Digital spend is the primary driver of advertising revenue growth in APAC. All incremental spend is coming from digital revenue growth; offline advertising revenues were down by -0.3 per cent in 2016, the MAGNA report highlighted.
MAGNA’s report showed that the Asia-Pacific’s advertising market grew by +5.3 per cent this year to USD 148 billion. This makes APAC the second largest region, behind North America with 30 per cent of global advertising revenues. The report predicts the region to record a similar growth of 5.4 per cent in 2017.
The highest growth rates this year came from some of the least advanced markets, such as the Philippines (+17 per cent), Sri Lanka (+15 per cent), India (+14 per cent) and Pakistan (+13 per cent), the report finds.
While many markets in developing APAC are showing fast growth, it’s important to keep in mind that the incremental dollar contribution from China is nearly three times the combined sum of the incremental dollars coming from these four fast-growing markets. At the other end, three developed markets suffered negative growth: Hong Kong (-2 per cent), Singapore (-4 per cent) and Thailand (-13 per cent).
Digital drives growth
The report highlighted that while linear television still controls the largest share of advertising budgets in APAC with 39 per cent of total ad sales, it is digital which is now the predominant driver of growth.
Digital advertising revenues are expected to grow by +18 per cent this year, bringing total digital spend to USD 51 billion, representing one third of total ad dollars. This compares to television growth of just +2 per cent, while radio and OOH are also growing in the low to mid-single digits. Print ad sales are shrinking by nearly -10 per cent.
Digital ad sales are expected to surpass linear television by 2018 in APAC, just one year after the same milestone was reached on a global scale in 2017. In many of the largest and most mature markets such as China and Australia, that milestone has already been reached. In some emerging markets, however, low access to digital media and devices is keeping the digital advertising market share much lower, with India serving as a prime example (15 per cent only).
Within digital, growth is driven by search and social spend. Search and social combine to represent 83 per cent of total incremental dollars across all media formats. In many large markets in APAC, the contribution to total incremental growth from search and social is even higher, such as China (90 per cent), Japan (95 per cent) and Australia (96 per cent); essentially all growth in many markets is coming solely from search and social spend increases.
Mobile drives growth in China
China is the largest advertising market in APAC and the second largest market globally behind the US, with RMB 386 billion ($61 billion) of ad sales in 2016. Growth in China is expected to reach +7.2 per cent this year.
China is one of the strongest digital markets globally, with total digital spend of RMB 186 billion (USD 30 billion) in 2016, representing 16 per cent of global digital advertising spend. Digital ad sales in China represents a robust 48 per cent of total advertising budgets, with China’s home-grown and concentrated digital media owner landscape offering significant appeal to large advertisers.
Digital is expected to increase by +18 per cent this year, and by 2021 digital will represent nearly 60 per cent of total advertising budgets. Mobile is a strong driver of this impressive digital performance, growing by +39 per cent this year to represent 56 per cent of total digital spend. By 2021, mobile will have grown to RMB 233 billion (USD 37 billion), representing 76 per cent of total digital advertising budgets, and nearly half of total budgets across all media.
Australia still strong
Australia ad sales grew by +7 per cent this year to AUD 15 billion (USD 11 billion), above of our previous forecast (+4 per cent).
Digital is already by far the largest advertising format in Australia, with television representing just 25 per cent of total spend (barely half of digital dollars). Not only that, but television continues to shrink (as it has since 2014). Mobile increased by +53 per cent this year to reach 41 per cent of total digital spend; by 2021 mobile will have increased to represent 2/3 of total digital advertising dollars.