Hong Kong advertisers face difficult 2019 with online and offline spend 50/50 split

Hong Kong’s advertisers predict a tough year ahead in 2019. Despite 59% of advertisers expecting an economic downturn in the territory, advertising budgets are expected to remain stable with an equal split between online and offline spend. This information comes from the latest advertising spending projections survey conducted by Nielsen in collaboration with Hong Kong Advertisers Association.

The survey finds that 36% of marketers are expecting an increase in ad spend in 2019. Brands will continue to use advertising to defend market share in the coming year. However, it is a mixed picture - ad spend of health and personal care categories, such as pharmaceutical, healthcare, cosmetics and infant products, is expected to grow, while there will be a decline across the property, financial services, and retail segments.

“While economic concerns are top of mind for Hong Kong marketers, advertising is seen as an essential tool to protect and defend market share,” said Helena Sze, director, media, Nielsen Hong Kong. “We can also see that the lessons from the previous economic downturn have been learnt, with the expectation that advertisers will cautious about future investment, and will use programmatic on targeting to optimise budget effectiveness towards the right consumers.”

In 2018 - for the first time - advertisers balanced their advertising investments, with 51% of spend invested in offline media and 49% in online. Nielsen noted that advertisers will continue the balanced approach in 2019. Ad budget planned distribution between offline and online is predicted to be 50:50 in 2019, continuing the budget shift from offline to online but at a lower rate than previous years.

Across online channels, the survey shows social will account for 10.5% of budgeted spend, a slight decrease from 2018 when it accounted for 12.8%, while video will account for 9.9%, an increase of 0.9% from 2018.

In terms of offline, TV will account for 13% of overall budget, a 2.4% increase from 2018, with free-to-air taking the lion’s share at 11.2%. While print will account for 11.7%, with free newspapers accounting for half of this. Outdoor advertising will also grow, accounting for 9.1% of total spend, a 2.6% increase from 2018.

In order to reach tech-savvy millennials, advertisements on online platforms are becoming more important. David Yeung, chairman of the Hong Kong Advertisers Association, said that due to the lifestyle and habits of Hongkongers, offline channels are still effective for advertisers.

However, marketers continue to be challenged by the need to demonstrate effective ROI. 38% of advertisers reported that the conversion of advertising into sales remains a challenge, and 28% said they continued to struggle with cross channel audience optimization.

“Return on Investment (ROI) remains a major challenge for the advertisers, especially at times when the marketing dollar is stretched,” said Yeung. “With the growing popularity of online media and e-commerce, ROI can be traced much more precisely and easily through the use of sophisticated tracking tools.”

In the survey, advertisers answered that they were adopting new technology. 56% are investing in new applications, such as programmatic tools, AI and automation, while 54% are using big data management services to address the challenge of cross-platform targeting. Perhaps most impressively, 41% are integrating mobile payments and fintech applications into ads themselves.

Sze commented, “While the return on investment conundrum hasn’t been solved, we are seeing a bigger role for technology applications to help address this issue. This is especially relevant as the KPIs for ad measurement are likely to be more comprehensive and demanding in 2019.”