PETALING JAYA: While the Covid-19 vaccination programme will pave the way for the local economy to expand, the advertising industry will not bounce back to pre-Covid 19 level fast enough unless measures are put in place to spur its growth.
Although businesses would soon be operating at full capacity, many advertisers had slashed their marketing budgets as they have used their advertising expenditure to shore up employee salaries and defray accumulated debts.
The Association of Accredited Advertising Agents (4As) president Andrew Lee told StarBiz: “The advertising and marketing industry needs short to medium-term temporary assistance from the government.
“This includes exemption from sales and service Tax (SST) and double deduction relief of advertising expenditure spent with Malaysian-owned companies exempted from claims submission, with extensions on qualifying criteria for a tax deduction.
”The double deduction relief of advertising expenditure will encourage advertisers to review their marketing budget and spend more with Malaysian-owned companies and in the process, galvanising the economic recovery of the country.”
Lee said 4As had earlier submitted a joint memorandum on behalf of the Malaysian advertising and marketing industry to the Finance Ministry before the Budget 2021 presentation, appealing for tax and non-tax-based temporary relief support for their members but had fallen on deaf ears.
He believes that over the long term, there are still opportunities to drive economic recovery. As a result of the movement restriction measures to curb the pandemic, he said advertisers have re-strategise on several fronts to adapt to changing consumer behaviour.
One such area is the shift to digital space, he noted. The recent movement control order (MCO) has witnessed a tremendous increase in digital traffic, digital media consumption and online transactions.
Lee said: “As the digital economy has been identified as a new development driver and e-commerce projected to contribute to Malaysia’s GDP, the industry stands ready to support the government in accelerating technology adoption by creating effective digital content and campaigns to lift consumer spending patterns to pre-Covid 19 levels and boost business and household confidence, as this will reinvigorate economic recovery.”
Datuk Johnny Mun, 4As senior adviser and a veteran in the ad industry, said while the vaccines have reached the country’s shores, the rate of which it is distributed to the general public is still something that needs to be grappled with.
He said that in the more developed countries like in Europe and the US, while the vaccine deliveries were all over the place, scepticism still prevails among some parties over the safety of the vaccines.
Vaccines aside, Mun said the government needs to do its part in ensuring a systematic opening of businesses in the country.
Many business establishments are still unsure if they can operate, he said, adding that the rules are too vague and would hamper progress.
“The ad industry is reliant on the business reopenings and relaxation of the restrictions currently imposed under the MCO.
“It’s cyclical in existence as when businesses are not opened and freedom of movement is restricted, where then is the business coming from? Where will businesses get funds to invest in advertising or any forms of communications?, ” he asked.
On the growth drivers for the ad and marketing industry this year, Mediabrands Malaysia CEO Bala Pomaleh said brands and businesses have begun to grasp the big picture in this new normal, and as a result, a few key growth areas have sprung to immediate attention.
While consumption as a whole has dropped, he said consumption via e-commerce has increased dramatically.
This marks a major shift in behavioural and spending patterns, which is unlikely to change with the lifting of movement restrictions, he said, noting that brands would continue to connect with audiences via their e-commerce journey.
“By placing greater effort towards identifying and targeting high value audiences, brands will be able to clearly define the purpose and role of a brand’s digital assets to better connect with individual consumers across multiple platforms.
”Finally, greater calls for data privacy globally and general data protection regulation compliance mean we will be seeing a lot of changes in the way brands use third-party cookies. This allows for behavioural profiling by tracking customers across sites in order to understand their interests and habits and to track customer journeys.
“It remains to be seen how brands will respond in time, but what is certain is that brands need to formulate a clear strategy to store, protect and transact across consumer identities, ” Bala added.
Besides technology being the growth driver in the ad industry, Entropia founder and senior partner Prashant Kumar cautions there could be stumbling blocks and hindrances in the industry.
“It will be at least another year before there will be convergence of physical crowds which are now absent like in cinema halls and night clubs. Large global events, which drove a lot of consumption and advertising investments, are not going to be there amid the pandemic. Clearly sectors affected by these happenings will remain subnormal.
“Also certain segments among the B40 (bottom 40) have been deeply affected by the pandemic and MCOs. Despite the government’s best efforts to help this sector, the impact will take a few years to normalise, ” he noted.
Malaysian Advertisers Association (MAA) vice-president Claudian Navin Stanislaus said while the immunisation might seem like springtime for the economy, the recovery for businesses may require much more time.
”There are sectors that will be quick to turn around and others that will be slower to recover, and even some that will go into a slump after an inflated boom caused by the pandemic.
“What is certain is there will be some businesses that will not be coming back from this – at least not in its current form.
”But it’s not all doom and gloom, as the impact could create a leaner marketplace of stronger players, along with a healthy entrepreneurial sector, driven by survival and need, ” he said.
”It’s always been true that post-devastation, economies tend to be bolstered by the strong and hungry, so certainly that’s something to look forward to. The question is how many of them will there be? And how driven will they be to push ahead or will they remain cautious?
”If this year is anything to gauge by, where the advertising sectors have been slowly getting back into gear, though perhaps more inclined towards digital and out-of-home, and more impeded by the restrictions that have been periodically enforced rather than how it was a year ago when budgets were near frozen, ” he said.
Navin, who is also the is also the head of communications and consumer marketing at Baba Products (M) Sdn Bhd, expects ad spend to grow this year.
“As a brand, BABA’s has seen a boom during this time, as did many dry grocery brands. However, this did come at a price as raw material prices took a hit for several factors, not least the impact of logistics restrictions. Our focus has and will remain to ensure fulfillment, ” he noted.