Advertising industry expects better 2H

IPG Mediabrands Malaysia CEO officer Bala Pomaleh

PETALING JAYA: The advertising industry is poised to perform better this year compared with last year, judging by growth drivers that will fuel the industry in the second half of the year.

Amid anticipated challenges, agency leaders and analysts on the whole are upbeat the second half of the year will set the tone for the industry to chart a stronger growth this year.

Since the state of the economy determines consumer spending, which in turn spurs marketers to allocate higher advertising budgets, higher consumption would be a positive signal for the ad industry, one analyst said.

The economy expanded by 4.2% in the first quarter of 2024 (1Q24) compared with the same period in 2023, and higher than the median estimate of 3.9% year-on-year growth in a Bloomberg survey of economists. Bank Negara said the country is on track to achieve the 4% to 5% gross domestic product (GDP) growth for the year.

IPG Mediabrands Malaysia chief executive officer Bala Pomaleh, who is also Media Specialists Association president, told StarBiz the strong economic growth bodes well for the ad industry.

He said the 4.2% growth in 1Q24 which was driven by strong private expenditure and positive exports, with higher household spending amid continued growth in employment and wages, is a positive indicator for the industry.

“According to IPG Mediabrands’ Magna Global Ad Forecast, Malaysia anticipates advertising revenues to reach RM8.8bil in 2024, reflecting growth of 7.1% from 2023, while the consumer price index is projected to reach 2.7% by this year.

“Top media categories forecast to grow include digital advertising, digital out-of-home and free-to-air TV. Overall, the indices and market outlook are positive suggesting the advertising industry will fare better in the second half of 2024, compared with 2023,” Bala said.

Havas Malaysia CEO Nizwani ShaharHavas Malaysia CEO Nizwani Shahar

Havas Malaysia chief executive officer Nizwani Shahar said several factors would drive the growth of the ad industry in the second half of the year.

Firstly, she said the continued digital transformation and increasing Internet penetration would amplify the significance of digital advertising channels, including social media, search, and video platforms. Additionally, she said the rise of eCommerce would spur brands to invest more in targeted and personalised advertising to capture online consumers.

Secondly, she said innovations in data analytics and artificial intelligence (AI) would enhance the ability of advertisers to measure and optimise their campaigns more effectively. Finally, she said the growing emphasis on sustainability and social responsibility would encourage brands to align their advertising strategies with consumer values, driving more purpose-driven and meaningful campaigns.

Overall, Nizwani expects the industry to perform better in 2024, albeit with some notable challenges, adding that the post Covid-19 pandemic economic recovery is expected to boost consumer spending and business activities, leading to increased advertising budgets.

“Moreover, advancements in digital technology and data analytics will enable more precise targeting and measurement of ad effectiveness, increasing return on investment (ROI) for advertisers.

“The continuous growth of digital platforms, especially mobile and video, will also provide new opportunities for brands to engage with their audiences in innovative ways. However, we cannot overlook the impact of global socio-political issues.

“The resulting boycotts and shifts in consumer sentiment have led brands to reassess their marketing strategies and affiliations, sometimes causing a temporary dip in ad spending. Brands are increasingly mindful of their social and political stances, which adds a layer of complexity but also presents an opportunity for those that align authentically with their audience’s values.

“Overall, while these dynamics add complexity, they also push the industry towards more meaningful and conscious advertising,” she noted.

Commenting on some pertinent challenges for the ad industry, Bala said they include boycott issues, the expected removal of fuel subsidies, and competition for talent.

He said the government’s recent announcement of the removal of fuel subsidies has led to concerns over rising costs.

This comes alongside other measures such as the progressive wage policy which positively increases minimum wages for individuals but would translate to higher cost of products and services, and impact consumers and brands directly, he said.

“Competition for talent in the advertising industry remains rife, amid the rising cost of services and tight advertising budgets. The accelerated pace of digitalisation in the industry also creates greater demand for programmers, data engineers, analytics and automation developers with solid technical skills.

“However, good talent in these areas is scarce, and there is greater need for more specialised training in these areas,” he said.

Association of Accredited Advertising Agents Malaysia (4As) acting president Ryusuke OdaAssociation of Accredited Advertising Agents Malaysia (4As) acting president Ryusuke Oda

Association of Accredited Advertising Agents Malaysia (4As) acting president Ryusuke Oda said, without positive changes in the global situation, companies may face harsher challenges in the second half of the year. Rising product and service prices and increasing wages could make the outlook tougher than in the first half, he noted.

In the realm of technology, he said AI continues to advance at a rapid pace, bringing both benefits and issues.

“Unfortunately, the improvement in the quality of fake content increases the threat of scams and malicious content generation. It will be crucial for the public to develop skills in discerning truth from falsehood and take appropriate measures.

“In terms of corporate branding and marketing, companies will need to be even more flexible in adjusting their plans and budgets to account for various potential scenarios. Price increases for products and services, as well as rising wages, will affect not only the advertisers but also the advertising agencies they are partnering with.

“Moreover, maintaining transparency and delivering truly trustworthy information, along with providing value that fulfills the happiness of individuals, communities, and society, will continue to be of utmost importance for branding in the latter half of the year.

“Creativity in achieving these goals in every aspect will be essential,” Oda, who is also Hakuhodo Malaysia managing director, said.

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Mediabrands , Havas , 4As


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