Changing ecosystem of the advertising industry

More efforts: Bala says investments will not be effective without rigour.

PETALING JAYA: As uncertainties take a toll on businesses, the advertising industry is not spared from this precariousness.

The current development in the country’s political arena, geo-political tensions worldwide, slower economic growth, spurred among others by the resurgence of the Covid-19 wave, have impacted many industries.

Malaysia’s economy saw its gross domestic product (GDP) contraction in the second quarter at 17.1% year-on-year, which was the worst since the Asian Financial Crisis in 1997.

The World Bank has forecast that the economy would take a bigger hit from the ongoing Covid-19 crisis with Malaysia’s real GDP expected to contract by 4.9% instead of 3.1% for the year.

The forecast revision reflects the heightened uncertainty of global economic recovery and elevated unemployment rate.

Expressing his views on the challenges and what needs to be done to address some of these hurdles, Mediabrands Malaysia CEO Bala Pomaleh told StarBiz that more than ever, marketers, agencies and media owners need to think of investments from a results perspective.

Go digital: Lim says the industry needs digital skill sets, speed, and agility at every level.Go digital: Lim says the industry needs digital skill sets, speed, and agility at every level.

Activities need to drive results, he said, adding that ads need to be better, more creative and innovative so they cut through the clutter, and media placements should do the same.

Gone are the days where media planners would just consider buying Gross Rating Points (GRP) at the cheapest price for a broad audience, he noted.

GRP measures the impact of a campaign. It is a common and standard measure of media delivery in advertising. One GRP, is the equivalent of reaching 1% of the total potential audience with one advertising message.

Bala said: “Now we need to find the high value audiences and connect with them in an engaging manner. The ecosystem is changing, and it is extremely hard work for everyone within.

“If we don’t put in the rigour, the investments will not be effective. It is the only way to have meaningful campaigns. That is why disciplines like analytics are so important as it allows us to better understand the consumer and how best to connect with them.”

Dentsu Malaysia country CEO Nicky Lim said the biggest challenge for everyone without exception is to ensure security and stability at a time when the economy is experiencing the biggest contraction with long-term structural implications.

“This means being profoundly consumer-driven to meet marketplace demand –delivering on the e-commerce boom, people-based marketing at scale, and hyper-localisation.

“We need digital skill sets, speed, and agility at every level. With the accelerated pivot to everything digital, we also have to remember it’s not just about understanding statistical consumer data but empathising with real human states and emotions, ” he added.

On talent shortage in the ad space, M&C Saatchi Malaysia CEO and founder Datin Seri Sharifah Menyalara Hussein said the industry was simply not attractive or proactive enough to attract the right talents, noting that it was losing brilliant young graduates to industries that offer higher salaries and attractive career path.

Proactive stance: Sharifah says strong  positioning as a dynamic, progressive and highly-creative industry will attract talents.Proactive stance: Sharifah says strong positioning as a dynamic, progressive and highly-creative industry will attract talents.

“The industry needs to build a strong positioning as a dynamic, progressive and highly creative one to attract a varied group of talents.

“This means looking outside the box and current pool and finding talents that offer a varied perspective, mathematicians, historians, scientists and economists and this will make industry more vibrant and create the change we need to make.

“Not enough effort is being made at the recruitment level, for example, to communicate to top universities on what the ad industry is about and the potential it holds. We need to have and attract different types of people that will make the industry appear not only diverse but interesting and a compelling platform to grow one’s career, ” she said.

This diversity and strength of talent, Sharifah said, would shape the industry’s raison d’etre and overall purpose to clients, which would in turn make the industry a far stronger force to be reckoned with.

As the industry expands in size and scope, Bala said getting the right talent becomes an increasingly monumental task. It is simply impossible for higher institutions of learning to cater for the various specialisations and skills that the industry requires today.

While they provide a good foundation, he noted it lies upon the agencies and industry bodies to help shape and mould talents through their own learning and development initiatives.

“In Mediabrands, apart from encouraging all employees to be digitally certified, we provide access to a global library of over 4,000 training modules.

“Learning plans are tailored across different needs, and whilst some training are mandatory, others are optional depending on the areas each individual employee sees relevant for their own upskilling.

“Despite best efforts, talents still leave the industry for various reasons including wanting to try something different or to become an entrepreneur, ” Bala said.

Bala said the other reality is that not everyone is suited to be in advertising, adding that the high-pressured environment is hard work and can take its toll.

On the flip side, the rewards are gratifying and one has to have a certain type of personality to succeed in advertising.

Commenting on the prospect of the ad industry for this year and next, Lim said the competition for ad dollars would be intense with client-agency models shifting towards shared performance-based goals.

This may include not just short term sales or conversion goals but longer term digital transformation outcomes such as setup on online marketplaces, CRM optimisation, customised engagement and loyalty programmes, etc, he added.

“Agencies well-positioned for sustainable growth are the ones who have already embraced trusted partnership models, serving as both consultants and executioners of impactful business plans, ” he pointed out.

Bala noted that 2020 is indeed an unprecedented year for all industries and the ad industry is no exception.

The ad industry is forecast to contract by minus 18% in 2020 as all mediums are impacted by this downturn, the only exception being digital where the agency is projecting an 8% growth overall across all digital platforms.

“As we move into the final recovery movement control order (MCO) phase, we are seeing some advertising spends return to above-the line, though it is not at the same pre-Covid level.

“Most activities are to drive sales and consumption as advertisers try to close the unavoidable sales-revenue gaps from the height of the MCO, ” Bala said.

Marketers, he added, are still cautious in terms of spends and the investment amounts are kept to a conservative level, where decisions on campaigns are made on a month-on-month basis.

“We remain cautiously optimistic that the ad industry will be rejuvenated with a growth of 11% in 2021 if the pandemic remains under control, ” he said.

In terms of ad spend, Sharifah hoped 2021 would be more favourable but it really depends on a few factors including the political scenario and the state of the economy.

“The pandemic has forced a re-think. Consumer behaviour has shifted, advertisers have also adapted by following consumers which means prioritising digital advertising, ” she said.

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