The changing face of advertising

With programmatic advertising, online ads no longer target specific publications. They focus on specific types of users instead.  -NSTP/File pic     With programmatic advertising, online ads no longer target specific publications. They focus on specific types of users instead. -NSTP/File pic

BEFORE the Covid-19 pandemic, the World Advertising Research Centre (WARC) had estimated that the global advertising investment would chart a healthy growth of 7.1 per cent this year.

But now, it is a brutal contraction of 8.1 per cent or almost US$50 billion as a result of changing consumer behaviour. The total loss becomes a bleak US$96.4 billion when taking into account pre-pandemic growth forecasts.

As advertisers adapt to rising in-home media consumption, the tug-of-war for advertising dollars between online and traditional media seems to have a decisive winner. Nielsen Malaysia, a measurement and data analytics company, says the impact in Malaysia is no different from current global trends, and any medium that cannot be accessed from home is already feeling the impact of Covid-19.

The way forward in a cluttered industry like advertising is through the digital reach. We cannot deny the fact that the digital economy has been the least impacted by the pandemic.

In Malaysia, we are seeing many companies boosting their e-commerce capabilities and traffic across digital platforms to ease the overall impact on their businesses.

With the ongoing Recovery Movement Control Order (RMCO), we see a surge of businesses that offer services that serve the people with immediate needs.

For instance, companies in the food and beverage industry have come up with delivery and pick-up options, while those in the financial services have pushed for online banking and provided ways for their customers to conduct business transactions without human contact. But not all industries are spending more on advertising. It seems that the automotive, retail, financial and cosmetics industries, for instance, will see a drop in advertising spending.

WARC says only the telecommunications and utility industries will spend more money on advertising.

It says these are projected to see a 4.3 per cent increase in ad spend this year on a global scale.

Digital platforms will continue to be the preferred choice for marketers given the reach of the audience and the quick turnaround in terms of creative messaging.

According to Nielsen Ad Intel, as consumers are spending more time at home, brands are allocating more dollars to certain media formats.

Case in point, when it comes to traditional in-home formats, such as television, consumers are opting for streaming services, instead. They streamed twice as much online video from services such as Netflix, compared with last year. Advertisers are pumping money into these streaming services.

On a related issue, our situation is slightly different from the West whose citizens do not put their trust in government-linked television stations. In Malaysia, there is a “return” of TV viewership, although millennials are inclined to streaming services, ignoring TV stations, especially news programmes.

Nielsen Malaysia says TV viewership in the country has increased by 47 per cent, compared with the period before the pandemic.

Reason for this? With the prevalence of fake news circulated on social media, viewers are opting for credible news from local television stations.

I have come to learn TV broadcasters in these stations offer packages to clients by tying up with the prime-time and key news programmes to get their brands’ messages across to the audience.

International Ad Forecast, another data analytics company, says advertising spending across all traditional media formats has seen a drastic decline over the years although there is a paucity of statistics to show how these traditional media industries suffered.

In the 1990s and early 2000s, digital display advertising — banner ads and pop-ups — was just the digital analogue of print advertising. A brand would buy space directly from a website.

But today, that has become increasingly rare.

WARC says what has risen in its place is something known as “programmatic advertising”. With this, ads no longer target specific publications. Instead, they target specific types of users based on factors, such as age, sex, location and browsing history, which reveals their interests.

Advertisers now put their ads into an automated system with instructions to reach a certain type of audience. They have some power to tell the system to keep their ads away from certain sites and content. It is now all about artificial intelligence, and systemic machine learning is taking over the conventional ways in advertising.

By Rohiman Haroon.

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