Emerging markets drive ad spend, China to overtake Japan next year: eMarketer

GLOBAL - Total media ad spend is expected to grow 7.4 per cent to US$542 billion on the back of the Olympics and growth in emerging markets, according to a report by research firm, eMarketer.

by Emily Tan | 08/06/2012

China is expected to drive online and total ad spend growth

eMarketer bases its analysis on various elements related to ad spending, including macro-level economic conditions, historical trends, estimates from other research firms, and consumer internet usage trends.

Asia-Pacific and Latin America are expected to be the fastest-growing regions throughout the forecast period, with spending rising at about double the worldwide rate. The biggest driver of growth is China, which eMarketer expects will overtake Japan's total ad spend next year for the first time, making China the world's second-largest country in terms of ad spend (after the US).

This year, China's ad spend is expected to reach US$46.3 billion and Japan's to grow to US$47.8 billion. Next year, the research firm predicts that China's ad spend will reach nearly US$53 billion, compared with Japan's ad spend of nearly US$50 billion.

eMarketer also predicts that online ad spend growth worldwide will reach 21.3 per cent this year to total US$107 billion, slightly faster than last year's rate of 21.1 per cent.

China has a big part to play in this growth as well as its rapid growth, set to reach US$7.36 billion this year, will propel Asia-Pacific past Western Europe to become the second region in the world for online ad spend in 2013. In 2014, this growth will make China the second-largest online ad market in the world, as it surpasses the UK and Japan, and remains behind only the US, said eMarketer.

eMarketer's forecast is markedly more optimistic than advertisers surveyed in Warc's latest Consensus Ad Forecast, which downgraded growth estimates for this year in 11 of 13 key global markets. At the worldwide level, Warc expects advertising expenditure to increase by 4.4 per cent in 2012 and 4.9 per cent in 2013, softening from April's forecast of 5.3 per cent and 5.4 per cent, respectively.

Warc's Consensus Ad Forecast is based on a weighted average of adspend predictions at current prices from ad agencies, media monitoring companies, analysts, Warc's own team and industry bodies.

According to Warc, the UK and Japan are the only nations where the trading outlook has improved since April and are expected to grow 3.4 per cent and 3.3 per cent in 2012, up from the expected 2.4 per cent and 2.8 per cent forecast in the first quarter.

Among the other featured countries, the US is anticipated to post a 3.6 per cent improvement in revenues this year, a modest change from the 4.1 per cent increase envisioned in April.

Even relatively robust economies were not immune to this trend. As such, India's growth rate was off by 2.7 percentage points to 8.7 per cent, while the 12 per cent lift outlined for Russia was down by 1.6 percentage points.

Nevertheless, Warc's survey participants expect China's ad sales to drive global growth with a forecast of 14.7 per cent, only 0.1 per cent down from expectations earlier this year.

Advertisers have lost confidence since the first quarter due to the lack of resolution in the eurozone, said Suzy Young, Warc's data editor. "Global advertising spend is holding up thanks to the Olympics, the US presidential election and rapid growth in China."

By medium, Warc forecasts a more modest growth for online ad spend of 4.8 per cent than eMarketer's forecast of 21.3 per cent. Warc also predicts that cinema will grow 4.7 per cent, television 4.6 per cent, outdoor 4 per cent and radio 2.4 per cent.

Magazine ad sales are expected to fall by 2.1 per cent and newspapers will decline 2.5 per cent, according to Warc.

| ad , emarketer , spend , warc