Hong Kong is expecting "marginal" advertising growth in 2016, but digital budgets are predicted to hit a record 41% of overall spending.
The latest survey on advertising spending projections by the Hong Kong Advertisers Association (HK2A) and Nielsen, shows just 29% of advertisers plan to increase their advertising spend in 2016, down 7% on 2015. But digital is set for an 11% increase from 30% in 2015 to 41% in 2016.
The slower ad growth is being driven by a more cautious approach to marketing and concerns over the state of the global and local economy.
"Nevertheless, over a quarter of them (29%) expect a positive company performance this year,” said Angel Young, managing director, Nielsen Hong Kong and Macau.
Young said discretionary spending on clothing, dining and out-of-home entertainment remained a growing trend over the past two years, indicating that consumers are still willing to spend.
"But it takes more to open their wallets," she said. "This calls for marketers and advertisers to explore innovative strategies and tactics to connect with consumers.”
According to the survey, nearly half of Hong Kong marketers consider understanding customer interactions across channels as their biggest challenge, followed by calculating the return-on-investment and the increased media fragmentation.
Among these top concerns, media fragmentation has become more prominent over last year. Nielsen’s data shows television will retain the lion’s share of ad spend, followed by free and paid newspapers and outdoor advertising.
Within digital advertising, almost two-third of budgets will go to social media channels, with display ads and mobile taking almost 20% of digital spending.
"When it comes to branding campaigns, TV is still very important. Without TV your campaign can not penetrate a mass market," said Raymond Ho, chairman of HK2A.
"Despite the fact that we know we should spend more on digital, the shift of funds to digital will come from print, not TV."
Ray Wong, CEO of PHD, said a lack of measurement tools for digital channels was holding back bigger digital spending ambitions.
"TV is just one part of a multi-screen strategy," he said. "We need to use Facebook and YouTube, however we don’t have the measurement tools to determine how effective they are or to understand the levels of duplication, reach and frequency.
"Advertisers want the total TV impact, now we only get TV ratings, we don't have e-ratings."
But a solution from Nielsen Media looks set to change this. This year Nielsen will rework its Television Audience Measurement tool to Total Audience Measurement to cater to an increasingly complex media market.
Wong said a tender for the new Hong Kong Total Audience Measurement tool was already underway.
Cherry Lau, senior director of Nielsen Media, said it was likely that a new digital rating tool will launch in late 2016, paving the way for a new TAM in 2017.
"Right now the landscape is changing, but we are pushing to measure across OTT, tablets, gaming devices, PC and mobile," she said.