KUALA LUMPUR: The advertising revenue of media owners in the country is forecast to increase by 15.4% to RM5.1bil this year after experiencing a contraction of 20% last year, according to global media investment and intelligence company Magna.
It added that in this environment, the linear advertising revenue is set to increase by 10.8% to reach 44% of total advertiser budgets for the year. Linear advertising refers to a systematic schedule in which adverts are designed to run for a specific time on a particular medium.
Magna also expects the economy to grow by 7.4% based on real gross domestic product (GDP), following 2020’s 6.3% decline. This would essentially regain all the economic output lost last year, it added.
Fan Chen Yip, who is the chief investment officer of Mediabrands Malaysia, said: “Despite the current gloomy sentiment, economic and advertising growth – though not on par with 2019 levels – are still anticipated as evidenced from data across markets recovering from the Covid-19 pandemic.
“We are cautiously optimistic that it will be a similar situation for Malaysia, especially after the mass scale vaccination takes off over the coming months, and as businesses are more prepared to face Phase 1 of the National Recovery Plan.
He said these forecasts also further drive home the importance of digital advertising.
“As we see linear media owners continue to aggressively digitalise their media offering, digital spending will continue to grow exponentially.
“Digital spends now account for more than half of total Malaysian advertising budgets at 56%, fast reaching the levels of global digital spends which will account for two-thirds of all advertising sales in 2022, ” he added.
Magna is the centralised IPG Mediabrands resource that develops intelligence, investment and innovation strategies for agency teams and clients.
Digital advertising spending is also projected to increase by 19.3% to RM2.9bil, representing 56% of total budgets, up hugely from 40% of budgets in 2019.
Television spending, Magna said, is expected to see an increase of 8% to RM879mil, representing 86% of the prior 2019 spending level following a 21% drop in 2020.
Other linear advertising formats are expected to fare even worse, including radio and out-of-home.
Linear advertising revenue has been hit so hard because Malaysia has a significant exposure to industries vulnerable to Covid-19 shutdowns and changes in consumer behaviour as a result of the crisis.
Restaurants, retail and travel/tourism sectors represent 62% of small and medium businesses in the country, and many of them have gone out of business or cut ad spend hugely to survive in the short term, it noted. Spending is slow to return, especially in linear formats, the company said.
On the global front, Magna said as the economy recovers faster than expected globally and in most markets, so do marketing activity and advertising spending.
With the added driver of rescheduled international sports events, the company said it is forecasting that global all-media advertising spending to grow by US$78bil (RM325bil), or a surge of 14% to US$657bil (RM2.73 trillion) in 2021, a new all-time high.
Magna also raised its forecast for advertising market growth in 2022 by 6.6% (previously 5%).
The 14% growth expectation for 2021 would represent the highest growth rate on record, beating the 12.5% growth in 2000, and a significant increase from Magna’s previous global forecast of 8% in December 2020.
Due to the pandemic, consumers in Asia-Pacific have gone to more streaming, more e-commerce and more integration of digital platforms into their day-to-day lives.
As a result, economic recovery and organic digital growth would power the region’s total advertising spending to grow by 12.8% in 2021, following last year’s contraction of 3.3%.
This would see total advertising budget reaching US$203bil (RM844bil), significantly ahead of 2019’s US$186bil (RM774bil).