Prashant: The industry needs a stable and consistent government.
WITH the 15th General Election (GE15) around the corner, the advertising industry like other industries will also be feeling some “heat” from the election and post-election.
StarBiz recently met up with ad veterans and industry leaders to get their views on how GE15 will affect the industry.
M&C Saatchi Malaysia CEO and founding partner Datin Seri Sharifah Menyalara, dentsu Malaysia group CEO Tan Kien Eng and Entropia founder and senior partner Prashant Kumar also shared other relevant views on the industry moving into 2023.
Tan: The election would contribute to an increase in ad spend.StarBiz: With GE15 around the corner, how would it impact the local ad industry i.e. during and after the general election?Sharifah: During GE15, there will certainly be a short-term bonanza for media houses.
For example, in the last election in May 2018, political parties and government organisations spent RM671mil on ads in traditional media alone – about 13% of that year’s market value.
As for post-election, that entirely depends on the policies of the new government and whether they recognise the undoubted value of the creative and communications industry as a huge potential driver of revenue, jobs and investment in Malaysia’s future.
Tan: The election would contribute to an increase in ad spend as parties race to influence and garner voters.
Digital social platforms and news platforms would benefit the most as the population would look out for the latest news on GE15 across digital platforms.
This is partly attributed to the new segment of younger voters. Regardless of the outcome, advertisers would continue to spend for the year-end festivities and the start of the new year events.
If GE15 results in a majority lead government meaning a more stable government, there could be a more positive economic outlook, investment, and ad spending.
Prashant: The industry needs a stable and consistent government with a clear economic vision to create a strong investment climate. This is to ensure businesses would want to invest in brand building, new products and to scale up the ladder.
Investments entail risks and an uncertain political climate multiplies the risks significantly.How would the industry pan out in the event a majority government is formed? Would this be different if post-election, either a minority government or a hung Parliament comes into effect?
Tan: It is critical for the country to achieve a majority government to ensure smoother implementation of the economic recovery plan to boost investor confidence and fuel the economy as compared to a fragmented government which would result in further instability.
As observed, the political parties are unable to set aside their differences and work together for the betterment of the nation.
Time and money are ill spent on politicking instead of implementing a sustainable growth plan across all sectors, including the advertising and marketing industry.Prashant: The impact on the industry is expected to be at a macro-level. The sentiment around growth spending and brand-building could at best be called “low fever” in the last five years and this must change.
A majority government would have the stability and boldness to craft and commit to a long-term strategy that would fuel momentum in ad spending.
M&C Saatchi Malaysia CEO and founding partner Datin Seri Sharifah Menyalara HusseinSharifah: There’s no specific effect that is direct on the ad industry. However, if the economy sneezes, we catch a cold – as it is everywhere, the communications industry is a mirror of advertisers’ health, which in turn mirrors the economic and consumer wellness of the country.
Certainly, instability of a government leads to policy uncertainty and the knock-on effects of that. Most importantly, from our point of view the industry wants a government that recognises and incentivises our future growth. It’s long been proven that a thriving and innovative ad industry is a commercial shot in the arm for our clients.
What are the prospects for the industry for this year and next ?Prashant: The sentiment is slowly turning around as we emerge from Covid-19, which is great for certain sectors.
However, some of the longer-term bottlenecks remain such as sectoral focus and powerful ecosystem support, bold reset of education and research policy, thrust towards industry 4.0 play, and reallocation of non-working budgetary allocations.
Malaysia is a small country. We need focus, clarity, and single-minded conviction. We must do certain things way better than most others in the world. And the whole system, from government to industries to academia needs to focus there. But this needs a strong government with a visionary leader.
Sharifah: There is some light at the end of this Covid-19 tunnel with advertising expenditure (adex) reversing five-year decline in offline media and posting 22% growth in 2021 from 2020.
This year appears to be witnessing greater momentum with a year-to-date increase of 4% in offline and 12% in digital media. We hope to see further growth in the last quarter with GE15 and major events like the World Cup in November.
It is difficult to predict 2023. Trying to ride on the wave of optimism is the way to go as businesses grow, start-ups increase and Malaysia focuses on the gig economy which is part of Malaysia’s business plan.
For the industry, however, it will be challenging as the economy and political situation remains vulnerable. Talent and squeezed margins will be issues we have to still contend with amidst impending global recession.
The industry will be challenged but perhaps not in the way it was during Covid-19. We expect greater momentum and some level of brighter days ahead.
Tan: I hope for a peaceful GE15 and better stability as we move into 2023. Advertisers, the ad industry and media owners need to come together in support of a fair and healthy value exchange to create a sustainable eco-system for continuous economic growth and future employment.
At dentsu, we took the opportunity to upskill our people with dentsu continuous learning to ensure our people stay relevant to progress in their career and to assist our clients in navigating the new and unpredictable world.Your projections for the adex in 2022 and 2023? What would drive the industry this year and next ?Tan: For this year, the adex is expected to be between 6% and 8% and for 2023, it could be about 4.5%.
The remaining year could intensify with GE15, multiple year-end sales, World Cup and festivities creating an uplift of digital, outdoor media, eCommerce, an increase in viewership across platforms and on-ground activation.
There could also be a change of guards amongst corporate leadership and potentially a restructuring in government-linked company (GLC) and GLC-leadership change leading to activities in the area of corporate communication, PR, branding and marketing.
The upbeat momentum would flow into 2023 and we would see refinement around Web 3 with investment in ad technology and marketing technology driving a more customer-centric approach.
