Ramadan ads in Malaysia muted due to geo-political tensions. How are ad agencies coping?

Festive seasons usually come with looser wallets - both on the consumer and marketing front. In Malaysia, with a majority of the population being Muslim, Ramadan and Raya is generally a season with much advertising buzz and peak season for sales. However, this year, the war in Gaza and the weakening of the ringgit has had a noticable impact on Malaysian consumers.

In Malaysia, the call for boycotts remains strong with brands such as McDonald's and Starbucks being caught in the eye of the storm. Recently, the founder and advisor for Berjaya Corporation, Vincent Tan, appealed to Malaysians to stop the boycott of Starbucks Malaysia which is owned by BFood, a Malaysian company, and is a franchise. Therefore, it is not owned by Americans or Starbucks America.

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McDonald’s Malaysia, which is now in the middle of a lawsuit due to the boycott issues, also made a contribution of RM1 million to the Palestine Humanitarian Fund in October 2023. The donation came days after the company released a statement addressing the fact that McDonald’s Israel donated free meals to Israeli soldiers, causing many online to question if the company was contributing to the destruction caused to those in Gaza. In its statement, McDonald's Malaysia clarified that the actions taken by its Israel branch were those of an independent market and that it does not reflect the values or practices of McDonald's Malaysia.

All of these incidents are causing many international brands in Malaysia to be cautious of being added to the list of brands being boycotted due to associations with Israel. Unlike previous years, this has led to a rather muted Ramadan period when it comes to advertising spend, said industry professionals A+M spoke to.

Syahriza Badron, general manager at FCB Shout said that many international brands are on high alert this Ramadan/Raya season due to heightened consumer sensitivity, primarily fueled by the Gaza War and resentment towards the weakening Ringgit. The agency has had clients explicitly informed the team to take a low-key approach during Ramadan/Raya, preferring to remain discreet despite going all out during Chinese New Year. She said:

What's particularly frustrating is that some marketers are aware of the decline in sales, and Ramadan/Raya traditionally represent peak seasons for marketing efforts.

"However, they're forced to adopt a cautious approach during this holy month, choosing to either step back or operate with minimal visibility, as even the slightest misstep can trigger significant repercussions,” she explained.

Agreeing with the observation is Winnie Chen-Head, head, product and growth of dentsu Malaysia, who said that there has been a slight slowdown in brand campaigns being launched or activated this year. This includes campaigns in public venues such as malls and at Ramadan bazaars, where social media chatter have indicated disappointment in lackluster Raya decorations compared to Christmas and Chinese New Year from a few months before.

Like Badron, Chen-Head added that the ongoing geopolitical instability and economic uncertainties have largely impacted local economies in Southeast Asia, with many global brands facing major impact on revenues.

However, as the Ramadhan period is still ongoing, she remains optimistic that there could be a surge in ads coming closer to a week or so before the main Raya celebrations on 10 and 11 April.

Brands are still spending and showcasing their respective festive campaigns, albeit in a slightly different tone and approach.

It isn't just a geo-political issue

Beyond the geo-political tensions, one area that has often been overlooked is that of the ad fatigue, argued Chen-Head. "Festive fatigue might have set in with a number of back-to-back festivities since late last year, from Deepavali in November 2023, to Christmas and New Year in December 2023, straight to Chinese New Year in January to February 2024," she said. 

"And now to Ramadhan and Raya in March to April 2024. It is hard for brands to sustain the high in campaigns, promotions and spends continuously, one after another."

Moreover, many brands are also now opting for digital spend, added on Sue-Anne Lim, chief executive officer at Universal McCann (UM). “In this age of hyper-personalisation, ads are now served individually to specific audiences, which may not be visible to the mass market. This is especially so if advertisers opt to run Raya videos online and not on any linear channels,” she said.

When media becomes more fragmented, the visibility of such campaigns may lack the same festive ‘feel’.

The impact on ad agencies

Of course, the reduction in ad spend, even for top advertisers in the market, has resulted in an impact on the ad industry given agencies are predominantly reliant on the client’s marketing and communications budget for activity.

But agencies A+M spoke to remain optimistic about their operations. Badron said that at FCB SHOUT, despite the challenging landscape and budgetary adjustments, the silver lining lies in the collective effort of stakeholders. “Recognising the adversity, there's a palpable sense of unity as everyone rallies to support each other—whether it's our production teams or media partners—to ensure the success of the campaigns we are launching,” she said.

Lim on the other hand said UM is well placed to ride the tide given its diversity in offering from clients to tech solutions.

Chen-Head added that the silver lining is in how the agency is working towards "exploratory test and learns, innovation agendas, and to relook it communications approach beyond traditional campaigns". This has allowed the agency to work more holistically and in a more integrated manner with other agency partners to gain better transparency and collaboration.

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