The Star: Marketers Urged to
Raise Budget for Online Ads

Derived from The Star

KUALA LUMPUR: Malaysian businesses that are online are encouraged to increase their advertising expenditure in the digital space. According to research carried out by McKinsey & Co, businesses that are online allocate about only 1% of their advertising budget for digital media.

“There is a disproportionate share between businesses’ advertising budget in a particular media and the time that consumers spend on a particular media,” said Google Malaysia country head Sajith Sivanandan.

Historically, companies had been used to buying media in a particular form such as print and television. However, in the last five to 10 years, the digital world had transformed the way consumers consumed media, he said.

“Marketers need to think of how they can take advantage of the change. In developing countries, the percentages that are budgeted for online advertising are still low,” Sivanandan said, adding that in the United Kingdom, about 25-30% of businesses’ advertising budgets were spent on digital media.

“Therefore, they hold the majority share of the advertising space online there. The people there recognise that advertising online works for their businesses.

“There are more private funds invested rather than funds supplied by the government.”

The ecosystem for digital advertising is growing. However, there is trouble of scaling it up in a developing economy.

Initiatives such as the “Get Malaysian Business Online” programme by the Malaysian Communications and Multimedia Commission and Google Malaysia will help enhance the development of the online ecosystem.

In a joint research by McKinsey and Google Inc called Online and Upcoming: The Internet’s Impact on Aspiring Countries, it is estimated that the Internet contributed 4.1% to the Malaysian gross domestic product in 2010.

This ranks Malaysia among the highest of the 30 fast-growing countries that were featured in the research, even topping the United States and China.

However, McKinsey principal Nimal Manuel believes that Malaysians should take this figure seriously and as an early warning indicator since the figure is primarily due to the trade surplus in Internet goods.