The Star: Ad market bucks the trend

Derived from Internal on Jan 13, 2012

Derived from The Star

The industry is expected to outpace global economic growth despite the eurozone and US woes

THE outlook for the Malaysian advertising market for 2012 is positive even with the problems besetting the eurozone and the United States. In fact, even globally, the ad market is expected to grow at a faster rate than the world economy next year, according to media service agency ZenithOptimedia, which forecast a higher 4.7% growth in 2012 compared with 3.5% this year.

Domestically, ad spending on media grew by about 13% in the first 10 months of 2011 to RM8.7bil, according to market research firm Nielsen (see table).

Industry players estimated the year would finish with a 12% to 15% advertising expenditure (adex) growth.

The local advertising market is expected to be supported by seve-ral events next year, including the general election, the Olympic Games and the UEFA Football Championship.

In terms of the economy, Starcom MediaVest Group and Optimedia Malaysia chief executive officer Ranganathan Somanathan says private capital spending, driven by initiatives such as the Economic Transformation Programme, expansion of capacity and investment in new growth areas will help Malaysia sustain its gross domestic product growth at 5% plus in 2012.

“However, given the headwinds in external market conditions, consumer worries over inflation and softer consumer sentiment, the real’ adex in 2012, adjusted for media inflation, is expected to grow 8% to 10% over 2011,” he says.

Aegis Media Malaysia executive chairman Margaret Lim expects adex to be “slightly lower” in the first half of next year as advertisers grapple with cautious consumer sentiment, local political uncertainty surrounding the election and the global economic uncertainty emanating from Europe.

However, by the second half, adex would pick up speed by increasing at a higher rate.

“Overall, there should be a slight absolute increase in adex next year because of several events that are believed to historically draw increased adex: the general elections, Olympics and Euro 2012,” she opines.

The Association of Accredited Advertising Agents Malaysia (4As) president Tony Savarimuthu says there should be a mid single-digit adex growth in media measured by Nielsen. But he notes that there are a lot of marketing communication activities that are not measured: investments in retail experiences, digital marketing, sponsorships, shopper marketing, applications and content.

“There are more Malaysia-based brands involved in important sponsorship vehicles like the EPL (English Premiere League) and F1 (Formula One) than our regional counterparts,” he points out.

Savarimuthu: ‘There are more Malaysia-based brands involved in important sponsorship vehicles.’

Savarimuthu says competition is keen in key sectors such as technology, telecommunications, financial services, consumer goods, electronics, broadcast and print media.

“There are many key brands in each sector and no one wants to slip behind or lose their place,” he adds.

He says that while there seems to be some nervous tension due to the eurozone crisis and the US economy, there is enough liquidity in the market and the banking sector is strong.

Lim of Aegis Media says that inflation as well as local and global uncertainties, which affect employment, put consumers in a cautious mood when spending.

“Local advertisers that pick up on the cautious consumer sentiment may reduce spending in anticipation of a period of tepid market demand. Advertising by multinational companies that receive their marketing budgets and directives from a global head office may be more affected by what is going on in Europe.

“Of greater concern to us in Malaysia is the lowered GDP (gross domestic product) projection for next year because experience has demonstrated that the growth of adex and GDP is highly correlated,” she says.

On marketing trends, Ranganathan and Lim both cite the increased reliance on technology and the digital platform to reach out to consumers.

“Search, social and mobile media have grown significantly in the last 12 months. These interactions with consumers are not captured by Nielsen adex data. Online adex by Nielsen only covers selected websites/publishers,” Ranganathan says.

Lim says that the number of media owners covered by Nielsen under digital barely covered 40% and this did not give a full view of the digital market. “We project real digital spend by advertisers to grow to the tune of 15%.”

In addition to relying on “bought, owned or paid” commercials, advertisers cannot overlook the importance of “earned media”: the new and powerful digital version of word-of-mouth, says Lim.

“Consumers’ opinions online can be powerful enough to make or break a brand,” she says.

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