Business

Saturday February 18, 2012

January adex contracts 5.7%

By M. HAFIDZ MAHPAR and EUGENE MAHALINGAM
starbiz@thestar.com.my


PETALING JAYA: Total advertising expenditure (adex) in the country shrank 5.7% year-on-year to RM771.93mil last month, according to market research firm Nielsen, marking the first monthly contraction in three years.

However, media specialists contacted by StarBizWeek did not find it alarming, mainly attributing it to the timing of the Chinese New Year (CNY) celebration.

Universal McCann Malaysia chief executive officer Prashant Kumar said the lower adex could be attributed to the shorter CNY season in the month of January. “(However) we see things getting better in the coming months,” he said.

An analyst concurred, adding that the contraction was “not worrying.”

GroupM Malaysia chief executive officer Girish Menon and Starcom Mediavest Group Malaysia chief executive officer Ranga Somanathan both said the retreat in January adex was due to early CNY, as well as delays in marketing plans getting firmed up.

“We believe the 5-6% contraction is largely a timing issue, driven largely by the relatively short gap between New Year and CNY.

“As a result, many clients have not got their annual marketing plans into full gear in January,” Menon says, adding that he believed the market would get back on track from March onwards.

“However, another reason the spend levels were a bit lower is that some advertisers are operating at 2011 budget levels without any adex growth, due to the volatile global economic conditions.

“So they will wait for Q1 and Q2 sales performances before releasing any additional budgets for the end of the year.”

Ranga said that from his interactions with Starcom Mediavest's client leadership, he gathered that “the plans are strong for the year and (we) will see more action in the second quarter onwards.”

An analyst from a local banked-backed brokerage concurred, adding that he expected adex to pick up towards the middle of the year.

“The general election, Olympics and Euro 2012 football championships later this year are expected to boost adex,” he said.

Omnicom Media Group chief executive officer Andreas Vogiatzakis, who also attributed the lower adex to the CNY period last month, said his agency had however expected the January 2012 adex to be at least on par with that of January 2011 as CNY was during this period.

“However, the decrease in adex may be due to advertisers being conservative, with non-festive brands preferring to avoid the perceived clutter.

“This also might be fuelled by consumer spending, as most of it was done in December.

“In January, it might have slowed down.”

PHD Malaysia general manager Audrey Chong pointed out that historically, ad spending in the first quarter was generally not aggressive.

“However, CNY festive ads will help to at least boost (adex),” she said.

Chong pointed out that marketing plans generally “are just about to be finalised” around year-end or in the beginning of the subsequent year.

“Campaign executions and new creatives usually take some time to develop. However, with advertisers planning early, they can take advantage of the relatively low clutter to gain a lead,” she noted.

The dip in adex was led by free-to-air (FTA) TV, which shrank 11.8% year-on-year (see table). In contrast, pay-TV adex rose 12.1% during the period.

Newspapers continued to command the lion's share of total ad spend, accounting for 41.1% of total ad spend in January 2012.

Canon Marketing Sdn Bhd was the biggest advertiser last month, shoring up ad spend by 155.9% year-on-year in January 2012.

Other top advertisers included Unilever Malaysia, Procter & Gamble and GlaxoSmithkline.

Prashant said Canon's high ad spend was not at all surprising. “Today people have a camera-on-the-go in their mobile and a high-end professional class camera at home, and some even have one small camera in their purse.

“One is to capture everyday spontaneity of life or to suit their instant vanity needs or just for conversations.

“The other is for those timeless occasions, or slices of life and times that must be carefully preserved,” he said.

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