To find out what the expectations are for advertising expenditure (adex) growth this year and what trends to look out for, The Edge Financial Daily asked various industry leaders to do some crystal ball gazing. This week, we hear from Girish Menon, CEO of GroupM Malaysia, which comprises four media service agencies including Mindshare, a leading media specialist company (of which he is managing director)

Last year was a great one for adex growth. Do you expect some of that momentum to spill over into 2012?
This year will see adex growing at a slightly slower pace than the 12% growth we saw in 2011. Nevertheless, even if we grow at 10% to 11%, it will still be very healthy compared to many other markets around the world.

Analysts are saying that adex momentum may lose steam in 2012 because of the negative global economic outlook and higher base effect in 2011. What do you think?
Yes, we do live in a more connected world, where it is difficult to ignore what goes on around us. However, from an economic fundamentals point of view, Malaysian GDP is still quite strong, driven by strong domestic consumption and exports which are increasingly delinked from Western markets.

Do you think with the severe downturns projected in Europe and the US, companies will be moving their advertising dollars to Asia? And if so, will Malaysia be a beneficiary of that?
Yes, Asia is clearly the engine of growth for most global companies now. There is no doubt there will be a net movement of budgets from Europe into Asia and Latin America. However, in Asia, we feel the priority will be high growth markets like Indonesia and Vietnam, and large markets like China and India.

Malaysia will usually be considered a Priority 2 market within Asia. In the past few years, the media inflation in Malaysia has been in the high double digits and this is out of sync with the GDP growth rate of 5% to 6%. Advertisers will be willing to live with high media inflation if they can set it off against equally high revenue growth or if the market is so big (like India and China) that it is worth it. I don’t think the high media inflation in Malaysia is justifiable or sustainable. Therefore, from a pure media investment point of view, Malaysia will be relatively less attractive than other Asian markets.

Do we have enough talent to meet the demand should this happen?
Talent shortage is the single biggest issue affecting the marketing and media investment industry.
We have to raise the profile of our industry among graduates and make ourselves a viable and attractive career option. There are a number of such initiatives taking place at an industry level and of course at GroupM as well.

Which sectors will be the key drivers of adex growth this year?
As usual, adex will be driven by fast-moving consumer goods and telcos. A significant contribution to growth will come from Malaysian companies, especially small and medium enterprises, many of which have built up their product quality, packaging and distribution networks, and are now ready to start investing in brand building.

Will print continue to dominate ad spend or are we going to see a shift this year?
The shift is gradual and has been happening for some time. This is inevitable with the growth of digital media and changing consumer habits. Fortunately, many of our large print players in Malaysia are already changing their product mix to cater for digital audiences and digital advertisers.

What other key trends do you foresee for adex in 2012?
Media investment will continue to grow in events, on-ground activation, branded content, mobile apps, social media and ambient digital media. Advertisers need to focus more on in-store communication and shopper marketing. Unfortunately, opportunities are limited in some of these emerging media areas, so at GroupM, we will be looking to work with media owners to jointly develop new touch points for advertisers.

This article appeared on the Media & Advertising page, The Edge Financial Daily, Feb 16, 2012