Business

Wednesday December 24, 2008

Digital media to gain more ground

Margaret Lim, chief executive officer of multinational media specialist company Aegis Media Malaysia Sdn Bhd, expects 2009 to be one of the most challenging years for the advertising industry


WHAT is your outlook for the advertising industry next year?

Mega events in 2008 such as the general elections and the Beijing Olympics bumped up advertising expenditure (adex) to 18% up to August.

With the global financial crisis and its creeping impact upon us, there has been a slowdown on a month-on-month basis since September. (In September, it was -5% and in October -9%.)

Next year will be one of the most challenging on record as we brace ourselves to meet the full impact of the global financial crisis in an environment where new communication patterns are fast changing and one where our business models are adapting to continue to be relevant.

None of our clients have yet to inform us of budget cuts and many are adopting a “wait-and-see” attitude.

Adex growth, if any, will be slow. If gross domestic product (GDP) growth can be achieved at 3.5%, we should see adex growth at about 5.5%.

Margaret Lim

What are Aegis Media’s strategies to ride out the economic slowdown?

With the global slowdown, our targets are still challenging but less aggressive than in the past.

And our strategy is to focus on how we can build our business and profitability further while keeping an eye on managing and minimising our cost of operation.

We are already implementing a freeze on hiring unless it is to manage new business, and have cut uncommitted expenses where possible.

What media-related trends will emerge or become more prominent in the coming year?

Digital media in its different forms will gain further ground as advertisers learn how to harness it to communicate with their consumers.

It is a less expensive medium than traditional media and has the added advantage of interactivity and engagement.

We believe that OOH (out-of-home) and WOM (word-of-mouth marketing) will also grow.

OOH media specialists have already emerged in the past couple of years and we can expect to see companies specialising in WOM emerging.

What can the Media Specialists Association, of which you were the president for four years, do to ensure that price undercutting and other “frowned-on” tactics will not escalate during these tough times?

A guideline for fees that media specialists in Malaysia are suppose to charge is already in place and all our members are asked to follow them.

However, we could not strictly enforce it as we had to deal with historical fees, global and regional applied fees and the different forms of fees/commissions applied to our varied clients.

The association is mindful that price undercutting will not only harm the industry which survives on razor-thin margins, but also demean our stature and the benefits we bring to the table for our clients.

How do you think the media landscape will change following this economic downturn?

In the economic downturn, advertisers will be hard pressed to make every ringgit work not only harder, but smarter than the competition.

There will be less emphasis on straight spot or space buys in traditional media and more deals on making the media work more effectively to make the advertiser’s message more relevant and in a cost effective way.

We can expect to see some weaker media – which do not have a strong niche, to close down.

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