MY's better-than-expected GDP growth in Q4: Are adland leaders feeling a boost of confidence?

The Malaysian economy has been on a rebound and the year kicked off rather positively as the nation saw fourth quarter growing by 7% based on continued domestic demand, and a resilient demand in electrical and electronics goods, Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus said, as quoted on CNBC. She added that the nation will not go into recession as investment and income remains strong.

The article also detailed that GDP for 2022 was 8.7% higher than in 2021, and this was the “fastest full-year growth in 22 years” even surpassing the government’s forecast for 6.5% to 7%. Meanwhile, China’s reopening is also expected to boost Malaysia’s tourist arrivals to help cushion export growth.

A+M has reached out to a number of ad agency leaders to find out their take on the impact of a higher GDP on Malaysian adland. Here is what they had to say, along with their advice on what can be done to push the ad industry’s forward:

Adrian Cheah, managing director, The Chariot Agency

While some might think that with the said “Malaysia GDP growth” in the media could translate to growth for the ad industry, we have not seen any form of growth just yet – brands are still careful; taking the “wait and see” strategy mainly contributed by the political situation in the country. We must first understand where this growth is coming from. The said 8.7% growth is referring to 2021 vs 2022 and in 2021, the country was in lock down which would mean that we had really low GDP numbers compared to what it was in the previous years, and what it is today in 2023. Also the growth was mainly contributed by capital injections from GLCs and public sectors to help give the economy a boost.

So it is not wrong to say that we had growth, but it is not coming from a sustainable source, like consumer or tourist spend.

The projection for 2023 is that we will see growth, but slow. Brands will be treading carefully – taking the “wait and see” strategy. 2023 is for us (the ad industry) to work with brands to stabilise. I do not foresee brands to carry budgets like they used to pre-covid.

When the economy recovers and we have some sort of normalcy, I hope brands will relook at how they work with Agencies. Less pitches for projects and to see brands retain us for a longer period of time. This will allow the agency to be more focused on working with the clients to bring the brands back into a healthy state. We should also see less talents burning out and more passion on doing what they need to do for the brand.

But of course, if all goes well and the situation is stable, we will see growth - hopefully brands will start appointing agencies with more permanency again rather than going on projects and short-term contracts which would mean fewer pitches, leading to a more focused agency and few changes in people working on a particular brand.

         Fan Chen Yip, chief investment officer, Mediabrands Malaysia

The stronger than expected Q4 and FY 22 GDP growth combined with the FY22 GDP growth are good indications that business sentiments will continue to improve, which will in turn lead to more advertising investments. However, rising costs of living, business costs and inflationary pressures are real concerns affecting consumers and businesses alike, and these factors could have a much bigger impact which could stem the growth of ad spends for this year.

For the industry to keep growing and innovating, there is big need to grow the talent pool. It is very heartening to note that various players in the industry are actively grooming more talents – us included -- through effective learning partnerships and programmes. However, more needs to be done, and quicker, in order to to keep up with the pace of demand.

As more growth occurs in spaces like ecommerce, data analytics and artificial intelligence, there will be an even bigger need for skilled talents in these areas.

Another area we believe is critical to grow ad spends is ‘measurements’ – single television audience measurements better ‘out-of-home’ measurements – these are areas that the various industry associations are collaborating hard on to get off the ground and will be able to give a better picture for brands and agencies alike to compare results through a common lens.

Peter De Kretser, chief executive officer, GO Communications

Over the years the Malaysian Communications industry has remained rather resilient. Enduring a series of global recessions, political instability and of course COVID-19, a healthy and stable economy naturally lends confidence for companies and brands to stretch their marketing dollar.

2022 is famed for becoming the ‘COVID Rebound’ year for many organisations and while some may remain cautious in 2023, one is hopeful that brave brands will seek to continue their intelligent marketing investment further translating into significant monetary and brand-centric returns.

While a stable and robust economy is eternally imperative, confidence displayed by the communications industry through unique and quality work coupled with the development of young passionate talent, provide both short and long-term aspirations for growth of the industry.

A credible industry that recognises and advises on sensible marketing expenditures with tangible and measurable results will build credibility with brand owners and foster further growth.

Don't miss: Malaysian adland leaders share their wishlist for 2023

Shaun Tay, co-owner and chief executive officer, The Shout Group & FCB SHOUT

After the hard yards of the Covid years, this is obviously welcome news indeed. The ad industry is driven by optimism thus having the GDP numbers bounce back in a big way should help strengthen the resolve of marketeers to continue doubling down on their marketing investments. At FCB SHOUT, are already seeing the positive effects of this with our new business pipeline going into overdrive.

Speaking as an agency owner, I have always valued clients who've chosen to work with local agencies.

Building a thriving a home-grown independent and entrepreneurial creative spirit is the bedrock of a strong local advertising industry.

I truly hope that this year, the local independent scene truly goes gangbusters!

Syed Nasir, business chief, The Clan

It is indeed welcoming news to the industry, after a grim first half of 2022 that had most of us worried about the impending recession. A growing economy can provide a much-needed tailwind for the advertising industry but heavily dependable on how brands react to other economic indicators such as consumer confidence index & discretionary spending in households. The uptick in consumer spending will trigger the need to invest more in marketing dollars. Needless to say, Q1 is looking promising as we see more activity amongst brands looking out for our services mostly through requests for quotes (RFQs)- which hint at the need but only if the cost is right.

To push forward, the industry can lean on AI to supplement and enhance the challenges ahead of the burgeoning requirements of the digital age that calls for inexhaustible content. However, only with the right human talent will agencies be able to mould the right answers. Therefore, the approach to talent investment will need to change as run of the mill output will no longer be their day-to-day responsibility.

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