Global trends to impact on Malaysia

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