Report: COVID-19 hits Hong Kong ad spend but online platforms set to grow

Hong Kong's advertisers are expecting a decrease in advertising budgets for 2020 with cashflow for offline advertising falling significantly due to the COVID-19 pandemic. But according to a Nielsen report, some industries will actually benefit from the current situation. 

Conducted by Nielsen in collaboration with the Hong Kong Advertisers Association (HK2A), the latest Advertising Spending Projections Survey has shown that half of the respondent advertisers expected that their ad budget would decrease by 7.1% in 2020, which was mainly accounted for by an 11% budget cut for offline ads, while the budget for online ads would expand by a marginal 0.8 % this year. Advertisers are especially pessimistic this year as there was only a 1.4% increase for ad budgets in 2019.

However, the actual decline of ad budget might be even greater as the true impact of the COVID-19 outbreak was not included in the research, which was conducted from the end of 2019 to early 2020.

The ad budget of most online channels was expected to increase in 2020. Video ads, paid social or social network, along with display ads were expected to account for 11.4%, 11.3% and 10.7% of the total budgeted spend respectively. As for offline ad budget, TV, print, and event marketing would be allocated the most advertising budgets.

The report's figures also indicate a change in the split between online and offline ad spending from 50/50 last year to 60/40 this year, with ROI on ad investment, especially online, continuing to increase in importance.

According to the survey, 44% of advertisers said ROI calculation was the top challenge for marketers. Research has also shown that advertisers were more inclined to spend on research for online advertising effectiveness evaluation in 2020, echoing the results that online ads will be allocated more of advertising budgets.

Big data analytics was the third biggest marketing challenge among advertisers. As for trends for adoption, advertisers said big data management, technology application, and fintech or mobile payments were the top three categories. 

“The tough economic situation can be a good differentiator for those who know how to adopt technologies to stand out from competitors. Whether they can turn potential crises into opportunities with the smart and cautious allocation of advertising budget, with the aid of state-of-the-art technology, is critical to business survival in the coming year,” said Clare Lui, vice president, media, Nielsen Hong Kong.

Out of the surveyed advertisers, 83% expected an economic downturn in the territory over the coming year. In general, they expected it would take at least six months for a rebound in the economy. However, respondents said the pharmaceutical and healthcare, telecom and technology, and packaged food sectors would enjoy the highest growth in 2020, as luxury, entertainment, and retail took a dip.  

“Under current economic uncertainties, marketers should always be ready to adopt and integrate new technology for successful marketing strategies. We need to keep abreast of different media platforms to optimise various opportunities,” said David Yeung, chairman of the Hong Kong Advertisers Association.

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