Consolidation the way forward in digital media

TheEdge Wed, Oct 17, 2018 02:00pm - 5 years View Original


DESPITE the aggressive growth in digital advertising expenditure, local digital media publishers will have to consolidate to stay in the game, says Rev Asia Holdings Sdn Bhd (RAH) managing director Voon Tze Khay.

His reason? Global digital platforms such as Facebook and Google are devouring the lion’s share of the adex.

“If you look at digital adex or the space we are currently operating in, the chunk of the advertising dollars is actually going to Google and Facebook,” Voon tells The Edge in an exclusive interview. “They are our real competition, probably taking up about 70% of total advertising in that sense.

“Right now, Google and Facebook command 70% to 75% of every RM10 that is spent on digital advertising. If the growth is 20% to 30% year on year, most of the increase in spending is on Google and Facebook.

“So, the growth in the remaining 25% of total adex, which is shared by the likes of Media Prima, Astro, The Star and every other content creator out there in the market, is actually very small.”

According to Nielsen Media Research, Malaysia’s total adex spending between January and June this year was RM2.93 billion — a tenth less than the RM3.23 billion seen in the first six months of 2017. However, Nielsen Media Research’s data does not include digital adex.

According to the PwC Global Entertainment and Media Outlook report, digital advertising made up about 5% of total adex in Malaysia and is projected to increase to 8% next year.

Voon says the digital media industry in Malaysia is saturated in the sense that everyone can become a content creator. However, as the market for adex is dominated by the likes of Google and Facebook, local players will have to amalgamate, whether through a partnership, collaboration or merger and acquisition.

As the market integrates, the smaller publishers and content creators, who are not part of a consortium that commands a large enough user base to compete with Facebook and Google in the local market, will eventually lose out, both in terms of revenue and user base.

“The moment we (local players) create a consortium that is big enough to at least command what Facebook and Google have in terms of audience, then the majority of the ad volumes will swing to these two groups (Facebook and Google, and the local consortium),” Voon says.

It is this strategy of consolidation that prompted Media Prima Bhd to buy RAH from Rev Asia Bhd for RM105 million in May last year. Now, Media Prima has access to RAH’s consumers aged between 18 and 35 years in the digital space.

At the same time, the acquisition has created the third largest digital platform in Malaysia with 10.4 million unique users. However, it still trails behind Google and Facebook’s audience of 15.7 million and 14.1 million respectively.

As local publishers can partner each other, RAH, as part of the Media Prima group, has tied up with other brands, including those in The New Straits Times (Press) (NSTP) group.

Widgets that link users of NSTP’s digital platforms with those of RAH are placed to attract eyeballs. As the sites receive higher volume of unique users, they can be better monetised as clients are likely to be more willing to advertise on them.

 

Expanding vertically and horizontally

While still competing in the local market, RAH is also extending its reach by entering into a partnership with Ziff Davis, a US-based global digital media company. RAH has secured the sole licensing agreement to operate Mashable in Malaysia, Singapore, Indonesia and the Philippines.

The partnership allows RAH to produce localised content for these Southeast Asian markets for Mashable, a tech, entertainment and lifestyle media platform.

The licensing right in these four markets not only allows RAH to grow its market but also creates verticals of topics or segments. Mashable is strong in its tech content and will anchor RAH’s tech verticals.

“So, tech will be an area that we want to invest and grow in. We already have a female network, which is driven by Durian Strawberry — a brand or channel that runs articles on lipsticks and mascara,” says Voon, adding that the objective is to increase tech content next year, whether through Mashable or other platforms.

He notes that RAH already has a number of platforms that cater for foodies, such as SAYS Makan, Seismic Makan and MyResipi.

The company is targeting revenue and traffic growth of at least 10% and 15% respectively next year. At present, its combined unique users total 5.2 million.

“It will be organic growth, and growth through partnerships with other brands, if we are able to find strategic ones next year like we have with Mashable now,” says Voon.

He reveals that between January and June this year, RAH’s revenue rose a whopping 70% from the previous corresponding period, thanks to the synergy achieved with the Media Prima group.

As for Media Prima’s digital segment, its revenue in 1HFY2018 more than doubled to RM44.9 million from RM20.7 million in 1HFY2017 owing to the consolidation of RAH’s revenue with the group’s. The segment’s profit after tax increased to RM6.63 million in 1HFY2018 from RM170,000 before.

 

 

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