Digital advertising thrives during lockdown (MCO) in Malaysia

Digital advertising spiked in the first three months of 2020 (3M20), propping up total gross advertising expenditure (adex) for the period at RM1.34 billion.

Based on Nielsen’s 3M20 statistics, traditional media platforms dipped by nine per cent with the biggest loser being newspapers dropping 24 percent.

Recall that Utusan Malaysia and Kosmo! shut their doors in 4QCY19, unable to bear the strain of declining print sales, contributing to the stark overall decline.

“While the key component of free-to-air TV (FTA TV) saw a rise of five percent in adex value, this was due to Nielsen now tracking digital terrestrial television (DTT) channels from 3M20,” said the team at Kenanga Investment Bank Bhd (Kenanga Research) yesterday.

“Removing this, FTA TV actually declined by one percent year on year (y-o-y). Other notable declines are cinema (a drop of 25 percent y-o-y) which previously saw strong results, thanks to blockbuster films in 2019.”

On a quarterly comparison, 1Q20 total gross adex diminished by 17 percent against 4Q19, which could be due to greater seasonal demand during the year-end periods.

Similarly, Kenanga Research saw that digital adex continued to be gaining traction by 27 percent at the expense of its conventional counterparts likely due to more engaging and effective means of reaching target audiences.

“With the ongoing movement control order (MCO) stemming from the Covid-19 pandemic, it is highly probable that traditional platforms would be affected more,” it opined.

“Newspaper publications may not physically reach readers as easily, while Out-of-Home advertising is proving to be less relevant as traffic flow greatly dwindles during the MCO.

“With almost the entire population being homebound, television and digital channels will see even greater consumption as a source of entertainment and news updates.

“However, the postponement of international events, such as Euro 2020 and Tokyo Olympics, would eliminate the otherwise seasonally induced traction that video platforms could benefit from.

“That said, online and web subscription for news access could see strong reception during this period.”

It went on to suggest that Media Prima Bhd, having a fair share in television advertising, may also seek to push its integrated solutions offerings in a time where advertisers are cautious about spending on marketing.

“Fundamentally, the group’s past downsizing of its print segment appears timely given the current circumstances,” it elaborated.

“While these efforts may take time to gain meaningful traction, tight cost controls are crucial to keep profits sustainable amidst the weakness in traditional channels, of which we see Media Chinese International Ltd as the best candidate for such a scenario.

“Despite the hurdles ahead, media players are still showing resilience in keeping up with their respective strategies to stay ahead.”