Malaysian adspend at current prices is expected to grow by close to 10 per cent in the next two years from RM3.92 billion (US$1 billion) this year to RM4.72 billion in 2006. The Olympics and Euro 2004 events will provide an additional fillip to spending this year. With the deregulation of the Asean Free Trade Agreement (AFTA) and the greater foreign competition that will come with it, further expenditure is expected in 2005, and 2006 will also benefit from the football World Cup. In anticipation of the greater competition as a result of AFTA, the Government has increased its Fund for the Development and Promotion of Malaysian Brands by another additional RM100 million.
There is a now also a growing sense of urgency in many sectors of Malaysian business and industry to building strong local brands. The success of the 'Buy Malaysian' campaign, the country's export promotion drive and the ability to meet the onset of greater foreign competition will greatly depend on it. And there is also now a greater appreciation of the important role advertising can play.
But at the same time, we are also seeing the emergence of a more hard-nosed approach to spending by clients. Given today's competitive business environment, marketing spend is now under the same fiscal scrutiny as other company costs. Marketing directors are being asked to justify adspend and prove that the advertising is actually adding value to the business - and to quantify this.
Today's business realities demand that advertising has to answer to the bottomline. One of the biggest mistakes made is the assumption that name recognition and consumer awareness will magically translate into sales.
The role of advertising must be to sell more stuff to more people and hopefully for more money, using all the consumer touch points.
Our industry is often guilty of placing branding above all else. We tend to focus on the consumer and the creative, and we're not nearly concerned enough with what drives sales. We are preoccupied with reach and frequency, when it should be about communication that delivers a measurable ROI.
We tend to place too high an importance on what can be measured - media reach, awareness, brand interest. Those are outputs, not outcomes, and clients are not really interested in these, because they don't relate directly to what, for them, is the only thing that matters. To deliver on this, we need to not only understand the consumer and the brand, but also understand the client's business as whole, the market place and the industry. We should not only focus on getting the best value for clients' money, but also look at how it can generate the best returns. The focus has to be on outcomes that are directly related to sales, as opposed to output.
