Survey: Ad budget is expected to cut in 2021, online advertising enjoys slight increase

Advertisers are expecting a decrease in ad budget but optimistic about Hong Kong's economy this year, according to a survey co-conducted by Nielsen and the Hong Kong Advertising Association.

Almost half (44%) of advertisers expect a decrease in ad budget in 2021 with the biggest challenge being a lack of funding (28%). To ensure a better return on investment, advertisers responded that using measurement and analytics was highly important. 74% of advertisers said that media effectiveness measurement could help with better marketing decisions.

In particular, analysis around reach and frequency (68%), ad performance (64%) and viewability (60%) were identified as the top three key performance indicators for advertising effectiveness measurement. Meanwhile, the overall ad budget was expected to reduce by 6% this year, mainly attributed to an anticipated 15% budget cut for offline advertising and a budget increase of 4% for online advertising.

The survey also expected that as the pandemic has shown some signs of stability after Chinese New Year and the availability of the territory-wide vaccination scheme, the actual decline in advertising budget could be even milder.

“Although the world begins to re-open more permanently, it’s clear that the pandemic will have a lasting impact on consumer behaviour and brand-to-consumer engagement,” said Macy Ng, chairman of the Hong Kong Advertisers Association.

“We saw how the new normal gave rise to a much greater emphasis on digital activity. This is therefore likely to be a year of pronounced digital innovation and more technology-driven empowerment to help marketers develop successful strategies and enhance customer’s digital journey," she added.

The 2021 advertising budget forecast is a split of 64% online versus 36% offline. Online ad budget is led by paid social and social networks, display advertising and video advertising, capturing 16.6%, 9.8% and 9.4% of the total budgeted spend respectively. As for offline advertising, TV, print and outdoor-static will be allocated the most advertising budget, representing 9.6%, 6.2% and 5.7% of 2021 budgeted spend.

Media selection is anticipated to be more driven by the pandemic and the new normal. Paid social and social networks, now a part of everyday life for most consumers who are more engaged with the digital world, are expected to increase by 16.6%. The flexibility of planning and the affordability of social networks are the key attracting factors under the current tight budgets.

Television (9.6%) remains the top offline media choice for advertisers. The stay-home policy brought about a significant increase in TV consumption in 2020. In addition, with 70% advertisers expecting to launch brand building and awareness campaigns to retain their brands’ top-of-mind positioning and brand trust among consumers, the expected use of TV remains as it is a strong media choice to reach mass audiences quickly for awareness building.

Moreover, 73% advertisers believed the rebound would happen in 2021 at varying levels across industries. The initial recovery might be stronger and happen much sooner than expected as the Consumer Confidence Index conducted by The Conference Board in collaboration with Nielsen has seen a reviving trend approaching pre-crisis levels at 93 in Q4 2020, compared with 75 (Q2 2020) and 83 (Q4 2019).

"it’s not a must to build your digital platforms. Nowadays there are options to deploy digitalisation, including e-commerce, through partnering with technology vendors or fulfillment suppliers to extend your online footprint. As a result, while saving on technology infrastructure and fulfillment logistics investment, you can also enjoy the huge pool of consumers available from well-established platforms," commented Clare Lui, vice president of Nielsen Media Hong Kong.

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