Media owners advertising spend growth in Asia Pacific will increase by 7.4 per cent in 2019, to reach USD186 billion, according to MAGNA’s forecast.
Growth will be only slightly slower than 2018’s 7.8 per cent growth rate and be slightly above prior expectations. Linear advertising revenues will increase by 0.4 per cent in 2019, compared to digital growth of 15.9 per cent. This is one of the few regions where linear sales are still expected to be positive in 2019; in EMEA and North America, linear growth expectations are negative in 2019.
The economy is expected to grow by 6.3 per cent in 2019 and also 2020. This is essentially unchanged from prior expectations (compared to lower expectations in most other regions as of the April 2019 IMF WEO report). APAC remains the second largest advertising market, behind North America and ahead of EMEA. APAC will increase its share of global advertising market, from 31 per cent to 33 per cent to global advertising spending by 2023.
Two thirds of all regional advertising revenue is concentrated in the two largest markets: China (44 per cent of APAC market) and Japan (23 per cent) while the fastest-growing markets are in the Indian sub-continent: India (15 per cent in 2019), Sri Lanka (14 per cent), and Pakistan (15 per cent). On the other end of the spectrum, Singapore (1 per cent), Malaysia (2 per cent) and Thailand (2 per cent) will show little advertising growth in 2019. Advertising markets in APAC are wildly different, in terms of both maturity and intensity: it ranges from Australia, with almost USD500 in ad spend per capita per year, to India with just USD9 per year. China is somewhere in-between with USD60 of ad spend per capita expected in 2019. This is still below the global average, but China is closing the gap as its growth is consistently higher than global average growth. APAC overall sees USD48 per capita of ad spending.
Advertising growth in APAC continues to be driven by digital formats. Digital advertising sales will increase by 16 per cent in 2019 to reach USD90 billion, representing 49 per cent of total ad sales. Mobile impressions and clicks are now attracting the bulk of digital advertising spend in the region, reflecting the continuing rise of smartphones or feature phones in the life of APAC consumers. Mobile ad spend will grow by 26 per cent in 2019, compared to -5 per cent for desktop-centric spending.
According to Leigh Terry, CEO IPG Mediabrands APAC, “APAC is suffering the same economic concerns that are present in much of the rest of the world, but the growth baseline is still higher than most developed regions in the west. As the market grows faster than NA and EMEA, we expect to see APAC continue to increase its share of global advertising spend to 33 per cent by 2023.”
In terms of formats, paid search controls the lion’s share of digital advertising spend, and will grow double-digit again in 2019: 14 per cent to USD45bn, half of total digital advertising spending. Social media is growing the fastest of all digital formats: ad spend will increase by 27 per cent in 2019 to reach USD17 billion, i.e. 19 per cent of total advertiser budgets. Digital video is also showing robust growth, as spend will increase by 26 per cent to reach USD16 billion (17 per cent of total budgets). Like many regions, static display advertising is struggling, and will be flat in 2019; spending on static display formats will start to decline and those declines will accelerate going forward as brands lean towards other more dynamic advertising formats within digital media.
Television advertising sales will grow by a modest 1 per cent in 2019 to reach USD59 billion, 32 per cent of total APAC ad spend. This is will be the second consecutive year of stagnation for linear television advertising in the region (2018: 0.5 per cent). Advertising revenue growth is driven by pricing – CPM cost increases in the high single digit percentages – as demand from brands remains robust, while viewing declines albeit at variable rates; India’s TV viewing continued to increase this year, compared to Australian broadcast television viewing declines approaching -10 per cent. There are consistently big sporting events that are important for APAC, such as the World Cup, the Asian Games, and the Olympics in 2018, the Cricket and Rugby World Cup this year, and the 2020 Tokyo Olympics. However, in APAC the impact on television spending is less about absolute increases or declines, and more about the cadence of spend throughout the year.
Print advertising sales continue to decline, with newspapers ad revenues expected to decrease by -7 per cent in 2019, while magazine ad sales may shrink by -10 per cent. Radio advertising is stable: 1.9 per cent in 2019, following 2018’s 5.4 per cent growth rate. Finally, Out of home continues to outperform other linear media: ad revenues will increase by 6 per cent to reach USD15 billion. Out of home growth is fuelled by digital OOH formats, which will increase by 16 per cent in APAC in 2019 to reach USD3 billion, representing 20 per cent of total OOH spending.
According to Gurpreet Singh, Managing Director MAGNA APAC, “Share of digital spend is increasing and likely to hit almost half of the total spend in APAC, and around two third in China this year. This is largely due to the continued double digit growth in digital spend and further decline in traditional media spend in the majority of APAC markets. TV remains strong in South Asia and some big SEA markets. In most other markets, TV is fast losing share in total ad spends as a result of a continual loss of viewership. TV viewership is not really dying, content consumption is just moving from linear TV to online video and non-linear TV (OTT) as technology is creating more accessibility to high quality content choices for consumers.”