Malaysia reentered the Movement Control Order (MCO) last week, with the states of Melaka, Johor, Penang, Selangor, and Sabah, as well as the federal territories of Kuala Lumpur, Labuan and Putrajaya in lockdown. The enforcement of the MCO means less consumers on the roads and malls, which once again shines a spotlight on the OOH industry. According to Magna's global advertising forecast released last December, media owners advertising revenues in Malaysia declined by 22% in 2020 to reach US$1 billion, with its ad spend performance being among the weakest in Asia Pacific. OOH suffered a 44% budget cut, as part of the total dip in linear ad sales.
When asked about the importance of OOH in a marketing mix over the past year and in 2021, Magna Malaysia's chief investment officer Audrey Chong told A+M that historically, the role of OOH in the marketing mix was to communicate brand stature, positioning and imagery instilling confidence with consumers. The advent of the pandemic meant that OOH as a medium was gravely challenged, especially during the MCO, with people forced to stay at home.
That said, Chong believes that the importance of OOH will not change or diminish further in 2021. "Despite the MCO 2.0 coming in to play, mobility is not as restricted as it was in March 2020. Hence, OOH’s relevancy in the marketing mix will continue, depending on the various campaign objectives or goals," she explained.
Similarly, Dheeraj Raina, Malaysia CEO Media Brands for dentsu said OOH in its digital form "will remain a medium to watch out for once consumers start being outdoors more", as it has given marketers an additional video screen to deliver their brand message. He explained that DOOH has witnessed a huge resurgence in the last two years.
"With more screens becoming digital, it has started to play a stronger role in building brand imagery through the use of rich creative graphic designs. It is unfortunate that the growth of this medium slowed down compared to what it should have been as forecasted due to COVID-19," Raina said. However, with the importance of video continuing to grow within the media mix, so will the importance of DOOH screen.
On the other hand, GroupM Malaysia CEO Chanchal Chakrabarty said it would be hard to justify the importance of OOH and DOOH in the marketing mix until normal consumer behaviour resumes. Prior to COVID-19, DOOH was the only other significantly growing platform besides digital in Malaysia, as traditional platforms such as print, TV, and radio were in decline, he said.
"With widespread and prolonged lockdowns through most of 2020, the new demand for OOH advertising essentially stopped. However, some media owners still had limited revenue that was associated with longer-term budget commitments and long-term ad placements primarily on the traditional formats. Spending resumed though not completely revived after the lift of the initial lockdown as consumers increased the time spent out of home," he explained.
The renewed MCO will pose a challenge in the rebound of the medium, and while GroupM's This Year Next Year study predicts a revival of OOH and DOOH this year, Chakrabarty said the renewed MCO "will delay a full rebound for the platform until the second half of 2021". This is assuming that with vaccination drives, consumers would resume their normal outdoor behaviour in the second half of 2021.
Malaysian OOH industry players' reaction to MCO 2.0
Since the inception of the MCO last March, the contraction on OOH and DOOH was estimated to be between 22% to 28% by Outdoor Advertising Association of Malaysia. Henry Low, MD of Spectrum Outdoor and president of the Outdoor Advertising Association of Malaysia said this time round, however, he expects a lesser contraction for the first quarter of 2021 compared with last year's MCO as some campaigns had already begun rolling out during the last quarter of 2020. He is hoping for recovery as these campaigns spillover into 2021.
Despite facing a setback during last year's MCO, Low said Spectrum Outdoor's media billings for the month of May "returned to almost normal" and with Chinese New Year just around the corner, more campaigns are expected to roll out during the first quarter of this year.
On the contrary, Pi Interactive's MD Alex Goh told A+M that "a lot of delayed spending" is in motion due to the current MCO, which means that year-on-year spending for the first quarter of 2021 will see a possible negative growth. This is despite January and February being peak periods for OOH due to Chinese New Year celebrations. "In late 2020, we observed strong recovery of OOH media spend, especially digital billboards post MCO 1.0, and we expect the same to happen or better in 2021," he added.
While Low and Goh have predicted results on two opposite ends of the spectrum, Mehul Mandalia, Moving Walls' co-founder and head of demand, said it is not seeing the same type of halt on traffic compared with the initial MCO in 2020. Last year, the company told A+M that there was a drastic dip in audience movement in Bukit Jalil, Bukit Bintang, Johor Bahru and Penang. The most drastic decline was seen in Bukit Bintang, which had about 3,132,920 consumers before the MCO between 1 to 17 March 2020. Following the MCO, the number dropped to 512,863. As a result of the MCO last year, many campaigns have been placed on hold and ad spends were restricted.
"The latest MCO was only recently announced but it did not come as too much of a surprise given the rising infection rates. We are, like everyone else, more prepared this time around and are helping our clients and partners understand the actual audience reach and views impact on their planned or booked OOH and DOOH campaigns," Mandalia said.
In 2020, the MCO was extended thrice to further control the COVID-19 outbreak. No announcement has been made on whether the current MCO, which is scheduled to be lifted after 26 January, will be extended like on previous occasions. However, Malaysia reported 3,339 new cases on 17 January 12 pm, with 3,324 of them being local cases, according to the Ministry of Health. The current number of active cases in the country stand at 37,782 while the number of discharged cases amount to 120,051.
When asked how the industry can prepare for a possible extension after 26 January, Mandalia said while the MCO extension possibility remains a question mark, what the industry does have control over is offering clients with the tools and technology to respond to these changes. Citing its own Outernet Marketing initiative, Mandalia said it is offering some of its advertisers with a dynamic planning and measurement tool for all forms of OOH media. This enables them to adjust their plans based on near real-time traffic movement patterns.
Similarly, Spectrum Outdoor's Low said respective media owners will have to devise plans to replace media airtime during periods of low traffic. "The replacement in airtime is to compensate the exposure lost during MCO 2.0, and it can be an extension of airtime on DOOH assets, subject to their availability," he explained. Clients, on the other hand, will need to work in collaboration with media owners to seek any best possible solution should the extension be implemented, Low added.
At the same time, it is also certainly crucial to plan ahead rather than planning for the moment. Pi Interactive's Goh said during the previous MCO, the company mainly focused on planning for a recovery. This time round, however, there are already plans to launch improved and new services to fill up the gaps of its advertisers' needs. "In worst case scenarios, the industry might see increased optimisation in spending. It is important that we are determined and ready to work with advertisers to navigate through this together," he added.
How can OOH firms and clients remain agile during this period?
The ongoing COVID-19 pandemic and MCO might be daunting for the OOH industry but Goh is optimistic that OOH companies will be able to survive this storm. According to him, OOH firms are known to be resilient to any situation. Innovate offerings, drive partnerships, and put themselves in their clients' shoes. Meanwhile, brands need to plan with post-MCO recovery in mind. "We are in a period of simplicity and necessity. Take calculated risks and be on media platforms that can offer your campaigns share of voice. While the outcome is important, do not over complicate the process. Lastly, avoid the fear of missing out when making media decisions," Goh said.
Besides being resilient and adapting to the current landscape, the adoption of data and technologies to help improve the planning and measurement of campaigns on both sides is the bare minimum for any OOH firm or client to be more agile during these uncertain times, Moving Wall's Mandalia said. At the same time, it is also the right time to experiment with more flexible and short-term execution models such as programmatic or real-time buys for DOOH and creative switching as well. "The pandemic has not been kind to the media industry as a whole but it has especially impacted OOH because of the lack of a data currency adoption. This is now changing across Southeast Asia," Mandalia added.
On the other hand, Spectrum Outdoor's Low is less optimistic about the future of the OOH industry post-pandemic. He explained that the pandemic has placed some companies in the industry "on the brink of cessation with cashflow being a concern". There are also issues of eroding profit margin and cost escalation due to the emergence of more OOH players in the industry. According to Low, the low barrier to entry for OOH has therefore created more supply than demand.
"With the very thin margin for OOH now, it will be a surprise to see many staying afloat after this year. Perhaps, one of the solutions is to consolidate the market. Only then will achieving cost leadership and increasing profitability yield be in the horizon," he said. Concurrently, clients can and should also "explore better opportunities to better stretch their money" during such uncertain times. One way is to look at media packages encompassing OOH and DOOH which Low said will offer more mileage and ROI. "Now is a good time to buy when rates are low and capitalising on cost efficiency," he added.
Changes to expect in the OOH landscape this year
In general, agency leaders are in agreement that 2021 is the year where DOOH will see increased demand. At the same time, Magna's Chong also said that the industry will increasingly see a bigger focus on sales and promotional messaging to drive the bottom line.
Further tech advancement into the programmatic DOOH space and its measurement would also be the focus moving forward, said GroupM's Chakrabarty. According to him, the rapid journey of digitalisation of OOH had already commenced in Malaysia, which was then disrupted by the pandemic. "We believe the current disruption would only fast-track these developments as programmatic distribution along with measurement, would help DOOH find its deserved place in the marketing mix alongside other measured digital platforms," he said.
Chakrabarty added that if these developments are on track, the agency forecasts that digital share of OOH would easily become a third of the media mix, despite the significant price difference between traditional and digital formats.
On the same thread, dentsu's Raina explained that more robust measurement will come into play, which includes defining a single currency of measuring effectiveness of the medium. The trend of robust measurement will also be triggered by programmatic availability of growing inventory. "We will also see creative formats that are being made for the DOOH medium specifically. DOOH allows us to create a compelling larger-than-life disruptive creative imagery and we will see brands using that to create impact and also steal share of voice," he explained.
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