Positive forecast: A file photo of digital billboards in Kuala Lumpur. Ad spending this year is projected to reach RM8.8bil.
PETALING JAYA: Advertisers are likely to be cautious in their advertising expenditures (adex) this year but not all is gloom and doom as there are areas which will see a rise in ad spending.
Travel and tourism, luxury sectors, businesses involving small and medium enterprises (SMEs), are among the areas which could see a surge in adex.
IPG Mediabrands Malaysia chief executive officer Bala Pomaleh, who is also Media Specialists Association president, told StarBiz advertisers would likely continue to be cautious with their spending this year based on the country’s latest gross domestic product (GDP) figures.
He said the economy slowed further in the fourth quarter of 2023 (4Q23), with Bank Negara expecting the economy to grow between 4%-5% this year.
“We might however see a rally in overall activity, made up by an increase in spending by small and medium-sized enterprise (SME) brands.
“Adex growth is expected in the travel and tourism industry which already picked up from last year, leading to increased ad spending from hotels, airlines, and other travel-related businesses.
“This will be driven through the integration of UGC (user-generated content) with collaborations from local content creators. There will also be greater emphasis on sustainable and eco-tourism,” Bala added.
IPG Mediabrands Malaysia CEO officer Bala Pomaleh
UGC is generally any form of content, such as images, videos, text, testimonials, and audio, that has been posted by users on online content aggregation platforms such as social media and discussion forums.
Malaysia’s 4Q23 GDP stood at 3%, which was lower than the 3.4% advance projection released last month, and compared with the 3.3% expansion in the preceding quarter.
The quarter’s lower-than-expected growth also weighed on the whole year’s GDP growth figure, coming in at 3.7% compared with 8.7% in 2022.
Another area of growth in ad spending would be in the aspirational and luxury sectors which targets the top-income (T20) group, with increased activity tapping on influencers and experiential marketing to drive sentiment, he noted.
Bala said the ad industry would at the same time see campaigns leveraging artificial intelligence (AI) for hyper personalisation and eCommerce integration for seamless offline and online store experiences.
However, he said consumer goods and other sectors targeting the lower income (B40) and middle income (M40) segments may not see much growth this year as the landscape would remain highly competitive.
He said challenges may appear in eCommerce, given the recent introduction of the 10% online-shopping tax.
Bala said this may influence shopper behaviour and impact marketing strategies. He said international brands would therefore need to revise their strategies accordingly to remain competitive, while local brands would look to leverage these gains.
Marketers would similarly need to keep up with emerging technologies to provide cutting-edge experience amidst constantly evolving innovations, he noted.
According to IPG Mediabrands’ Magna Global Ad Forecast, Malaysia anticipates advertising revenues to reach RM8.8bil in 2024, reflecting growth of 7.1%, while the consumer price index (CPI) is projected reach 2.7%.
Advertising revenues for digital-media owners this year are forecast at RM6.5bil, showing growth of 9.3%. This includes spending in Malaysia by foreign entities, used to promote products and services based outside of Malaysia. Digital advertising is expected to represent 74% of total budgets, with search advertising revenues growing by 7.3% to RM2.1bil.
Social media advertising revenues are predicted to grow by 12.1% to RM3.4bil, while digital video advertising revenues are expected to increase by 8% to RM600mil.
Advertising revenues for traditional media owners in 2024 are projected to be RM2.3bil, reflecting growth of 1.4%. Television advertising revenues are expected to grow by 0.9% to RM900mil. Audio advertising revenues are expected to increase by 2% to RM300mil, while out-of-home (OOH) advertising revenues are anticipated to grow by 6% to RM500mil.
The Association of Accredited Advertising Agents Malaysia (4As) senior adviser Datuk Johnny Mun
The Association of Accredited Advertising Agents Malaysia (4As) senior adviser Datuk Johnny Mun said the anticipated growth for adex this year has now moderated to between 5% and 6%, reflecting a cautiously optimistic outlook for the year ahead.
“This adjustment accounts for the upcoming changes in the service tax rate, from 6% to 8% in March this year, which could impact advertising spending to some extent.
“Despite this, the growth projection remains positive, buoyed by the digital advertising sector’s resilience, ongoing economic recovery, and the continued evolution of the digital landscape.
“The key driver of this growth will be digital advertising, as advertisers increasingly leverage performance and lower-funnel channels to optimise their marketing spend.
“Digital out-of-home (DOOH) advertising is expected to see strong growth, benefiting from technological advancements and more interactive ad formats,“ Mun, who is also Oxygen Advertising managing director, said.
The Association of Accredited Advertising Agents Malaysia (4As) acting president Ryusuke Oda
Acting 4As president Ryusuke Oda said there are economic concerns based on the premise of a global recession, new taxes imposed by the government on consumers, rising costs of goods and services, and the weakness of the ringgit.
He said some predictions for the economic outlook were not very bright, but things have returned to normal, adding that there are many events to celebrate this year, and travel, both inbound and outbound, is reported to be booming which augurs well for the ad industry.
“My personal impression in urban areas is that this year’s Chinese New Year (CNY) was lively. And it seems that the people around me also have had the same impression on it.
“Ramadan and Hari Raya are around the corner, as with CNY, consumption related to spending time with family, relatives, acquaintances, and loved ones may be vibrant.
“The nature of these time frames leading up to the festivities also suggests that brands, products, and services that can shed light on the intrinsic values in people’s lives will be favoured. All these are positive events for the ad industry,” said Oda, who is also Hakuhodo Malaysia managing director.
In terms of ad trends for 2024, Bala said social platforms and UGCs would continue to play a big part in advertising, and be supercharged by artificial intelligence (AI).
He said enriched AI-generated content now becoming available even in video will revolutionise the ways in which ad creatives work behind the scenes, as visualisation and storyboards which previously took days can now be churned out in minutes.
“Big cultural and sporting events and the ‘fear of missing out’ or Fomo culture will also continue to draw attention. For instance concerts by the likes of Coldplay and Taylor Swift or the Barbie movie, are things brands are able to capitilise on.
“As a result, we’ll see enhanced experiential and immersive events, which will manifest in a hybrid form, integrating live and digital media, and new at-home experiences including wearables.
“Even locally, Seni Jaya for example has diversified from pure OOH into immersive exhibitions by bringing in B*VERSE which is the BTS exhibition. We can expect more exhibitions and events like this to take place in Malaysia,” Bala said.
