The 2% year-on-year (y-o-y) increase in advertising expenditure for January 2009 should not be taken as an overly optimistic predictor for the rest of the year, say some industry players.

According to recent Nielsen Media Research figures, January 2009 recorded an annual increase of 2% to RM457.8 million from last year’s RM448.1 million. Roy Tan, managing director of Carat Media Services (M) Sdn Bhd, told The Edge Financial Daily that the increase of 2% was not significant when Chinese New Year spending was taken into account. “The prevalence of FMCG and hypermarket spending is highly indicative that spending is seasonal. In fact, a 2% increase is a sign that the market is slowing down,” he said. According to Carat Media’s February media update, Chinese New Year spending was the main driver of the RM9.7 million boost, with telcos, fast-moving consumer goods (FMCGs) and hypermarkets generating the most adspend.

Andreas Vogiatzakis, managing director of Omnicom Media Group, agreed with Tan. “I won’t be fooled by January’s growth, and my outlook for this year remains prudent,” he said. “Higher priced purchases have been affected but not the FMCG goods yet. Also, this year lacks events like the Olympics or the elections to make a difference to the adex. It is not realistic to expect another year of 12% growth,” he added.

The top three advertisers for January were Procter & Gamble (RM8.7 million), Celcom (RM7.6 million) and Nestle (RM7.1 million). Despite a 4% y-o-y drop from last year, newspapers accounted for the highest ad spend in January at RM258.6 million, which is more than half of total adex (56.5%). It was followed by free-to-air television which contributed 31.7% of total adex at RM145.1 million, and radio at RM24.4 million. The highest growth was seen in cinema advertising (19%), radio (14%) and free-to-air TV (12%) while the biggest drop was in Internet advertising, which shrank by almost half. Internet adex came in at RM2.2 million in January last year but fell to RM1.1 million this year.

However, both Tan and Vogiatzakis are of the view that the online figures are not representative of the online market as a whole. “The participants in the Nielsen study do not reflect the universe of online media,” said Tan.

Vogiatzakis believes digital marketing will grow this year. “There has been a lot of drive to move to digital platforms over these last two years. This online market will have advertisers gravitating to the digital medium with its measurable return on investments,” he said.

This article appeared on the Media & Advertising page, The Edge Financial Daily, March 12,2009.