Advertising expenditure (adex) in Malaysia is expected to grow 10% this year, rebounding strongly from the slump early last year in the wake of the global financial and economic crisis. This is according to the latest forecast by Zenith Media Malaysia, one of the country’s leading media services agencies.

Advertising expenditure (adex) in Malaysia is expected to grow 10% this year, rebounding strongly from the slump early last year in the wake of the global financial and economic crisis. This is according to the latest forecast by Zenith Media Malaysia, one of the country’s leading media services agencies.

After contracting 0.5% in the first half of 2009, adex roared back in the second half to post a strong 7.4% growth for the full year. “The world economy is now recovering and consumer, business and investor sentiment everywhere have started to improve,” said Mr. Gerald Miranda, chief executive officer of the agency, in Kuala Lumpur today.

“Most developed countries have now come out of recession. Most notably the US came out of recession with a growth of 2.2% in the third quarter of last year, after contractions in the previous four quarters. ”Malaysia will benefit from this global economic recovery and will also return to positive economic growth this year.”

Although the government is officially forecasting economic growth of 2% to 3% this year, he believes actual growth is likely to surprise on the upside. As the world economy bottomed out in the first quarter of last year, year-on-year growth figures, including Malaysia’s, for the first quarter of this year are expected to be especially strong.

“The government’s fiscal stimulus spending has also begun to bear fruit with improved consumer spending and sentiment and a bullish stock market is adding to the general optimism,” he said.

“Measures to increase consumers’ disposable income such as through an increase in personal tax relief and the lowering of the maximum tax rate from 27% to 26% will also help to further stimulate spending.” Malaysian advertisers spent RM6.6 billion last year. Spending on television grew 13%, radio 24%, outdoor 17%, point of sale 16%, and internet 22%.

Newspapers managed to arrest their decline, posting a 3% increase. Cinema registered the biggest drop of -18% and magazines -11%.

The top five advertising sectors in percentage growth were pharmaceuticals +36%, industrial +35%, household products +26%, education +24% and foodstuff +24%.
The top three sectors in percentage decline were office and business equipment -29%, alcoholic beverages -25% and apparel & accessories -18%.

Malaysia is among a number of advertising markets in the developing world, particularly in Asia Pacific and Latin America, which have now returned to growth following last year’s slump.

“It is normal for adex to exaggerate economic trends. When the economy shrinks, adex shrinks faster and by more,” he said. “The corollary to this is that when recovery is complete, we can expect spending to outperform the economy as a whole.”

Apart from the increased spending as the world economy recovers, global adex growth this year will also be aided by the Winter Olympics, FIFA World Cup and the US mid-term elections.

The worst recession since the Great Depression had caused an advertising downturn unprecedented in modern times and global adex is estimated to have dropped 10.2% over the course of last year.   But the pain inflicted by the advertising downturn has been distributed across the globe very unevenly. All the developed markets like North America, Western Europe and Japan suffered substantial losses and the decline is expected to continue in these markets in this year as economic growth there remains slow and uncertain.

Zenith forecasts adex to shrink 2.4% in North America, 0.5% in Western Europe and 3.2% in Japan this year before mild growth returns next year.

In contrast, it expects adex to grow 8.4% in Asia Pacific (excluding Japan), 8.1% in Latin America, 2.3% in Central & Eastern Europe and 7.0% in the rest of the world this year.