The report found that media owners' ad revenues increased by an estimated 5.6 percent in 2015 to US$146 billion, down slightly from previous expectations of 6.3 percent.
This is despite growth being slightly stronger than expected in two of the region’s biggest markets, China (9.9 percent) and India (16.3 percent).
Asia ad revenues are expected to be slightly weaker in 2016, at 5.2 percent, due to continuing slowing of the region’s economy, according to Magna Global.
APAC in 2016 will be the second largest global region, behind North America, having passed EMEA, with 29 percent of global ad revenues.
The region’s GDP growth is expected to land at 6.5 percent for 2015, according to the IMF, down from 6.8 percent in 2014.
Economic growth will again slow down slightly in 2016, to 6.3 percent as China continues to transition to a consumer economy while India accelerates.
Despite concerns about APAC growth weakness and the spillover to the global economy, it’s important to keep in perspective that it’s only a modest slowdown, and APAC growth remains significantly ahead of most of the western world, Magna Global pointed out.
Given the high growth rates expected in APAC going forward, compared with EMEA, the region will become increasingly critical to global advertising spend growth, the agency stated.
Television still dominates spend
Television remains the largest media format in APAC with 40 percent of total ad sales in 2015, but growth has slowed from mid-single digits to low-single digits (2 percent).
While Magna Global expects television to show stability going forward, the days of 5 to 10 percent growth are gone.
Television will remain the dominant media format longer in APAC than other regions, but digital media are expected to overcome television in ad sales by 2018.
This difference in growth trajectory can be seen in the media CAGR expected through 2020: television will see compound growth below 2 percent, whereas digital media will see compound growth just over 11 percent through 2020.
Digital media continues drive forward
Digital remains the primary driver of advertising growth in APAC. Digital ad revenues grew by 22.4 percent to US$43 billion, bringing the digital market share to approximately 29 percent of total regional ad sales in 2015, a figure that will increase to 32 percent in 2016.
The drivers of digital growth are social media (up 42.8 percent in 2015) and video (41.8 percent).
Social and video together now represent nearly 20 percent of total digital spend, up from just 12 percent three years ago.
Search remains the largest digital media format with slightly over half of total digital budgets, and while growth rates are slowing, it remains at a vibrant 23 percent.
Across all digital formats, mobile is the primary driver. Mobile-centric ad campaigns (71.4 percent) generated the bulk of regional growth, while desktop-based impressions are now stagnating (2.8 percent).
Advertising on mobile devices (smartphones, tablets) grew to represent nearly 40 percent of total digital ad sales in APAC in 2015, and will represent 70 percent of budgets by 2020.
Digital is expected to remain strong in 2016 with nearly 16 percent growth year on year.
China cements place as major spender
China is the largest APAC market, and ad spending grew by 9.9 percent to just over US$50 billion this year, slightly above mid-year expectations.
It is now comfortably the second largest global market behind only the US. Chinese Real GDP grew by 6.8 percent on a real basis in 2015, and is forecast to grow by 6.3 percent in 2016.
Economic growth continues to slow down, causing adspend growth to slow from the heady double-digit growth rates witnessed in the first half of the decade to mid-to-high single-digit growth in the years to come.
Even at such moderated growth rates, the mere scale of the Chinese market will continue to make it the biggest contributor to global advertising growth.
Digital media is the driving force in China. Not only was growth a robust 29.3 percent in 2015, but also digital spend is approaching half of advertising budgets (44.9 percent).
This is driven by continued strength in search advertising, which is still growing by 34 percent in 2015. In addition, display growth is weakening but still growing by nearly 17 percent in China.
Chinese digital strength is supported by dominant local internet companies whose linked platforms between search, social media and e-commerce are just as sophisticated as those seen in global giants Google, Facebook and Amazon.
Australia remains digital leader
Australia, the third largest APAC advertising economy, grew by 3.4 percent in 2015 to US$12 billion.
This was up from 2014’s 0.7 percent growth rate and 2013’s 0.9 percent growth rate. This growth was driven both by television recovering to flat versus 2014’s 1.7 percent drop, but also by increases in the growth rate of radio and OOH.
Australia is one of the most advanced advertising economies; with ad spend per capita just under US$500, one of the highest figures globally.
In addition, digital spend represents nearly 40 percent of total ad budgets. Unlike the US, where digital has not yet passed television as the largest ad spend format, in Australia digital became the largest part of ad budgets in 2013.
India most dynamic market
With China slowing down slightly, India has become the most dynamic economy among BRICs and among all the large nations monitored by the agency.
Real GDP grew by 7.3 percent in 2015 and will grow again by 7.5 percent in 2016, according to the IMF, with consumer price inflation at around 6 percent per year.
In that context advertising spending grew by 16.3 percent in 2015 to 487 billion rupees (about US$8 billion) allowing India to become the 12th biggest ad market in the world at the expense of Russia.
The new business-friendly government in place since 2014 has pledged to encourage cable television and digital media penetration in rural areas that were hard to reach previously.
Digital television and the expansion of the measurement panel will allow advertisers to reach more consumers and TV vendors to better monetize their audience.
TV ad sales grew by an estimated 18.5 percent this year to 200 billion rupees (US$2.99 billion or 41 percent market share) and will grow again by 15.1 percent in 2016.
Digital media ad sales grew by 49 percent to 57 billion rupees (US$850 million or 12 percent market share).
Newspapers remain the second biggest category at 36 percent market share, but ad sales growth slows down to 8 percent this year and next.
Radio and OOH ad revenues grew by 12 to 14 percent this year and will continue to grow double-digit next year.
Japan slows down
According to estimates, Japan advertising revenue growth slowed down this year to just 1.6 percent to ¥4.4 billion (about US$41 billion) due to the economic slowdown and lower-than-expected inflation.
TV ad sales were flat at ¥2.0 billion (US$16.2 billion, down 1 percent in the dominant free-to-air segment, up 16 percent on digital multichannel) as TV remains the number one media category. OOH media grew 1 percent.
All other traditional media categories were down year-on-year: newspapers by 2 percent, magazines 5 percent and radio 0.5 percent.
Digital media ad sales grew by 11 percent to reach ¥915 billion (US$7.4 billion, 21 percent market share).
Mobile advertising across digital formats increased by 37 percent to represent 44 percent of total digital media ad sales.
In 2016 the Japanese economy is expected to strengthen slightly, which should help ad spend to accelerate to 2.6 percent, according to Magna Global.
TV and OOH ad sales should stabilize while digital media sales will grow by 10 percent and other media categories will continue to decrease by low-single-digits.
Rest of Asia sees mixed growth
Elsewhere in APAC, the fastest ad growth of 2015 was seen in the Philippines (17.9 percent) while the “dragon” economies registered little or no growth:
- Singapore (-1.6 percent),
- Malaysia (1.0 percent),
- Taiwan (1.1 percent) and
- South Korea (1.1 percent).
Television continues to weaken in APAC as it does around the globe, but in 2015 only three APAC markets out of 16 will see shrinking television budgets.
This spend continues to funnel towards digital media. Growth in digital is highest in Indonesia (74 percent) and India (49 percent).
The weakest digital growth is seen in mature markets such as Korea (6.8 percent), Japan (10.9 percent) and Australia (13.1 percent).
Mobile share continues to increase, and even the APAC market with the least mobile penetration in 2015 (Vietnam: 18 percent) sees nearly one fifth of digital budgets shifting to mobile platforms.
Hong Kong, on the other hand, sees nearly half of all digital spend (48 percent) going to advertising on mobile devices.
Globally, the agency estimates that media owner advertising revenues grew by 3.2 percent in 2015 to US$503 billion.
This is lower than the previous forecast of 3.9 percent in June and represents a slowdown compared to the 2014 growth of 4.9 percent.
In 2016, advertising revenues will be boosted by economic stabilisation and the incremental spending generated around non-recurring even-year events (US presidential and general elections, UEFA Football championship in Europe, Summer Olympics in Brazil).
The agency is predicting ad sales to grow by 4.6 percent, marginally less than its previous forecast.