SEA digital economy worth RM1.32 trillion
10 Apr 2023
While Malaysia will not be able to avoid global recessionary headwinds if they were to hit these shores, the Asia-Pacific region is likely to experience a lesser impact than its Western counterparts, says GroupM Malaysia.
The agency’s chief executive officer Chanchal Chakrabarty attributes this to the opening of China’s economy and India’s resilience.
This bodes well for the local economy, which the media industry is closely linked to.
He told StarBiz that the marketing ecosystem, of which the media and ad industries are a part, has a very close correlation to consumer sentiments and economic growth.
On top of it, he said the sentiments across South-East Asia (SEA) markets, including Malaysia, were more positive, with economic growth coming back to pre-Covid pandemic levels or even better.
Malaysia ended 2022 with a high gross domestic product (GDP) growth rate of 8.7%, and the first half is expected to keep the momentum, thanks to the Chinese New Year and Hari Raya festivities, he said.
He said Malaysia and other Asian currencies have also started rebounding, erasing about half of last year’s losses and easing pressure on domestic prices.
Chanchal added: “The government headed by Prime Minister Datuk Seri Anwar Ibrahim has further added to our hopes and is surely expected to provide the much-needed tailwinds to consumer sentiments and hence the economy.
“The government’s focus on supporting the small and medium-sized enterprises (SME) sector, which is expected to contribute about 40% of GDP and more than two-thirds of employment this year, is sure to bear fruits.
“The digitisation of the SME sector across SEA during Covid-19, especially with marketplace and technology adoption among them massively increasing, has helped them to scale their physical and mental availability quickly and efficiently, setting them on the path to rapid growth.”
Furthermore, he said the digital economy in SEA is estimated to be worth US$300bil (RM1.32 trillion) and is expected to grow five times in the next five to seven years.
This would lead to a massive boom across digital services and is evident from the focus on technology and digital platforms in driving commercial innovations towards the SEA markets, he said.
To this end, Chanchal hopes that the second half of the year will continue to ride on these tailwinds, adding that even if it tapers down, Malaysia would still at least deliver a decent and positive 2023 GDP growth, he added.
Bank Negara expects the economy to grow between 4% and 5% this year.
Touching on ad spending, which is closely linked to the media industry and the economy on the whole, he said for about six to seven years pre-Covid-19, Malaysian ad spending was growing at a very slow pace, even risking being stagnant at times.
While digital spending was growing, the bulk of its growth was coming from cannibalising other platforms, he said.
The year Covid-19 hit the shores in 2020, Malaysian advertising spending fell by about 18%, as was the case in the majority of countries.
He said what was surprising was that advertising spend recovered in 2021, growing by more than 17%, and continued to deliver robust double-digit growth in 2022.
While this was unprecedented, he said the agency now expects the growth trajectory to taper down to single digits, and be in line with GDP growth.
“The out-of-home platform has also been growing rapidly, especially digital out-of-home (DOOH).
“While Tik Tok has been delivering unprecedented growth, Google and Meta’s growth has dropped quite significantly last year in the region to low single digits, but given their large bases, they continue to contribute significantly to the overall media spends.
“Platforms like radio have also been delivering healthy growth, and cinema is coming back fast to pre-pandemic levels. Even the otherwise declining platform of magazines has seen the launch of new premium luxury fashion magazines recently,” he noted.
Separately, he said the agency would drive growth through new business acquisitions and identify new and relevant developments that would help drive growth for its clients’ businesses and consequently also boost GroupM’s revenue.
To this end, it recently introduced two first-mover products: Finecast and Sightline.
The former is an addressable and connected TV product with state-of-the-art planning and sharp targeting capabilities.
Finecast is the agency’s investment in developing a tech product that provides targeting ability down to the postcode and custom audience level, thus minimising the wastage that brands have to “live” with when advertising on national TV.
Sightline is the agency’s programmatic DOOH planning, measurement, and execution product.
It is another of its tech investments for a platform that always lacked any proper measurement as well as addressability.
Chanchal said the other areas of continued growth for the agency would be the rapidly growing eCommerce solutions and SME consulting services.
He noted that the agency’s focus is also on responsible investment.
“This covers critical areas and trends of sustainability, that is, reducing carbon emissions of media buys in line with the agency’s net zero commitments and brand safety, which would ensure our client’s brands appear in a responsible journalism (no fake news) environment and achieve high viewability.
“These are in line with our goal of shaping the next era of media to make advertising work better for people,” he said.
As for a specific measurement system for the media industry, he said there isn’t one at the moment.
Therefore, he said marketers, agencies, and platforms would need to create a unified video measurement system, as only then could the measurement of duplication, frequency, etc. across these platforms be ensured with accuracy, hence driving efficiency in the media industry.
“In Malaysia, Astro is coming out with a unified multi-device reach across its platforms.
“Nielsen has launched its cross-platform measurement but is limited by its digital coverage.
“The Malaysian Communications and Multimedia Commission has also been leading the single video measurement project, which is expected to first combine video viewing across TV platforms and progressively add some other video platforms.
“If all these efforts could somehow be brought together and the measurement was able to include at least all the large video platforms, then we as an industry would be well placed from a media measurement standpoint,” he said.
Source: The Star