Global trends to impact on Malaysia
Worldwide advertising trends are showing a definite shift in focus,
and much of this will have an impact on the future of the advertising
and communications industry in Malaysia, said Association of Accredited
Advertising Agents (4As) Malaysia president, Tony Lee.
A key indicator, he said, was the change in how worldwide agency groups
like WPP, Interpublic, B(com3 and Omnicomm were deriving their
"Worldwide trends show that all communication disciplines - advertising,
media planning, buying and research, public relations and public
affairs, branding and identity, healthcare and specialist communications
are growing, but with greater growth outside of advertising, so much so
that advertising activities now account for only half of agencies'
Agencies will therefore place more emphasis on revenue growth from
non-core businesses, including moving to acquire strategically
important, small-to-medium sized businesses that meet specialist skills
training and development.
In addition to the change in revenue streams, Mr Lee said that other
patterns were also starting to emerge as the industry moved forward.
As companies and networks grow in size, new technologies are enabling
agencies to enjoy the benefits to both size and scale, with the
responsiveness and energy of smaller firms. This would prevent networks
from becoming sluggish, and allow them to respond quickly to
opportunities in different markets.
Geographically, North America, the United Kingdom and continental Europe
are all enjoying double-digit growth. Growth in the Asia-Pacific, Latin
America, Africa and the Middle East is much slower, largely due to
Worldwide, operating margins are up, from an average of 13-14 per cent
previously, closer to 20 per cent now.
Productivity and efficiency were also up, partly a result of investments
in technology, partly as a response to increased pressure to deliver
margins and increase shareholder value.
Year 2000 started very well for most agency networks, and the year
should see improvements in all business areas.
Having studied these trends, the Malaysian 4As was predicting some
definite changes to the local advertising and communications scene, said
First of these changes will be in service offerings, with agencies
striving to increase the depth and breath of their expertise.
Already, many of the international networks were offering the full range
of communications consulting services in Malaysia, by acquiring small
local specialist businesses, aligning with specialist agencies or
investing in developing their own. Information and consultancy, public
relations and public affairs, and specialist communications will grow
rapidly, accounting for close to two-thirds of revenues.
This bodes well for the industry, said Mr Lee, which needs to see some
consolidation as the Malaysian economy moves into recovery. Smaller
agencies that invest in better people, stronger alignments, better
technology and global partnerships will continue to reap the benefits,
while retaining their flexibility and individualism. Agencies will also
increase investment in technology, much of which had seen a freeze
during the past 18-24 months.
While upgrading hardware would be important, the critical investment
would be in IT skills, especially in the areas of digital, direct and
Thirdly, while agencies will invest in development, they will also keep
a closer eye on margins to meet the expected pressure from worldwide
This included putting a cap on spiralling costs, especially in payroll,
which has seen significant leaps as agencies rushed to beef up human
resource after severe cutbacks during the recession.
"But all this will not be at the expense of creativity, which is still
the major differentiator in the advertising and communications
industry," said Mr Lee.
"Clients will look for creativity not just in advertising, but across
all communications. We therefore see a move towards companies developing
and training talent, and perhaps recruiting from creative hotshops
around the region to bring new blood to the market."
He said this would lead to more performance-related remuneration, with
agencies celebrating and rewarding talent and ideas across
"Agencies that continue to enjoy growth and profits will be the ones who
take note of what is happening in our industry around the world, and who
make changes that keep them in tandem with these trends," Mr Lee
"Borderless trade is also reaching our business, and clients will choose
to buy their services within one agency network, but not necessarily in
one market. Connectivity, shared resources and creativity across borders
will be the most efficient and effective ways for agencies to stay ahead
of the pack."