Advertising expenditure (adex) in Malaysia surged 22% in the first half of this year compared to the corresponding period last year on the back of a resurgent economy and the FIFA World Cup.
The Malaysian economy performed much better than expected in the first quarter of the year, with real Gross Domestic Product (GDP) growth accelerating to 10.1% and nominal GDP surging 17.0% from first quarter 2009.
“The recession is past and advertising is once again growing as quickly as it did before the downturn,” said Mr. Gerald Miranda, chief executive officer of Zenith Media Malaysia, one of the country’s leading media services agencies, to ADOI today.
“Some of the upswing in spending was also due to the FIFA World Cup. We estimate that local broadcast sponsors of the World Cup would have spent at least RM50 million on the event.”
The final match, broadcast live at 2.30 a.m. on a Monday morning, had an audience of 1.5 million, not including out-of-home viewers. Some of the more popular matches at 10.00 p.m., like the Argentina versus Germany quarter-final, pulled in a whopping 2.5 million viewers.
Free to air television benefited most from the spending increase in the first half of the year, registering a 29% growth, followed by online (+55%), point of sale (+27%), radio (+18%) and newspapers (+18%). Magazines and outdoor increased 6% and 8% respectively and cinema dropped 8%.
Online advertising dramatically increased during the World Cup by nearly doubling the revenue it pulled in the second quarter compared to last year.
Zenith estimates that online advertising spending this Q2 will be about 80-90% higher than Q2 2009, mainly on account of the extra money that came from the World Cup.
Higher spending from telcos, the automotive sector, government, transportation and tourism also fueled the strong overall second quarter adex growth.
The high first quarter GDP number was to a large extent also due to the low base effect in first quarter 2009 and it will be unrealistic to expect this growth rate to continue.
“So, economic growth is expected to moderate as the year progresses. The announcement of the second half of the New Economic Model in the second half of this year will also help to provide some clarity in this respect.”
The International Monetary Fund says developing economies in Asia will expand 9.2% this year, compared with 2.6% for advanced countries.
Despite the expected moderation in economic growth going forward, Mr. Miranda was confident that advertising spending will still end 2010 with strong double-digit gains for the full year.
According to its latest global advertising expenditure forecasts, the agency expects spending in Asia Pacific, excluding Japan, to grow 10.6% this year.
And Malaysia is one of seven countries in the region that is expected to post double-digit growth this year, the others being China, India, Indonesia, the Philippines, Thailand and Vietnam.
The agency has also upgraded its forecasts for global advertising expenditure growth in 2010 to 3.5%, up from the 2.2% it forecast at the beginning of April. This is the third upgrade in a row, after six consecutive downgrades.
Most of the upgrade is in North America and Western Europe, where advertising spending was stronger than expected in the first half of the year, but these regions are still growing much more slowly than most developing markets.
Overall it forecasts 1.3% growth from developed markets (which it defines here as North America, Western Europe and Japan) in 2010, compared to 8.6% growth from developing markets (everywhere else).
The gap will narrow slightly in 2011, but growth in developed markets will remain modest: it forecasts developed markets to grow by 2.4% in 2011 and 2.9% in 2012, while developing markets grow by 9.1% and 9.8% respectively.
It expects developing markets to drive most of the growth in global advertising expenditure over the next few years, contributing US$39 billion of the extra US$60 billion it expects to see added to the world advertising market between 2009 and 2012.