Declining advertising expenditure may push traditional media to evolve

Digital advertising provided by the new media has taken a bigger market share and eroded revenue recorded by traditional media


BLEAK outlook awaits traditional media if it fails to embrace changes in the era of content providers, as advertising expenditure continues to decline due to the Covid-19 pandemic.

Digital advertising provided by the new media has taken a bigger market share and eroded revenue recorded by traditional media that are still struggling to make money online although they have begun the business model transformation.

Social media networks such as Facebook Inc, Instagram and YouTube have broken down the barriers in content-making, distribution and consumption.

These platforms have evolved with new features that support live broadcasting, streaming and business transactions which can be done by anyone who has the account.

Advertising expenditure of traditional media slumped 9% in the first quarter of the year (1Q20), with the newspaper segment being the biggest loser at a 24% decline, according to data by Nielsen Holdings plc.

Total gross advertising expenditure in the quarter had been flat at RM1.34 billion, supported by a 56% growth in digital advertising expenditure.

As it is, a number of media outlets in Malaysia have downsized their workforce or products to be more sustainable in the challenging market.

Corporates and businesses are expanding their marketing approaches beyond traditional media such as televisions, radios, prints and billboards.

Organisations are putting more money into digital advertising for targeted leads or customers and hence, eroded the topline of traditional media.

An analyst said traditional media needs to find new ways in the digital space and grow new revenue streams as their bread and butter has been impacted and yet hardly recover.

“The outlook is not looking very bright for traditional media unless they can monetise online content. Social media will take market share away from traditional media as businesses use the channels to communicate to consumers,” the analyst who requested anonymity told The Malaysian Reserve (TMR).

The analyst said user-generated content does pose threats to traditional media with a growing viewership gravitating toward the platforms, thus impacting the advertising appeal.

“You need to have the numbers in viewership to sell to advertisers. What matters is the content quality and whether consumers are interested,” the analyst added.

For news providers, the analyst said traditional media may implement a collective measure to introduce paywalls to their website, but that too, is expected to be difficult to be effective as sources of information will be widely available elsewhere on the Internet.

This year, the analyst said advertising expenditure will be weak due to subdued economic sentiment caused by Covid-19.

The emergence of digital content creators poses fresh competition for traditional media in gaining an audience and advertising expenditure as access to creation and distribution has been democratised by the Internet.

Universiti Teknologi Mara deputy dean of academic affairs (Faculty of Communications and Media Studies) Dr Wan Hartini Wan Zainodin said social media networks have evolved content creation and marketing methods to the individual level.

She said traditional media need to adapt to the trend and technology spearheaded by the new media which include social media to remain relevant in the future.

“There is greater competition from social media platforms where people go for individual business models. Nowadays, everything is user-generated content. Anyone can be a citizen journalist or have a YouTube channel,” Wan Hartini told TMR.

While information credibility remains the strength for traditional media, Wan Hartini said they must strike the right balance between content worthiness and people’s voice to be attractive in the new landscape.

“Traditional media is in clashes between human interest and advertising revenue. I think what the media companies can do is tap into these content creators of those with substance, but there must be checks and balances between catering to people’s needs and media responsibility.”