maturity. When it comes to the number of available prime digital billboard real estates, he said the country stands well above other South-East Asian countries.

“The brands and media agencies have also experienced running dynamic and audience-data driven campaigns, so media owners are aware that they can attract above-average spends for OOH, ” he said.

Lim expects consolidation to take place but at this juncture is not sure as to who will take the lead.

“A market-wide consolidation would be a fairly long journey, with almost 400 media owners in this space, we expect to see consolidation efforts stem from both foreign and local players. The presence and interest of robust foreign outdoor advertising companies in the Malaysian market could fuel the consolidation process, one way or another.”

Rapport’s Hor said in recent years, there has been market consolidation of local players, especially amongst the small to medium players, which most recently involved Unilink and CSSB.

“With regional players like VGI and Plan B now having a big footprint in Malaysia, there is an expectation by the industry to see further consolidation at a bigger level as these groups can leverage upon larger financial muscle and expertise.

“The success of these regional players will surely attract more foreign OOH companies to enter the market and is a space to watch over the coming year, ” he said.

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