Magna forecasts global advertising spend to surge this year, Malaysia to see 15.4% increase

Interpublic Group’s Magna forecasts a 14% increase in 2021 global media ad revenue, now expected to reach a record USD657 billion which according to Magna, represents the strongest ad revenue acceleration in 40 years. Shifting the lens to a more local view, in terms of advertising activity in Malaysia, the disruptions in 2020 led to a contraction of -20% but Magna forecasts that 2021 will see an increase by 15.4%. 

In terms of linear advertising, revenues are expected to increase by 10.8% and reach 44% of total advertiser budgets. However due to the -39% decline in 2020, this means despite the bounce, linear advertising revenues will only regain 68% of the prior 2019 spending levels. 

Television spending is forecasted to increase by +8% to MYR879 million, representing 86% of the prior 2019 spending level following 2020’s big -21% decline while other linear advertising formats fared even worse, including radio (65% of prior levels) and OOH (67% of prior levels). 

According to Magna, linear advertising revenues have been hit so hard because Malaysia has very significant exposures to industries vulnerable to COVID shutdowns and changes in consumer behaviour as a result of the crisis. Restaurants, retail and travel/tourism sectors make up 62% of small and medium businesses in Malaysia and many of them have gone out of business or have made huge cuts to their ad spend in order to survive in the short term. 

In terms of digital advertising spend in Malaysia, Magna forecasts it’ll increase by +19.3% to reach MYR 2.9bn, representing 56% of total budgets which is a huge increase from 40% of budgets in 2019. 

Digital adoption was propelled by the pandemic with the increased use of devices as spending on mobile devices is forecasted to increase by +27%. Meanwhile, in terms of format, search, video and social, in that order, are leading the way. 

Although Malaysia’s economic output is projected to regain all the momentum it lost in 2020, the recent spike in COVID-19 cases and the subsequent national lockdown may impact the forecasted economic activity.  

According to Chief Investment Officer of Mediabrands Malaysia, Fan Chen Yip, despite the current gloomy sentiment, economic and advertising growth, though not on par with 2019 levels, are still anticipated as evidenced from data across markets recovering from COVID. 

“We are cautiously optimistic that it will be a similar situation for Malaysia, especially as mass scale vaccination takes off over the coming months, and as businesses are more prepared to face current lockdowns as compared to 2020,” Fan said. “These forecasts also further drive home the importance of digital advertising. As we see linear media owners continue to aggressively digitalise their media offering, digital spending will continue to grow exponentially.”

Digital spends now account for more than half of total Malaysian advertising budgets at 56%, fast reaching the levels of global digital spends which will account for two-thirds of all advertising sales in 2022.