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Carat revises ad forecast to be lower; APAC still the bright spot

Carat has updated its forecasts for worldwide advertising expenditure in 2013 and 2014. Based on data collected from 57 markets around the world, Carat’s data shows continued positive momentum for global advertising expenditure in 2013 and 2014. Carat predicts global advertising expenditure will grow by 3 per cent in 2013, a slight decline from the 3.7 per cent predicted in March 2013, and global advertising spend forecast for 2014 will grow by 4.5 per cent, also down fractionally from the previous forecast of 5 per cent in March 2013.

In Asia Pacific, growth is better than in other parts of the world but Asia Pacific has also been touched by the slowdown in the global economy. Forecasts are for a 4.7 per cent growth in advertising spends in 2013 picking up pace in 2014 to 5.2 per cent. Within Asia Pacific, Indonesia, Philippines and Vietnam are showing the highest growth rates. These markets have growing domestic demand, coupled with increased foreign and domestic investment. The Indonesian ad market is forecast to grow 17.1 per cent in 2013 the Philippines by 12.3 per cent and Vietnam by 29.1 per cent.

Key BRIC market India also continues to see healthy increases in advertising expenditure of 7 per cent in 2013 and a slight increase to 7.6 per cent in 2014.

China is forecast to see a solid 6.9 per cent growth in 2013. This is more modest than the stellar growth rates we are used to in China but in line with the market’s moderating GDP growth rate. That said China’s advertising market growth is still the second highest of the key advertising markets in 2013 behind Russia’s at 11.2 per cent. Whilst newspapers are seeing a decline in spend 6.7 per cent and TV growth in single digits 3.1 per cent, Digital media spend continues to see substantial year-on-year growth of 44.5 per cent (2013) – fuelled by online video, search and mobile growth at 50 per cent. The forecast for 2014 is for uplift to 7.9 per cent.

In Japan, there is a steady recovery of the advertising market happening notably for TV and Digital media, at 2 per cent and 7 per cent respectively. Most key advertising categories will maintain a similar performance to the previous year, Transport/Leisure and Automotive categories notably performing well at an increase of 10 per cent in 2013 compared to 2012. While the picture in Q1 and Q2 was that of steady recovery, there is expected to be acceleration in the second half of 2013 moving into the key advertising season in the market. The full year forecast for the ad market in Japan is 1.3 per cent with continued growth next year of 1 per cent.

In Australia, the advertising market recorded negative growth in the first half of 2013 of 0.6 per cent which marked the longest recorded period, two and a half years, of consecutive negative growth. However the tide is turning towards improved market conditions with full year 2013 forecast to be flat and with growth of 1 per cent in 2014. Advertising spend is expected to return to peak 2010 levels in 2015.

Commenting on the Carat forecasts, Nick Waters CEO of Aegis Media Asia Pacific said, “Planned tapering of the Federal Reserve QE program creates some concerns in the region, but there are signs the improving confidence of consumers in western economies will finally provide more support for exporters. We can expect more moderate rates of growth in China in line with slowing of the GDP growth, but the market continues to be the major player in driving growth in Asia Pacific. The advertising industry in Australia still faces headwinds but the change of government gives cause for encouragement and the market is predicted to grow in 2014. South East Asian markets continue to show significant and rapid growth.”

“Technology’s impact on consumer behaviour continues to drive acceleration of digital media as agencies and clients adapt to the new possibilities. For market participants with focused and specialist capabilities, and the scale and reach to provide innovative and integrated solutions, the future of digital and the whole of the advertising industry is exciting,” added Mr Waters.

Predictions for 2013 are lower than previously forecast due to a slower upturn of the global economy; however the expectation of market recovery to positive growth in all regions in 2014 is predicted. After two consecutive years of market decline, Western Europe is predicted to experience a slow and gradual recovery even in markets registering double digit decline in 2013, such as Greece and Portugal.

By media, Digital spend continues to outpace all other media with the highest year-on-year growth rate of 15.6 per cent in 2013, more than 10 per cent higher than any other media and a trend which is expected to continue as emerging markets, such as Brazil adopt a more digital approach. Digital spend predictions continues to meet expectations of taking one out of every five dollars from the advertising wallet in 2014.

Commenting on the Carat forecasts, Jerry Buhlmann CEO of Aegis Media and Dentsu Aegis Network said, “Carat’s latest ad spend forecasts highlight the positive momentum and global growth for 2013, a year which has proven extremely challenging for some markets to maintain their 2012 ad spend levels, in light of the poor recovery of the global economy. In parallel to this, the new trend of a three-speed world is reinforced, with the rates of growth in the faster growing markets remaining ahead of steadily recovering markets, such as the US, followed by the struggling Eurozone markets.”

“The forecasts also reinforce the strength of digital media in today’s world and the upward direction of its market share, a media which is somewhat untouchable from the current, uncertain economic conditions. This buoyant and alluring media is attracting a crowded market, but for those with focused and specialist offerings, and the scale and reach to provide innovative and integrated solutions, the future of digital and the whole of the advertising industry remains exciting and enticing,” Mr Buhlmann added.