Media owners’ advertising revenues seen to surge

Mediabrands Malaysia chief investment officer Fan Chen Yip said digital advertising is clearly the dominant media, projected at 63% of total advertising spends in 2022, and driven mainly by social media advertising.

PETALING JAYA: Media owners’ advertising revenues in Malaysia are expected to surge by 14% this year to reach RM6.1bil, according to Magna global advertising forecast for 2022.

Mediabrands Malaysia chief investment officer Fan Chen Yip said digital advertising is clearly the dominant media, projected at 63% of total advertising spends in 2022, and driven mainly by social media advertising.

“This will continue to grow in the coming years and is projected to represent 73% of total advertiser budgets by 2026. In the linear advertising formats, it is very heartening to see that cinema is coming back in a big way, with an expected colossal growth of 330% for the year.

“Out-of-home (OOH) has similarly rebounded, spurred by the on-the-move culture of Malaysians, with a projected 13% growth. We are very optimistic about the OOH scene that has largely taken off due to new technological innovations within digital out-of-home.

“Programmatic and addressable technologies and audience targeting in general, remain the growth engine of many digital formats,” he said.

Hence the recent announcement of the availability of addressable TV advertising by Astro is equally exciting, he added.

Fan said the digital-style targeting on TV is a first in the South-East Asian region and leverages Astro’s first-party data, providing a more impactful advertising experience for consumers.

While still early days, he expects this innovation to help TV maintain its position as the mainstay amongst linear TV and may possibly stem the decline of TV advertising as other TV operators catch on to this addressable technology, he noted.

Magna is the global media investment and intelligence agency within the IPG Mediabrands network, which is the media and marketing solutions division of New York listed Interpublic Group. Mediabrands Malaysia is part of the Interpublic Group.

Meanwhile, Magna said the agency anticipates the domestic economy to grow by 5.6% this year on a real gross domestic product (GDP) basis, following 2021’s 3.1% growth.

While this is lower than prior expectations, it said brands would still spend, especially on digital advertising formats.

“With 84% of the population now fully vaccinated, consumer behavior is returning to normal. In this environment, linear advertising revenues are expected to increase by 6% to RM2.3bil this year.

“Linear budgets remain at just 68% of their pre-Covid-19 levels. Because linear ad spending will erode from here as consumers continue to shift to digital media formats, linear advertising revenues will never again approach their pre-pandemic highs.

“TV spending, which increased by 1%, is now 92% of their pre-Covid-19 total,” Magna noted.

An increase in consumer behavior means that OOH spending would increase this year by 13% and would continue to grow by 15% in 2023.

Digital advertising spending, on the other hand, it said would grow by 18% this year to reach 63% of total budgets.

Digital advertising spending would be led by social media, which would increase by 25% this year and represents 47% of total digital budgets.

By format, it said spending would be led by mobile (24% growth), display (17%), and search (14%).

“Malaysia reopened its borders to all international visitors starting April 1. This will provide a boost to the tourism, airlines, and hotel industries. In addition, Malaysian general elections, while not constitutionally required until mid-2023, have been rumored (a snap election) throughout the past few months.

“If there is a snap election that could also provide some incremental TV ad spending revenues.

“In 2023, ad spending will grow by 6% to reach RM6.5bil. GDP will continue to grow by 5%, and linear budgets will begin to decay in 2023 and beyond,” it added.

On the global advertising front, Vincent Letang, executive vice-president of Global Market Research at Magna said most of the headwinds facing the advertising market this year were expected.

Economic landing following a red hot 2021, he said has continued supply issues generating inflation, and mounting privacy restrictions slowing down the growth of digital ad formats.

On top of that, he said the war In Ukraine is exacerbating inflation and economic uncertainty.

Nevertheless, Magna believes full-year advertising revenues would grow again in 2022, helped by a strong start to the year, on top of organic and cyclical drivers.

“Organic growth factors, strong cyclical drivers, and the strength of emerging or recovering industry verticals will generate enough marketing demand to offset headwinds and keep the advertising economy growing in full-year 2022, ” Letang added.

Organic growth factors refer to continued and broad-based e-commerce spending and digital marketing adoption.

Strong cyclical drivers relate to the record political spending in the US Winter Olympics and FIFA World Cup, while recovering industry verticals refers to travel, entertainment, betting and technology businesses.

Commenting on the Asia-Pacific market, Leigh Terry, CEO Mediabrands Asia-Pacific (Apac) said while some markets continued to bear the effect of mixed Covid-19 impacts through-out 2021, the region’s advertising revenues have continued to rise by 35% above pre-pandemic spending levels.

“Not surprisingly this has been largely driven by digital advertising, as digital consumption is even further integrated into consumer day-to-day lives.

“Apac consumption is already more significantly skewed towards eCommerce than it is in western markets.

“Giants like Alibaba,, Rakuten, and Pinduoduo, have grown to the point where shopping online is just as large as shopping in person, versus eCommerce sales at an average market share of 20% of total retail sales in the West,” he added.

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