Global ad expenditure is expected to grow by 3.9 per cent this year to US$518 billion. Although this forecast is slightly lowered from ZO’s previous figure of 4.1 per cent, the decrease is due to a better-than-expected performance in 2012, leaving tougher comparatives for 2013. In dollar terms, this global forecast is ahead of the previous forecast by US$430 million.
The US will continue to be this year’s largest advertising market, and between 2012 and 2014, ZO expects the US to contribute 28 per cent of the $76 billion that will be added to global adspend. This year, Japan will continue to hold its place as the world’s second largest ad market with $51.7 billion, followed by China with $36.2 billion.
Overall, seven of the 10 largest contributors will be from 'rising markets', contributing a further 45 per cent of new adspend. ZO further predicts that developing markets will contribute 63 per cent of adspend growth between 2012 and 2015, while increasing their share of global adspend from 34 per cent to 38 per cent.
This year, ZO divided Asia-Pacific into three categories, namely ‘Fast-Track Asia’ which includes China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam; ‘Advanced Asia’ which covers South Korea, Hong Kong, Singapore, Australia and New Zealand; and Japan as a standalone market.
The Fast-Track Asia countries are so named, explained the report, for their swift growth and ready adoption of technology, often leapfrogging over superseded technology that has become entrenched in more developed economies. The region’s ad spend grew by 11.2 per cent in 2012 and is expected to register growth of 10 percent to 11 per cent each year from now until 2015.
Advanced Asia grew just 2.6 per cent in 2012, mainly because of a slowdown in trade with China and other fast-growing markets. Trade is expected to pick up in 2013, said ZO, and ad expenditure should follow, growing 4.5 per cent this year, followed by 5.0 per cent growth in 2014 and 5.2 per cent in 2015 as advertisers rebuild their confidence in the global economy.
Japan, as usual, is Asia-Pacific’s outlier market. The nation had a stronger year than expected in 2012 as it recovered from the disaster of the 2011 earthquake and tsunami. The forecast estimated that ad expenditure grew 3.6 per cent in 2012, up from ZO’s December forecast of 3.1 per cent. This will make the comparatives tougher for 2013, however, so the agency reduced its forecast for 2013 from 1.6 per cent to 1.0 per cent. This will be followed by 1 per cent to 2 per cent annual growth for the rest of the forecast period, as Japan continues to struggle with low growth and deflation, according to the agency.
Global advertising expenditure by medium
The internet continues to be the fastest growing medium. ZO estimated that it grew 15.2 per cent in 2012 and expects 14 per cent annual growth for 2013 to 2015. Within this medium, display is the fastest growing sub-category, with 20 per cent annual growth thanks partly to the rise of online video and social-media advertising, each of which are growing at about 30 per cent a year.
“Measurement agencies are investing in research that should measure consumers’ exposure to traditional display ads more accurately, and track their exposure to video ads across desktop computers, tablets and television screens,” noted the report. “Some broadcasters are starting to trade packages that include both online video and television spots.”
Paid search is expected to grow at an average rate of 13 per cent a year to 2015, due to continued innovation by search engines, including the display of richer product information and images within ads, better localisation of search results, and mobile ad enhancements like click-to-call and geo-targeting, said ZO.
Online classifieds however, has been a subdued category since the downturn in 2009, as it depends heavily on the weak property and employment markets in the developed world. ZO forecasts an average annual growth of just 5 per cent for the rest of the forecast period.
The internet’s rise continues at the cost of print. The report states that internet advertising will increase its share of the ad market from 18.0 per cent in 2012 to 23.4 per cent in 2015, while newspapers and magazines will continue to shrink at an average of 1 per cent to 2 per cent a year. These figures include only advertising in print editions of publications, not their internet or mobile offerings, which are included in the internet category, the report authors noted.
ZO expects internet advertising to overtake newspapers for the first time in 2013, and then exceed the combined total of newspaper and magazine advertising in 2015.
The internet is also the biggest contributor of new ad dollars to the global market. Between 2012 and 2015 ZO expects internet advertising to account for 59 per cent of the growth in total expenditure. The next biggest is television, which is forecast to contribute 40 per cent of growth.
Television’s share of global adspend has stabilised, after growing slowly but surely for most of the last three decades. ZO now expects television’s market share to peak in 2013 to 40.4 per cent, before falling back marginally to 40.3 per cent in 2015.