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Publication Date : 29-09-2012
Marketers continued to remain cautious as ad spend in Malaysia, despite maintaining a growth trajectory, still fell below expectations.
According to data and information and measurement firm Nielsen, year-on-year advertising expenditure (adex) rose marginally by 0.8 per cent to 988.75 million ringgit (US$323.5 million) in August.
This was lower than the 6.3 per cent growth seen for July, which had benefited from the London Olympics.
For the entire January-August period, adex rose 2.3 per cent to 7.1 billion ringgit.
Starcom Mediavest Group Malaysia chief executive officer Ranga Somanathan says the August's 0.8 per cent growth was below expectations and did not reflect Malaysia's consumer confidence level.
“August's adex was below expectations and my forecast was actually higher. The numbers did not align with Malaysia's consumer confidence level. This just shows that marketers are cautious,” he tells StarBizWeek.
According to the latest data from Nielsen, consumer confidence in Malaysia rose to a six-year high while more than two-thirds of Malaysians were optimistic about their job prospects and personal finances.
Based on the Nielsen Global Consumer Confidence Survey, it says Malaysia's consumer confidence was up four points to 111 in the second quarter of 2012.
“Optimism towards local job prospects and personal finances continue to boost confidence,” the survey says.
The index last hit its 111 level in the first quarter of 2006. Malaysia advanced to fifth place from seventh among the 56 countries surveyed in terms of confidence level, after Indonesia (120), India (119), the Philippines (116) and Saudi Arabia (115).
Citing the survey, Ranga notes that Malaysia's latest adex numbers “was not aligned” with the country's consumer levels.
“In terms of consumer confidence, Malaysia is among the top five in the world!”
IPG Mediabrands president (Asia World Markets) and chief executive officer (Malaysia) Prashant Kumar also agrees that Malaysia's latest adex figures came in below expectations.
“I actually expected it to be slightly better, especially in light of the recently concluded Olympics and Hari Raya (Eid-ul-Fitr) holidays.”
A media analyst also says that August adex was “a little bit disappointing.”
“We expected a boost to adex, driven by activities done in conjunction with the Olympics.
“We believe it (less than stellar adex numbers) could be due to the cautious sentiment, in light of the uncertainty in the United States and shaky situation in Europe,” she says.
Adex growth in August was led by cinema, which surged 177 per cent year-on-year. Cinema ad spend jumped 121.4 per cent year-on-year in July after posting a 29.6 per cent contraction the month before.
Adex growth in August was also led by outdoor and pay television, which grew 19.1 per cent and 11.5 per cent respectively.
Newspapers still continued to command the lion's share of total ad spend, accounting for 39.6 per cent of total adex in August and 40.3 per cent in the January-August period.
For the eight-month period ended August 2012, the product/service categories with the highest ad spend were local Government institutions, mobile line services, women's facial care, fast-food outlets and universities.
Prashant is hopeful that ad spend will pick up in the final quarter of the year.
“I think everyone is expecting a booster, especially with the impending General Elections,” he says.
Ranga is also hopeful that adex will improve. “Going forward, it is doubtful that adex will improve significantly, but I do hope it picks up.”
A media analyst with a local bank-backed brokerage says he is optimistic about the adex outlook for the remaining of 2012.
“The Christmas period and New Year are periods that encourage consumer spending and this will spur ad spend.
“Consumer spending is also boosted during this period in light of their year-end bonuses,” he says.
*US$1= 3.06 ringgit