KUALA LUMPUR (Sept 28): RAM Rating Services Bhd (RAM Ratings) expects advertisers to spend more of their advertisement expenditure (adex) on new media platforms, compared to traditional media platforms, amid the rapid urbanisation of Malaysia.

In a statement today, the ratings agency said the new media segment is set to enjoy healthy growth in Malaysia, based on the effects of new media on other regional and global markets.

It noted that Internet penetration rate in Malaysia has been increasing at a compounded annual growth rate of 4.8% over the past five years, to reach 70.4% as at end-March 2015.

"The relevance and advancement of new media sources in the Malaysian market closely mirror the Internet penetration rate, broadband speed and tech savviness of the general population.

"We expect new media platforms to continue gaining traction at the expense of traditional ones, as the government keeps up initiatives to further improve Internet penetration rates," said RAM head of consumer and industrial ratings Kevin Lim.

However, it said traditional media platforms such as television, newspapers and radio, still dominate the advertising scene, making up 95% of the overall adex in Malaysia, while AGB Nielsen Media Research noted that the Internet accounted for a larger 4% of non-discounted adex in 2014.

However, independent advertising agencies have argued that AGB's numbers are understated and that Internet adex is actually higher, making up around 10% to 15% of overall adex.

In any case, the rising popularity of new media has compelled advertisers to hedge their ad spend through various new platforms, noted RAM Ratings.

"To shield themselves from the effects of new media's burgeoning popularity, traditional platforms must innovate extensively, closely tracking rapidly changing consumer preferences to stay relevant. They will need to progressively evolve their businesses to address the threat posed by new media sources," said Lim.