By: Wesley U. San Sebastian, Strategy & Insights Director, IPG Mediabrands Philippines; and Maita B. Consulta, Chief Strategy Officer and Head of Mediabrands Consulting, IPG Mediabrands Philippines
Economy has recovered but external headwinds are expected to weigh heavily
The Philippines rises above growth expectations on its gross domestic product (GDP) from +5.6% before the year started to +6.5% as we conclude the first half of 2022. The National Economic and Development Authority (NEDA) states that we did not only surpass pre-pandemic GDP levels, but we were also dubbed as the “fastest growing economy in the East Asian region” during the first quarter of the year.
While our domestic performance seems to be at the pink of economic health, risks from the outside – including the Russia- Ukraine conflict, China’s economic slowdown, as well as the monetary normalization in the United States – are anticipated to impact our growth trajectory flagging the country to avoid resting on its laurels.
Mediabrands Philippines, one of the country’s leading marketing communications agencies, has observed an evolution in the country’s total media and advertising landscape in parallel to this standpoint of uncertainty for the economy.
Linear media consumption and ad spend projections evolve as public mobility increases
After braving one of the world’s longest lockdowns, the country is seeing steadily increasing mobility in the past 6 weeks in retail and recreation (+23%), grocery and pharmacy (+63%), parks (+63%), transit stations (+28%), workplaces (+33%), and residential areas (+10%), according to Google’s latest mobility reports. This expanding people movement stimulated changes in media and advertising environments.3 MAGNA, Mediabrands’ arm for Media Investment & Intelligence, forecasts a +12% total increase in advertising spends reaching PHP 143.5bn ($2.9bn) this year.
Media consumption data from Nielsen shows that the consumers’ regained mobility in Q1 is seen to reshape opportunities in today’s linear media and advertising landscape when compared to Q4 of 2021.
Television viewing slightly dips in terms of past day usage (from 82% to 80%)4 and average viewing minutes (from 13% to 12%)5. People getting out of their homes as well as watching TV programs on other devices are key triggers for this national decline of broadcast TV viewership. Meanwhile, the long-term effect of the ABS-CBN shutdown on TV consumption is expected to persist as its franchise renewal remains challenged. Despite these contractions in TV consumption, advertising in this platform still advances beyond the pre-COVID spending total. MAGNA predicts television budgets to increase by +9% reaching PHP 76bn ($1.5bn).
Radio consumption is still driven by home listening but softens its reach at 52% coming from a 55% past day exposure. Concurrently, radio ad volume is down by 10% during the first quarter contributing significantly to the 6% dip of total linear advertising spends.
Print readership stays at 15% since the last quarter of 2021 as online news readership continues to soar in 2022. 9 out of 10 Filipino online news readers are accessing news via social media. In terms of advertising, the budgets are still hugely below their pre-COVID total, and its representation is now less than 1% of total advertiser budgets. Despite this, MAGNA still projects ad spending growth for this touchpoint by +3%, following an +8% growth in 2021.
OOH consumption increased to 67% coming from a 65% past week exposure in 2021 Q4. This is mainly stimulated by the growing public mobility. Shock and awe giant format billboards along major thoroughfares are seen to be the most salient OOH executions delivering mass reach of 84%. MAGNA forecasts OOH advertising spends to grow by +22% leading this touchpoint to reach pre-COVID levels by 2023.
Digital media positions itself as a go-to touchpoint with positive ad outlook
Internet has taken over the leadership from TV in terms of consumption since the early surge periods of the pandemic. As of the first quarter, 93% of urban Filipinos have used the internet in the past day fueled by a myriad of new normal motivations.
Digital consumption data from Nielsen shows that online banking and use of e-wallets entered the list of Filipinos’ top 5 online activities at the start of 2022 alongside social media, messaging, online calls, and watching of videos. This attests to the country’s ranking as the 4th fastest growing digital economies in the world.6
eCommerce usage also validates the boosted digital maturity of the country with a whopping +134% growth on the number of Filipinos having online purchases since the pandemic hit our shores. This led the government’s positive outlook for eCommerce’s GDP contribution to grow from 3.4% in 2020 to 5.5% this year.7
Despite recent pilot tests for face-to-face classes, online schooling still grew by +65% in the first quarter compared to Q4 of 2021 among urban areas. Companies announcing return-to-office announcements are also facing challenges as 53% of Filipino workers are now preferring remote work setups – 41% of them being amenable to pay cuts if they can move to affordable locations.8
With these escalating internet activities among Filipinos, MAGNA projects a +17% growth to our total digital advertising spending this year. Digital formats (social, video, search, banners, digital audio) now represents about a quarter of total advertising budgets and is seen to further grow its share to 41% by 2026, as more brands strive to move at the speed of their consumers.
Social advertising, on a global scale, is seen to decelerate this year. However, 8 out of 10 Filipinos are thriving strongly in this space making it the largest digital advertising format in the country with 60% share of the total digital advertising revenues.
Nielsen data shows that Filipinos are on social platforms at an average of 4 hours and 6 minutes per day. Keeping in touch with family and friends tops the list of motivations for Filipino netizens to use this touchpoint. This fear of missing out (FOMO) transcends beyond what is happening in their innermost circles as Social is also used to read news stories (51%) and seeing what is being talked about (49%).
Meta platforms, according to Data Reportal, continue to dominate this touchpoint with Facebook as the most used platform with 96% past month penetration followed by Messenger at 94% and Instagram at 76%.
Video follows the lead of Social as the country’s second largest format in digital advertising with 18% share in revenues according to MAGNA. Consumption in this platform, as reported by Data Reportal, shows that YouTube’s ad reach equates to half of the Philippine population with movies and songs as top searches in the platform. Meanwhile, the rise of vertical- short form videos continues to be driven by TikTok with a potential reach of 36M Filipinos equivalent to 32% of the total population.
MAGNA also predicts that Video will be the most dynamic format in 2022 and is poised to reach a +16% growth ($68 billion) in digital advertising space globally. This serves as a validation to the growing shift of Video consumption from linear TV towards on-demand, addressable platforms (mobile devices and, increasingly, connected TV).
Search advertising also represents 18% of the total digital ad returns in the Philippines according to MAGNA. Google takes nearly 95% of the total country’s market shares for search engines based on Data Reportal’s digital media review. In February 2022, Google released a summary of trends of the Philippine search behaviors in 2021 uncovering thematic signals of interest within this touchpoint.10
Online searches containing ‘which one is better’ grew by +195% establishing Search as a mainstreamed digital space for consumer’s consideration behaviors in recent times. Indications of life reexaminations were also observed as search interests for ‘quality time’ and ‘with family’ grew by +140% and +110%, respectively. Filipinos’ gifting activities were not hindered by last year’s peaking levels of quarantine measures as search interest for ‘virtual gifts’ also grew by +260%. Lastly, despite our challenges in fostering financial inclusivity, the country remained interested in money management products as ‘quick loans’ and ‘0% interest’ grew by +80% and +70% in search interests, respectively.
Display placements own 4% share of the total digital advertising revenues as reported by MAGNA. This touchpoint’s growth
in desktop environments is at 4% while it also grew by 11% for mobile devices.
Despite this positive ad outlook, the digital space does not get exempted from external headwinds layered by unique challenges in its own realms.
On top of economic and inflationary pressures, the impending ‘cookie-less’ future as well as Apple’s updates in their privacy management protocols are expected to offset some of the organically harnessed strengths of digital media. Advertisers are seen to be driving campaigns to collect as much first party data as possible as consumers are set to enjoy better privacy and interest-based digital experiences by 2023. Thus, slight, and gradual shifts are expected in digital ad spends towards campaign strategies that can be directly attributed to sales.
Tech developments may be placing great challenges soon for today’s advertisers, but recent technologies may also serve as
must-have weapons in one’s ad arsenal.
Programmatic technologies, as well as precision targeting methods are expected to spur growth for digital advertising and will continue to evolve while the landscape of privacy matures. These external triggers are not seen to cause advertisers to veer away from digital spending, but only expected to fuel diversification of investments from one format to another in this evolving space.
Despite these, digital formats, including digital OOH, remain as fast-growing platforms as data sciences and targeting technologies aid brands in activating meaningful advertising experiences for 21st century consumers.
Regained mobility and new technology puts the consumers in even greater power
The Philippines is once again exhibiting early media adoption behaviors synonymous to when texting and social media were introduced to us. Today, the power of defining one’s content environment has landed in the hands of the consumers as Filipinos have begun defining their new sources of information and new primetimes of media consumption.
“As their digital maturity and outdoor mobility rises, consumers’ influence on today’s media landscape accelerates”, says Mediabrands Philippines’ Chief Executive Officer, Tricia Camarillo-Quiambao. “This poses a great urgency for marketers to elevate their media and consumer intelligence to craft campaigns that will move needles in the now normal”, she added.
The opportunity to rise above the global uncertainties, therefore, lies on brands’ thorough understanding of the novel behaviors of this ultra-social nation – fueled by the rising empowerment of today’s digitization.