The advertising industry is expected to recover this year

KUALA LUMPUR: The advertising revenues of the country’s media owners are expected to increase 15.4% to RM 5.1 billion this year after experiencing a 20% contraction last year, according to the global investment and development firm. Magna media intelligence.

He added that in this environment, linear advertising revenue is expected to increase by 10.8% to reach 44% of total advertiser budgets for the year. Linear advertising refers to a systematic schedule in which advertisements are designed to run for a specific duration on a particular medium.

Magna also expects the economy to grow 7.4% based on real gross domestic product (GDP), following the 6.3% decline in 2020. This would essentially recoup all lost economic output. last year, he added.

Fan Chen Yip, who is the investment director of Mediabrands Malaysia, said: “Despite the current gloomy sentiment, economic and advertising growth – although not comparable to 2019 levels – is still expected, as evidenced by data on markets recovering from the Covid-19 pandemic.

“We are cautiously optimistic that it will be a similar situation for Malaysia, especially after the large-scale vaccination takes off in the coming months, and as companies are better prepared to face Phase 1. of the national recovery plan.

He said that these forecasts also reinforce the importance of digital advertising.

“As we see linear media owners continue to aggressively digitize their media offering, digital spending will continue to grow exponentially.

“Digital spend now accounts for over half of Malaysia’s total advertising budgets at 56%, quickly reaching global digital spend levels that will account for two-thirds of all ad sales in 2022,” he added.

Magna is the centralized resource of IPG Mediabrands which develops intelligence, investment and innovation strategies for agency teams and clients.

Digital advertising spending is also expected to grow 19.3% to RM 2.9 billion, representing 56% of total budgets, from 40% of budgets in 2019.

TV spending, Magna said, is expected to increase 8% to RM 879 million, representing 86% of the previous spending level in 2019, after falling 21% in 2020.

Other linear advertising formats are expected to hurt even more, including radio and signage.

Linear advertising revenue has been hit so hard because Malaysia has significant exposure to industries vulnerable to Covid-19 shutdowns and changes in consumer behavior as a result of the crisis.

The restaurant, retail and travel / tourism sectors account for 62% of the country’s small and medium-sized businesses, and many of them have gone bankrupt or have significantly reduced their advertising spending to survive in the short term, a he noted. Spending is slow to return, especially in linear formats, the company said.

Globally, Magna said, as the economy recovers faster than expected globally and in most markets, so do marketing activities and ad spending.

With the added engine of rescheduled international sporting events, the company said it projects global advertising spend in all media to increase by US $ 78 billion (RM 325 billion), a 14% increase to 657 billion. (RM 2.73 billion) in 2021, a new all-time high.

Magna has also raised its advertising market growth forecast in 2022 to 6.6% (from 5% previously).

The 14% growth forecast for 2021 would represent the highest growth rate on record, surpassing 12.5% ​​growth in 2000, and a significant increase from Magna’s previous global forecast of 8% in December 2020 .

As a result of the pandemic, consumers in Asia-Pacific have turned to more streaming, more e-commerce, and more integration of digital platforms into their daily lives.

As a result, the economic recovery and organic digital growth would allow the region’s total ad spend to grow 12.8% in 2021, following the 3.3% contraction last year.

This would see the total advertising budget reach US $ 203 billion (RM 844 billion), well ahead of the $ 186 billion (RM 774 billion) of 2019.

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