The future of Malaysian online ads

Online advertisement is set for an explosion in the US with spending expected to surpass television ads budgets by 2005. What's the situation like for the Malaysian online ad scene?

A Goldman Sachs report recently stated that it took radio 38 years to reach an audience of 50 million while it took only 13 years for television to garner a similar audience. The Internet on the other hand, took only an amazing four years to hit the 50 million mark.

Another key factor is that Internet adoption is three times faster than television, ten times faster than radio. Like a virus, the Internet phenomena, is undeniably spreading to all corners of the globe. Currently, there are about 250 million Internet users in the world.

There has never been a medium like the Internet before; it is truly a medium like no other before. And people like Dan Khoo from e-Asia, an Internet advertising specialist, aims to ride the cyberspace wave and capture opportunities.

"These are very important times ... the Internet is the fastest growing medium in the history of mankind," Khoo who is also the firm's chief executive officer says. He further illustrates that the Internet is the only medium where one can in effect mutate or morph from one medium to another. "You can read, listen, write as well as conduct real-time transactions on the Net," he says.

According to Khoo, the Energy, Communications and Multimedia Ministry uses a 4:1 ratio to estimate the extent of Internet penetration in the country. Malaysia has, admittedly, a low level of Internet penetration, compared to the more advanced "cyber nations" in the region. The 4:1 rule literally rests on the basis of one Internet account is shared by many people. "One college Internet account, for instance, is shared by hundreds of students. Similarly, a family account would mean four or five people accesing the Net," Khoo adds.

"So, despite IDC stating there'll be about 1.8 million Internet users by the end of the year in terms of users, the figure could well be more than four million," he says. This figure, if it is correct, represents an opportunity too large to be ignored by advertisers. Carving out a niche market

It does not matter whether the Internet audience is really receptive or not to the ads screaming out at them on the Web. The point, Khoo says, is that advertisers must want to reach out to the Internet population that is desirable. "You must go to places where people congregrate."

There's no doubt that online advertisements are now poised to see strong growth curves in coming years. As far as the US is concerned, several studies have consistently indicated that American advertisers will spend more on online advertising than on television ads by 2005. This is a highly remarkable prediction as it means a definite changing of the guards in the history of communications. But a parallel scenario is unlikely to happen anytime soon in Malaysia.

3Capital.com chief executive Sivapalan Vivekarajah says dot-coms cannot depend on the ad model as its main revenue stream, which was what literally hundreds, perhaps thousands of Internet plays were doing during the feverish days of last year. "Now, there are about three million new Web sites coming up this year alone ... and although online ad revenue budgets have seen an increase, there's no way it can keep up with this kind of growth in Web sites," he points out. "Everyone will be going for a limited amount of ad money and that's just not going to work for a majority of these new sites."

Anyway, it makes sense for advertisers to want to put the bulk of their online ad budget into successful portals like Yahoo! and Lycos plainly because the huge number of people congregrating there in cyberspace. "Some local Web sites hoping to make ad revenue their main source of income is just not going to make it especially as these Internet giants already have plans for localized portals," Siva says.

Even jazzed up banner ads and streaming audio snippets in online radio broadcasts which have made their debut in the US will not pull in the desired target markets onto Malaysian Web sites for long, as according to Siva, these technological innovations would soon be available to everyone and its uniqueness will die out. "It's still going to be big players who will grab most of the ad money", he asserts.

"Anyway, these new banner ads will face problems in Malaysia as the bandwidth is just not there. Now even if there's bandwidth, not all people here have multimedia computers ...what's the point of having ads with sound if you cannot access them," he asks. But one aspect of Internet advertising which Siva is optimistic will work in Malaysia is the niche, personalized advertisements. New ways to advertise

One Singapore Internet company which launched its Web site in Kuala Lumpur yesterday plans to offer just that. music4nothing.com which offers free songs and music to surfers, employs sophisticated file-swapping programs which exploit the fact that the company's songs with ads tagged onto them could be spread far and wide via email. Once a person gets the song via email, he or she will also see the ad permanently attached onto the song once they've downloaded music4nothing's player.

The company's ad server can then track that person's surfing behavior. "We can continually feed ads unique only to that person's taste once we've created a profile on him or her," music4nothing founder John Chong enthuses. The best part of this form of online advertising is that the person may not have a clue about music4nothing.com and what it does. This means he doesn't need to visit its Web site even once! "Once the person has received our song on one occasion, we can continuously track him anytime ... this form of 'data mining' is also valuable to advertisers who are willing to pay for such information."

E-Asia's Khoo agrees. He says the days when advertisers had no choice but to print a hundred thousand copies of pamphlets to distribute, not knowing who actually reads it, is finally a relic. "I can now give advertisers what they want ... if they want to target just males in a particular age category who loves sports, I can do this now." This way, the advertisers can be sure their messages are being read by their preferred target audience".

This means a banner ad for a male product for example, would only be seen by a guy logging in on his PC. A woman surfing the same site elsewhere would not see that "male product" banner ad. This is the beauty of Internet advertising. And just like television and radio which grew by leaps and bounds here, the Internet will also experience similar growth spurts.

But online advertising in Malaysia will take some time before it gets the same sort of attention it is garnering in the US and Europe. Total online ad market in the country this year is estimated to be only about RM3.8 million compared to the RM16 billion spent in the US last year. And new snazzy ads using mini-movies and movie trailers embedded in emails will not hit our shores in a big way anytime soon. The immediate task is to fast track the country's Internet penetration rate.