Modest growth likely for outdoor advertising

Outdoor Advertising Association of Malaysia (OAAM) president Maaresh Starling

THE outdoor advertising industry is expected to continue a modest growth in 2024, primarily driven by digital out-of-home (DOOH) advertising in light of the challenging economic landscape. StarBiz spoke to the Outdoor Advertising Association of Malaysia (OAAM) president Maaresh Starling to get his take on the outlook and some pertinent issues facing the industry. Below are the excerpts of the interview.

StarBiz: How will the outdoor advertising industry on the whole, out-of-home (OOH) as well as digital OOH (DOOH) advertising, fare this year? Will its outlook be better than last year? Maaresh: OOH advertising declined marginally by RM30mil or 7% year-on-year (y-o-y) in 2023, while DOOH advertising grew by substantially RM148mil or 25% y-o-y.

Based on this trend, OOH will likely remain muted or may decline marginally for 2024. On the other hand, DOOH is expected to grow further with an estimated 15% to 20% growth for this year, while OOH is likely to see a 5% drop on “cannibalisation” from DOOH.

The total advertising expenditure (adex) for OOH in 2022 was RM985mil compared with RM955mil in 2023. However, DOOH for 2022 stood at RM600mil against RM748mil last year.

For DOOH, there would be at least five big digital gantries which would be launched from the second to third quarter of this year, primarily in the Klang Valley.

Furthermore, it is expected that there would be around eight to 10 upgrades or new unipole for DOOH.

This would drive the growth of the DOOH footprint.

On another note, the airport OOH adex (not tracked as OOH adex) has turned around with expected increased footfall on arrivals and departures in 2023.

Airport OOH adex should recover almost fully to pre-Covid-19 period. Transit advertising (trains, buses, taxis etc) is expected to recover 20%-25% for this year.

Overall, outdoor advertising would continue a modest growth in 2024, primarily driven by DOOH.

More outdoor advertising sites are expected in the Klang Valley this year as well as in other major market centres (Johor Baru and Penang) and secondary towns (Seremban, Melaka, Kuantan, Ipoh, Kuching and kota Kinabalu).

Last year, there was an increase of 46 new outdoor advertising sites in the country and this strong growth is expected to continue this year.

In the outdoor advertising space, do you foresee stiffer competition going forward?To an extent, competition is heating up due to the increase in media owners in the market. Furthermore, illegal billboards are creating an uneven playing field in the outdoor advertising industry.

This undermines the efforts of legitimate players and impacts their financial viability, reputation and compliance with regulations.

This makes it difficult for legitimate players to sustain their businesses.

At the same time, underfunding of OOH prevents total media plan optimisation because the outdoor advertising share is being allocated to other channels beyond their point of diminishing returns.

How about the challenges for the outdoor advertising industry this year? Any specific issues that should be addressed?Real-time data collection and reporting pose a challenge for the outdoor advertising industry, especially when compared to platforms like digital, TV and radio, which offer more measurable metrics.

Hence some marketers and brands have been hesitant to invest in OOH because the return on investment (ROI), or simply in plain terms the monetary value of an investment versus its cost, cannot be met.

Following in the footsteps of developed markets like Australia, OAAM is working on the introduction of Malaysia’s inaugural national industry-wide audience measurement system for OOH advertising.

This advancement promises a significantly more precise measurement framework, bringing it in line with online, TV and radio metrics. The rollout of this system would occur in phases.

OAAM believes this would lead to increased credibility, measurability and growth of Malaysia’s outdoor advertising sector.

Are there any other relevant emphasis pertaining to the outdoor advertising industry that you would like to highlight?The success of OOH advertising extends beyond monetary ROI alone. The success of OOH in general is a combination of many factors.

Among them are the policymakers and regulators providing stability and certainty in OOH scene, media owners bold and courageous move to accept and invest transformation of digital OOH, and advertisers acceptance of change in the OOH landscape with the boom of DOOH with better technology advances in light-emitting diodes (LEDs), content management system (CMS) and programmatic platform and software.

Another success factor is the continuous change in the lifestyle. This is because many people are spending more time outside their home, especially post-Covid-19, which has driven more eyeball contact onto the OOH scene with increased traffic and footfall across all spectrum.

For media owners this is a monetary reward but for the outdoor advertising industry, it is a breakthrough for OOH to emerge as a prominent media format and medium.

OOH, an old and traditional medium, has been able to grow under such intense digital and social media competitions.

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