10% adex growth forecast for this year

PETALING JAYA: Advertising expenditure in Malaysia will grow by about 10% this year after slumping last year in the wake of the global financial and economic crisis, said leading media services agencies Zenith Media Malaysia and Omnicom Media Group (OMG).

OMG is the media services division of NYSE-listed Omnicom Group Inc while Zenith Media Malaysia is a member of ZenithOptimedia Worldwide, one of the world's leading media services agencies.

Figures released by Zenith yesterday estimated that Malaysian advertisers increased spending by 7.4% to RM6.6 billion for the whole of last year, after contracting 0.5% in the first half.

According to the latest figures by Nielsen Advertising Information Services (Nielsen AIS), Malaysia's adex for January to November last year grew by 6% to RM5.9 billion from RM5.6 billion in the same year-ago period. Nielsen AIS is expected to release full-year figures for 2009 this week.

Zenith CEO Gerald Miranda expects a recovering world economy, and improved consumer, business and investor sentiments to drive adex growth.

"Most developed countries have now come out of recession and Malaysia will benefit from this global economic recovery," he said in a statement yesterday.

Miranda added that while the government forecast is for the economy to grow at 2% to 3% this year, he believed "actual growth will be a surprise on the upside".

"The government's fiscal stimulus spending has begun to bear fruit... and the increase of personal tax relief and the lowering of the maximum tax rate from 27% to 26% are all serving to stimulate consumer spending," he said.

Miranda added that it is normal for adex to shrink faster and by a bigger quantum when the economy shrinks. "The corollary to this is that when recovery is complete, we can expect spending to outperform the economy as a whole," he said.

While OMG's outlook for the year remained one of "cautious optimism", there are clear indications of double-digit adex growth, said OMG managing director Andreas Vogiatzakis in a phone interview yesterday.

"There is the World Cup and positive sentiments about the recovering economy. Also, in general, our clients have been more optimistic with their advertising budgets this year," he added.

According to Zenith, last year, TV adspend grew 13%, radio 24%, outdoor 17%, point of sale 16%, and Internet 22%. Newspapers posted a 3% increase while cinema adex shrank 18% and magazines fell 11%.

OMG predicts that this year, newspapers will maintain the lion's share of the adex pie but will lose 1% to 2% of its share to TV.

According to Nielsen AIS, from January to November last year, newspapers garnered 52% of total adspend while TV's share was 12%.

Online will achieve double-digit growth — mostly because more websites will be monitored, said Vogiatzakis who also predicted that point-of-sale's share of the adex pie will grow. "The need to engage with consumers will lead more advertisers to advertise below-the-line," he said.

Vogiatzakis added that there are indications that the "big five", namely the telcos, large fast-moving consumer goods companies, the government, automobile and aviation, will raise their spending this year.

According to Zenith, last year the top five advertising sectors in terms of percentage growth were pharmaceuticals (36%), industrial (35%), household products (26%), education (24%) and foodstuff (24%).

Sectors that showed the largest percentage decline in adspend last year compared with 2008 were office and business equipment (-29%), alcoholic beverages (-25%) and apparel & accessories (-18%), said Zenith.