Media owners advertising revenues in Malaysia increased by +13% this year to reach MYR 6.0 billion ($1.5 billion). In 2023, total advertising revenues will reach MYR 6.6 billion ($1.6 billion), a +9% growth.
The economy will grow by +5.4% on a real GDP basis, following 2021’s +3.1% growth. While this is lower than prior expectations, brands spent anyway, especially on digital advertising formats.
Economic inflation in Malaysia is increasing by +3.2% with +2.8% growth expectations in 2023. With consumer behavior now back to normal, real GDP will grow by +4.4% in 2023.
In this environment, linear advertising revenues increased by +8% to MYR 2.3 billion ($554 million). Linear budgets remain at just 70% of their pre-COVID levels. Because linear ad spending will erode from here as consumers continue to shift to digital media formats, linear advertising revenues will never again approach their pre-COVID highs.
TV spending, which decreased by +3%, are now 88% of their pre-COVID total. Finally, with the economy returning to normal and consumer spending increasing, cinema screens have re-opened.
Recovering from the fallout due to closed operations, cinema is showing a substantial growth this year of +281%. Finally, an increase in consumer behavior means that OOH spending will increase this year (+20%) and will continue to grow by +10% in 2023.
Digital advertising spending, on the other hand, grew by +13% to reach 62% of total budgets. Digital advertising spending is being led by mobile devices, which will increase by +213% and represents 73% of total digital budgets. By format, spending is led by social media (+20%), search advertising (+16%), and video advertising (+13%).
Digital advertising spending will continue to significantly outperform linear budgets, and by 2027, digital formats will represent 74% of total advertiser budgets.
In 2023, ad spending will grow by +9% to reach MYR 6.6 billion ($1.6 billion). Digital advertising will continue to grow by +13%, and linear budgets will grow by +3% before decaying in 2024 and beyond.
Fan Chen Yip, Chief Investment Officer of Mediabrands Malaysia stated that “For the 2023 outlook, our optimistic 9% growth to reach RM6.6billion is impressive in comparison against the APAC growth rate of 5.2% in 2022 and 6.1% projection for 2023. We must however highlight that these growth rates are uneven across different categories of media, with digital unsurprisingly taking even more share of revenue.
Forecasting further ahead into the next 5 years, we expect digital to take a dominant position of 75% of advertising revenues. While Malaysian media owners have ramped up significantly in terms of digital capabilities, there is still much work and innovation to be done before our industry fully capitalises on the full potential of digitalization.”
TEN TAKEAWAYS – GLOBAL & APAC
- The winter update of MAGNA’s “Global Ad Forecast” predicts media owners advertising revenues will reach $833 billion in 2023, +5% growth vs. 2022 ($795bn), slowing from +7% in 2022. This new 2023 growth forecast is 1.5 percentage points below MAGNA’s previous forecast (June 2022) due to the deteriorating macroeconomic outlook.
- After a strong start in 2022 (e.g. US 1H: +11%), advertising spending growth slowed significantly in the second half amidst global economic uncertainty (US 2H: +3% excluding political). Nevertheless, full-year 2022 ad revenues still grew by almost +7% to $795 billion, helped by record levels of cyclical spending (elections in Brazil and the US, Winter Olympics, FIFA World Cup).
- Traditional media companies (Television, Audio, Publishing, OOH) saw their advertising revenues grow by +2.5% this year, despite the challenging economic environment, while digital media companies grew by +9%. This the narrowest growth gap ever observed by MAGNA, signaling that editorial media brands remain attractive and relevant as they now combine brand-safety with cross-platform reach.
- Several industry verticals may slow down marketing expenditure in 2023, e.g. CPG/FMCG verticals and Finance. Entertainment, Travel and Betting will continue to be driven by post-COVID recovery and regulatory relaxation. Automotive is a big question mark due to the uncertainty in macroeconomic environment and supply issues, but MAGNA believes ad spend will finally start to recover in 2023.
- In that environment, the ad sales of traditional media owners will slow: Publishing and Television ad sales will shrink by -3% and -4% resp. while Audio advertising will be stable (+1%) and Out-of-Home ad revenues will grow by +6% to reach almost $32 billion, just above pre-COVID total.
- Meanwhile, digital advertising sales will grow by +8% to reach $557 billion dollars i.e. 65% of total ad sales, driven by organic growth factors (ecommerce, media consumption shifts). Digital Video will be the fastest-growing ad format (+11%) followed by Search (+10%), and Social recovering slightly (+7%).
- Television advertising will suffer from continued erosion in linear viewing (-5% to -15% depending on targets and markets), and the lack of cyclical events following the record cyclical spending of 2022, mitigated by resilient pricing (average CPM costs +10%) and growing AVOD ad sales on broadcasters’ streaming platforms.
- In 2023, APAC advertising revenues will increase by +6% to $263 billion, 23% above the pre-COVID spending level, driven by digital advertising growth (+70%).
- The second largest ad market, China (15% of global advertising revenues), will re-accelerate in 2023 (+7% to $128 billion) following a historically weak performance in 2022 (+3%) due to the zero COVID policy crippling the economy, and regulatory restrictions slowing down digital media.
- Among the world’s top 15 advertising markets the strongest 2023 growth will come from India in 2023 (+14%) and South Korea (+7%). At the other end of the spectrum MAGNA expects very little growth (under +3% all-media, negative for traditional media) in Germany, Italy, Japan, and Spain.
Vincent Létang, EVP, Global Market Research at MAGNA and author of the report, said that “Advertising spending slowed down in the second half of 2022 because of economic uncertainty and issues affecting digital advertising formats, but traditional editorial media managed to grow by +2.5%. The gap in growth rates with digital advertising growth (+8.9%) was the narrowest ever measured by MAGNA, suggesting that the long-term transition to a digital-centric marketing landscape has slowed down following the COVID acceleration.
Marketers continue to value the brand safety that editorial media vendors deliver, combined with expanding cross-platform opportunities. Television (+2%) and OOH media (+12%) were particularly resilient in 2022. The introduction of ad-supported premium streaming in 2023 and the continued success of digital audio formats also exemplify the comeback of ad-supported editorial media in the top of mind of marketers, consumers, and media executives.”
Leigh Terry, CEO Mediabrands APAC commented that “The Asia Pacific advertising economy will grow by +5% this year, following the 2021 rebound (+18%). In 2023, the Asia Pacific ad market will expand by +6%, which is slightly higher than the global average of +5% and in line with the pre-COVID long-term regional growth.
Growth is powered by large markets such as Australia (+8% in 2022, +5% expected in 2023) and India (+15% in 2022, +14% expected in 2023). In 2023, APAC advertising revenues will increase to $263 billion, 23% above the pre-COVID spending level, largely driven by digital advertising growth (+70%).”
Gurpreet Singh, Managing Director MAGNA APAC stated that “After a double-digit growth in 2021 which was largely a bounce back from negative growth in 2020, advertising spends in Asia-Pacific continue to grow but at relatively lower growth rate. Growth in overall advertising spends is mainly driven by growth in digital spends, while spends on linear media overall are mostly showing decline in a majority of the APAC markets except for OOH which is getting back on growth track in most markets.
Overall linear media spends are not yet able to come back to pre-covid levels in most of the APAC markets. South Asia is an exception where linear media is still showing good growth. Share of digital spend is already in a dominant position in more than half of the APAC markets, and within the next 5 years we expect this trend to expand across the vast majority of APAC markets.”
KEY FIGURES
TABLE 1: GLOBAL ADVERTISING MARKET
| 2022 | 2022 | 2022 | 2023 | 2023 | |||
| AD SALES | GROWTH | PREV | GROWTH | PREV | |||
| GLOBAL | 795 | 6.6% | 9.2% | 4.8% | 6.3% | ||
| EMEA | 190 | 5.1% | 7.5% | 4.3% | 5.8% | ||
| NA | 334 | 7.9% | 10.8% | 3.8% | 5.7% | ||
| LATAM | 25 | 13.7% | 9.6% | 9.2% | 6.7% | ||
| APAC | 247 | 5.2% | 8.4% | 6.1% | 7.4% | ||
| DIGITAL MEDIA | 514 | 8.9% | 12.5% | 8.4% | 10.8% | ||
| SEARCH | 260 | 12.7% | 14.8% | 10.0% | 11.5% | ||
| SOCIAL | 149 | 4.4% | 10.6% | 6.8% | 11.0% | ||
| DIGITAL VIDEO | 65 | 11.3% | 15.8% | 11.2% | 15.5% | ||
| TRAD. MEDIA | 282 | 2.5% | 3.6% | -1.7% | -2.3% | ||
| TELEVISION | 172 | 1.7% | 3.9% | -3.6% | -3.7% | ||
| RADIO | 30 | 4.2% | 3.6% | 0.6% | 0.2% | ||
| 47 | -3.0% | -2.6% | -2.6% | -4.5% | |||
| OOH | 32 | 12.4% | 10.4% | 6.2% | 5.7% | ||
| CINEMA | 2 | 63.2% | 62.4% | 21.8% | 15.3% |
Source: MAGNA Global Ad Forecasts, December 2022.
PREV= Previous MAGNA update (June 2022)
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