The Annual Advertising Spending Projection Survey conducted by Nielsen in collaboration with Hong Kong Advertisers Association (HK2A) is out, and the outlook for 2020 is bleak, to say the least.
More than 80% of respondent advertisers say pressure from Hong Kong’s economic downturn stemmed from political instability and social movement in 2019 would result in worse economic conditions in 2020; and at least half says effects of this slump would translate to their industries and companies.
Though overall economic condition is pessimistic, most growths are expected to be seen in industries such as Pharmaceuticals and Healthcare, Telecommunications / Technology, Packaged Food etc., while Travel & Tourism, Cosmetics and Skincare, and Infant Products are expected to drop year over year (YoY) given the decrease in inbound travellers.
In terms of the ad-spent landscape in 2020, half of the responding advertisers expected that their ad budget would slump by 7.1%, shifted mainly from an 11% budget cut for offline ads, albeit online ads would grow by a marginal 0.8% this year. Hence, the balance between online and offline went from 50:50 in 2019 to 60:40 in 2020.
In fact, budget cuts and pessimism may be down even further as the survey for this study was taken from the end of 2019 to early 2020, before the COVID-19 outbreak took the world by storm.
Actual ad-spending in 2019, as compare to 2018, saw a 7% YoY decrease whereby the biggest dip happened in Q4 at 16.4%. The biggest drop was seen in Magazines at 23%, followed by Desktop at 17% , Newspapers at 14% and TV at 13%.
In terms of 2020 forecast in the online scope, Video Ads (11.4%), Paid Social / Social Network (11.3%) as well as Display Ads (10.7%) claimed top three; while TV (9.7%), Print (8.4%) and Event Marketing (8%) won in the offline sphere, albeit their YoY slump of 3.3%, 3.3% and 0.2% respectively.
As for marketing challenges in 2020, respondent marketers predict that ROI calculation (44%), Cross-platform effectiveness (41%) and Big data analytics (32%) will be their biggest headache; while they foresee challenges in social marketing include the difficulty to convert sales (42%); and for the first time ever, concerns for social crisis management rose from 16% in 2019 to 35% in 2020.
Overall, advertisers will increase their focus in conversion (CPA), and ad performance (CTR, CPM) as the KPI for ad effectiveness measurement, albeit reach & frequency still top the chart this year.
Lastly, due to the increasing importance of online advertising, research budget for online has also gone up by 4% this year compared to 2019; whereas the same budget dips 12% for offline. Among key research topics to make better marketing decision, cross channel optimization remains to be the 1st priority of the research goal, followed by deployment effectiveness which grew drastically by 19% YoY.