4As senior adviser and Oxygen Advertising managing director Datuk Johnny Mun warns that the global headwinds could throw a spanner in the works for the ad industry.
PETALING JAYA: Some trends are fast emerging in the advertising industry at a time when the industry, like other industries, is being hammered by global headwinds.
Agency leaders and media analysts said some of these trends, if taken advantage of, would help propel the industry growth to a higher level.
These trends include the rise of the digital economy, artificial intelligence(AI) and machine learning (ML), data driven marketing, influencer marketing and the advent of 5G.
The Association of Accredited Advertising Agents Malaysia (4As) president Andrew Lee told StarBiz although the ad industry is facing challenges that may impact its growth, he is upbeat that the industry is well-positioned to succeed in the digital age.
Lee: Although the ad industry is facing challenges that may impact its growth, the industry is well-positioned to succeed in the digital age.
He said the industry has the skills and the creativity to meet the challenges ahead.
Delving into the trends of the industry over the next few years, Lee, who is also Havas Immerse Malaysia group managing director, said agencies that could adjust to these developments would be well-positioned for future success.
The continued growth of the digital economy like other emerging trends would help shape the ad space over the next few years, he said.
“The digital economy is growing rapidly, and this is where most ad dollars are being spent. Agencies must ensure they are well-positioned to capitalise on this expansion.
“Consumers are also becoming more affluent, and this is driving up advertising spending. Businesses are looking for ways to reach a larger audience, and advertising is a key part of their marketing strategy.
“The rise of AI and ML in advertising are revolutionising the ad industry. These technologies are being used to create more personalised and targeted advertising campaigns,” Lee added.
ML is a branch of AI and computer science which focuses on the use of data and algorithms to imitate the way that humans learn, gradually improving its accuracy.
Influencer marketing is a growing trend, he said, noting that consumers are more likely to trust recommendations from people they know and follow, and businesses are using influencers to reach a wider audience.
M&C Saatchi Malaysia CEO and founder Datin Seri Sharifah Menyalara Hussein said the advent of 5G would be the main driver of new technologies which would change behaviour from Internet of Things to virtual reality (VR) immersive experiences automation in our businesses.
VR is a computer application which allows users to experience immersive, three dimensional visual and audio simulations.
Sharifah Menyalara: Advancements in technology and consumer behavior will change the landscape on how we reach and engage with the market and consumers at large
She said furthermore AI would make things faster and more efficient. This is an example, where behavioural analytics and multichannel customer engagement would create a robust automation process to drive hyper-personalised marketing campaigns at scale, she noted.
Another trend Sharifah said she expects involves personalisation and customisation as consumers expect more and more relevant advertising experiences going forward. Advertisers would also increase their data usage to ensure targeted delivery to customers.
“Streaming services and over-the-top platforms will at the same time provide brands with more opportunities. Advancements in technology and consumer behavior will change the landscape on how we reach and engage with the market and consumers at large,” she added.
Meanwhile 4As senior adviser and Oxygen Advertising managing director Datuk Johnny Mun warns that the global headwinds could throw a spanner in the works for the ad industry.
“With the threat of a looming global confrontation between the United States, its Nato allies, and China with Russia on the other side, there will be repercussions particularly to the supply chain for raw materials, fuel and gas being key.
“A squeeze on these essentials will see prices skyrocketing which in turn will translate to higher cost of goods for consumers, hence affecting the ad industry as well,” he said.
Mun said in this situation, there are two possible routes that marketers may adopt. The could either consolidate their bottom line and cut advertising expenditure, or for the bolder ones, they may even increase ad spend to boost sales.
Going by conventions, he said most would prefer the former. Should this be the marketers’ modus operandi then, he said the industry could experience a flattish second half of 2023.
Barring the above events from happening or at least not in a full-blown manner, he said the industry should still experience at least a single digit growth from 2022.
In terms of the industry’s growth drivers, Mun said they include the revival of the hospitality and tourism sectors, the growth in eCommerce platforms and strong automotive sales.
The political stability of the current government would also bolster the ad industry’s growth, Mun said.
For advertising growth, Sharifah said based on the past three years’ trend, it is estimated that the advertising expenditure (adex) for June 2023 would decline by 15% to 20% compared with the same period last year.
Looking at this scenario, she said the adex growth for this year would be either flat or at best minimal due to global uncertainties and in the absence of global events to spur the industry growth.
She also highlighted some concerns in the ad space. Sharifah said this includes the rising employment costs and talent shortage, noting that the latter being an on-going issue for the ad industry, particularly now that businesses have re-open and with more people moving to secure better salaries etc.
The dwindling margins of businesses due to tough business conditions would also impact the brand building activities, she said. Although marketers would continue to invest in brand building activities, she said it is expected to be on a smaller scale.
