The Asia Pacific’s advertising market will grow by almost 7 per cent (+6.9 per cent) in 2018, ahead of previous expectations for +5.9 per cent growth, to reach $165bn. APAC remains the second largest region for advertising spend, behind North America’s $218bn. This represents accelerating growth compared to 2017’s +5.7 per cent performance.
Globally, net media owners advertising revenues (NAR) are projected to grow by +6.4 per cent in 2018, to $551 billion. This is significantly above MAGNA’s previous forecasts (+5.2 per cent, published December 2017) due to stronger-than-expected market year-to-date, for digital media sales in particular.
Digital continues to be the growth driver for advertising spend in APAC, and will increase by almost +17 per cent this year to reach $70bn, following 2017’s +18 per cent digital growth. Digital formats will command 42.5 per cent of total advertising budgets this year, ahead of television’s 36 per cent share. By 2022, MAGNA expects digital advertising will increase to $110bn, representing more than half of total APAC advertising budgets. Mobile continues to be the growth engine within digital, and will increase by +29 per cent this year to reach two thirds of total digital advertising spend. APAC is now the most advanced region for mobile advertising, ahead of North America.
Within digital media types, search remains the 800 pound gorilla, representing just over half of total budgets. Search spending will grow by +15 per cent this year as brands continue to be attracted to the performance benefits of search advertising. Furthermore, an increasing share of growth is non-core search such as Alibaba Product Listing Ads, rather than traditional search engines. While smaller than Search, Video and Social are the fastest growing formats, and will increase by +32 per cent and 30 per cent respectively this year. Combined, they will represent just over 30 per cent of total budgets. Meanwhile spending on static banners remain flat, due to ad blocking, shrinking inventory and weak pricing.
Leigh Terry, CEO IPG Mediabrands APAC said, “Economic confidence across all of Asia Pacific region is reflected in the current and anticipated expansion of client investment in their marketing dollars. Our forecasts show that with the exception of one market, all have positive growth, and the powerhouses of China and India – the world’s two most populous countries, both with double-digit growth. Whilst there is no United States of Asia, and each market has a unique ecosystem, there are some key trends. Digital continues to thrive and enjoy expansive growth especially through mobile – something that Asia is a world leader in, but also as search evolves to voice this will be something we will be watching closely; print remains under pressure and has now crossed a threshold of being less than 10 per cent of spends in totality.”
Television remains the #2 advertising format in APAC, and TV ad sales will increase by +2.4 per cent this year in the region. That is faster than last year’s +1.3 per cent growth, and reflects an improving economy as well as continued Cost-per-thousand inflation offsetting audience erosion. The 2018 FIFA world cup will be a minor driver where the national team has qualified for the tournament in Russia (Japan, Korea, and Australia). Television still commands nearly 36 per cent of total advertiser budgets, but the continued outperformance of digital means that by 2022, TV in APAC will represent just 30 per cent of total spend. Compound growth through 2022 will remain positive, however, unlike many other traditional media formats, which are now shrinking.
Print ad sales is experiencing significant declines. Newspaper spend will decline by -7.5 per cent in 2018, and magazines will shrink by an even more precipitous -12 per cent. While these growth rates are significantly negative, they actually represent stronger growth than in 2017. This might be due to print now combining to represent just under 10 per cent of total budgets. As spend continues to decline, core loyal print advertising brands may be all that remains on newspaper and magazines, insulating them somewhat from continued strong declines.
Offline advertising in totality in APAC will represent $95bn of revenues, but will be flat year-over-year; all of the growth in APAC comes from digital formats.
Vincent Létang, EVP, Global Market Intelligence at MAGNA and author of the report, “Global Advertising Spending is going to expand by the strongest growth rate since 2010 this year, as several of the largest markets – including the US, Russia and China – experiences robust economic growth. Many brands in consumer packaged goods and automotive are freezing or cutting ad expenditure, which hurts the revenues of traditional media types while digital media, used by millions of small and local advertisers, seems to be immune from slow-down so far. Linear television will enjoy modest growth in most market however, as cyclical events bring incremental budgets and strong pricing (CPM inflation) offsets shrinking volume (ratings decline).”
Gurpreet Singh, Managing Director MAGNA APAC, said, “Overall 2018 looks more promising in terms of ad spend growth in APAC compared to 2017. There is a clear spectrum of ad spend trends across APAC. For markets like China, Australia, Korea and Taiwan, digital is the key driver of growth. In South Asian markets (India, Pakistan, Sri Lanka) and big south east Asian markets (Indonesia, Thailand, Philippines, Vietnam) TV still dominates ad spend; digital is growing very fast – but from a low base. Markets like Japan, HK, Malaysia and Singapore are rapidly closing the gap between TV and digital spends. In the next 5 years, we will see spends further consolidate between TV and digital leaving a small single digit share for other media.”