Digital ad spend to continue going strong
Sporting events, upcoming general election will drive growth
DESPITE consumers taking a cautious stance in their spending, advertising expenditure (adex) on digital media in Malaysia is going strong, following similar trends globally.
Sporting events and the upcoming general election as well as programmatic digital ad buying are some of the factors that will drive digital adex growth.
Amplifi’s managing director Hasnain Babrawala tells
StarBizWeek that the agency expects a 23% growth in digital ad spend in Malaysia this year compared with a 17% expansion last year.
Amplifi is Dentsu Aegis Network’s media investment arm in the country.
He says that based on research, Amplifi sees a similar trend where digital media will continue to top all other media platforms in adex growth.
“As digital grows at a rapid pace, so will programmatic ad buying, which is forecast to enjoy a 33% increase this year versus direct ad buying, which is likely to see a single-digit growth only.
“Like the trend of Asia-Pacific ad spend, mobile in Malaysia will also overtake desktop in terms of growth percentage.
“It’s an election year, plus major sporting events like Asian Games and FIFA World Cup is also happening this year. So, if track record holds true, we are expecting a healthy overall adex growth of about 6%-8%,” he says.
Based on Nielsen’s latest adex figures, which do not include pay- TV and digital media, total ad spend for 2017 declined by 12.8% to RM6.43bil compared with RM7.37bil in 2016.
On a month-on-month comparison, total ad spend for December 2017 was lower at RM532.4mil against RM639.6mil in the same month of 2016.
Although cinema only saw a marginal increase in its share of voice, it experienced the highest year-on-year growth, increasing by 30.2% year-to-date in December 2017.
In terms of ad spend share, newspaper was slightly ahead with 43.9% for last year, although this figure was lower than that registered in 2016, which was at 49%.
Free-to-air TV’s ad spend share for 2017, however, was higher at 43.4% (against 39.5% in 2016). Radio also saw a gain in ad spend share at 7.6% compared with 6.7% in the previous corresponding period.
Meanwhile, Dentsu Aegis Network’s latest Ad Spend Forecasts report, which is based on data received from 59 markets, puts global growth at 3.6% in 2018, up from 3.1% in 2017.
Asia-Pacific adex growth is forecast to accelerate to 4.2% this year, up from 3.5% in 2017. The region is forecast to be the leading contributor to global adex growth in 2018, contributing 39.7% – US$8.1bil of the total US$20.3bil incremental global increase – led by China, Japan, India and the Philippines.
The global ad agency says events will play an important role in 2018 – Winter Olympics, Commonwealth Games, Asian games and state elections are all expected to stimulate adex growth.
However, a slowing expansion in markets like Australia and China can be attributed to multiple factors such as a naturally maturing market, ad fraud and data accuracy issues on top of a general economic slowdown, it notes.
Within this context, the report says digital media channels will continue to disrupt adex in 2018. This can be seen, among others, where digital media channels will continue to power adex growth, growing globally by 12.6% in 2018, versus 15% in 2017, to reach US$220.3bil.
Mobile will go from strength to strength, reaching US$121.1bil having overtaken desktop as a share of total digital spend in 2017. Desktop will continue to lose global share (-1.5% since 2016), versus mobile’s gains (8.2% since 2016), it says.
Digital adex will account for 38.3% share of total ad spend, while TV at 35.5%.
The report also reveals that video and social will also drive growth within digital ad spend, powered by smartphone take-up and mobile-video, in particular.
Programmatic spend will rise by 23% as established players and startups compete over ad tech, the report says.
Dentsu Aegis Network CEO Jerry Buhlmann says: “The latest ad spend forecasts show a market in transformation, but not recession. The challenge for brands is to navigate an uneven economic outlook alongside a rapidly evolving tech and innovation landscape.
“In many markets, disruptive innovation – from mobile, voice activation and new ad tech players – is still providing new sources of growth and we forecast this trend will continue into 2018.”
Dentsu Aegis Network AsiaPacific CEO Nick Waters says the region continues to lead the growth in digital ad spend.
He says with the region’s fast adoption of technology and innovation, there will be a substantial shift towards mobile and smart devices.
“As a result, mobile online video ads will be the main drivers of growth within digital ad spend across the region.
“Data continues to be central to our business in the Asia-Pacific. With better understanding of new technology, structures and models for business growth, agencies must help brands move from being disrupted to disruptor.”