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Ad revenue hit by MH370 crisis

Publication Date : 13-04-2014

 

The disappearance of Malaysia Airlines (MAS) flight MH370, despite receiving a lot of attention worldwide and boosting the audience for the mass media, has however had an adverse impact on advertising revenue.

MH370, which was carrying 227 passengers and 12 crew members, departed the KL International Airport at 12:41am on March 8 and disappeared from radar screens within a couple of hours later while over the South China Sea. It was to have landed in Beijing at 6:30am that same day.

This incident almost immediately resulted in ads being cut or reduced and campaigns being either pulled out or put on hold.

“Almost all airline advertisers put their ads on hold, including MAS, Firefly, Singapore Airlines, AirAsia and Malindo. Most of them resumed their ads after a week, except for MAS,” says a source from a local Chinese daily.

“Some retained the frequency of advertising after the postponement, but some reduced.”

He adds that some campaigns that were supposed to be held during that period were either cancelled or postponed, such as the case with fast-food giant McDonald’s Malaysia, which was supposed to kick-off its “National Breakfast Day” promotion on March 17.

In a statement on its Malaysian Facebook page, McDonald’s Malaysia said it had decided to postpone the campaign in light of “developments surround Flight MH370”.

“This decision is made as a mark of respect for those affected by this event, and we also extend our hope and prayers for the safety and well-being of the passengers and cabin crew involved.

“We sincerely regret any inconvenience caused due to this postponement. Rest assured that we will announce the new date of the National Breakfast Day at a more suitable time.”

The fast-food giant added, however, that promotions would continue as planned in other countries across Asia-Pacific.

The source adds that some advertisers also moved their ads to the back-half of the main section of the newspaper to avoid the “negative editorial environment”.

“This resulted in losses in premium page surcharges,” he says.

Star Publications (M) Bhd chief advertising officer Lim Bee Leng confirms that ad spend was affected following the disappearance of flight MH370.

“We saw seven-digits worth of ad spend being pulled from aviation and travel-related companies,” she says, adding however that ad support has since picked up.

“When news broke that the plane had disappeared, some companies pulled out ads in a sign of respect for the family and friends of the victims on board the aircraft,” says Lim.

The source from a local Chinese daily also confirms the drop in ad spend.

“There was a dip in aviation and travel ads. Overall, it was a moderate level drop in advertising sales, especially in the first half of March. But things have since improved.”

Local Malay daily Berita Harian also postponed its annual Anugerah Bintang Popular Berita Harian 2013, which was scheduled to take place on April 6 at the Arena of Stars in Genting Highlands.

The postponement was a mark of respect for flight MH370.

“The decision is supported by its management and partners, including Media Prima, TV3, Resorts World Genting, sponsors and artistes who are involved in the event,” Berita Harian group editor Mahfar Ali was quoted as saying at a press conference last month.

A major event cancelled in relation to the MH370 tragedy was a Petronas-sponsored two-day concert, Twin Towers Alive, featuring the likes of Christina Aguilera and Rain.

The concert was among the entertainment events to be held in conjunction with the 2014 Petronas Formula 1 Malaysia Grand Prix.

Despite the negative impact, the events surrounding the disappearance of MH370 did create a lot of eyeballs for the media. The Star Online, Malaysia’s top daily news portal, registered its highest ever number of page views in March – surpassing even interest generated during the general election in May last year.

Star Online recorded 7.07 million unique visitors in the month of March, double the 3.56 million registered in May of 2013.

The number of page views in March 2014 stood at 59.99 million, compared with 41.60 million for May 2013.

Interestingly, the recent Malaysian Association of Tour and Travel Agents (MATTA) Fair also did not experience any slowdown in visitors − quite the opposite actually. According to reports, the event, which was held from March 14 to 16, recorded 90,273 visitors – its highest number of visitors.

In September last year, the fair recorded over 83,000 visitors.

Organising chairman Judy Cheah says: “There was no impact, only change of destination, from Beijing to other locations.”

Given the sensitivities surrounding the event, it is not considered unusual for companies to pull their ads or postpone campaigns, says creative agency Initiative global chief executive officer Jim Elms, who believes that such a move is in fact “the right thing to do”.

“Even during the 9/11 tragedy in New York, ad spend dipped a little. Some pulled back more than others. When the general mood is down, you can still be pitching things, but there still has to be a level of integrity in what you do. It’s also a level of respect.

“In an era when brands become more people-centric, issues like dignity have to be honoured. It’s our obligation to hold back also. But more importantly, it’s the right thing to do.”

Association of Accredited Advertising Agents Malaysia (4As) president Datuk Johnny Mun says it is not unexpected to experience a slowdown in ad spend after a tragedy involving an airline crash.

“It’s usual for other airlines to have a sort of unwritten moratorium on ads immediately after events like that.”

According to Nielsen, year-to-date (YTD) February 2014 advertising expenditure in Malaysia rose 15.8 per cent to 1.96 billion ringgit from 1.70 billion ringgit ((US$605 million to $525 million) in the previous corresponding period.

Omnicom Media Group Malaysia chief executive officer Andreas Vogiatzakis was quoted by StarBiz last month as saying that the MH370 crisis had, to an extent, affected spending, with many advertisers postponing their March spending till later.

“I personally think it is to show solidarity and respect to the families of all the people affected,” he said.

 

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