Magna Global forecasts "explosive" advertising growth in emerging markets

The Magna Global forecast shows media owners advertising revenues globally will grow by 3.1 per cent in 2013–1.4 per cent less than previously forecast in June.

It said the revision is mostly caused by a slow-down in economic growth and continued economic uncertainty in Europe and the US. The cautionary marketing spend that took place in the second half of this year is another factor, it added.

The global advertising market reached $495 billion this year, up 3.8 per cent on 2011. The US remains the largest market with $153 billion in advertising revenues. Japan, China, Germany and the UK complete the top five. Asia-Pacific advertising revenues grew by an average 5.5 per cent in 2012.

The report comes at the same time as ZenithOptimedia's predictions of advertising expenditure, which said advertising expenditure in Asia-Pacific in 2012 will hit US$140 billion and then increase by 5.5 per cent in 2013 to reach nearly US$148 billion (excluding Japan). ZenithOptimedia added that China will lead as Asia’s biggest contributor of new ad dollars to the global market.

Meanwhile, Magna Global said it expects emerging Asia to experience “explosive growth” in 2013, pointing to 9.7 per cent growth in Malaysia and 13.4 per cent growth in Vietnam.

As a point of comparison, Asia-Pacific is expected to grow 4.8 per cent in 2013. India is forecast to grow at 8.7 per cent, China at 9.5 per cent, Japan at just 0.2 per cent while Australia will post modest growth of 1 per cent.

Gurpreet Singh, managing director, Magna Global, Asia Pacific, said a rising middle-class that is embracing Western lifestyles and the current low ad spend per capita are the main contributing factors to the strong growth in emerging markets.

He said ad spend in Vietnam is $7 per capita, while in Malaysia it is $80. This is against a global average of $91.

“The Philippines, India and Indonesia will all grow double-digit in the next five years, driven by economic growth and media inflation,” he added.

Meanwhile, Magna Global said 2013 globally will be a seventh consecutive year of decline for newspaper ad revenues (down 3.4 per cent) as fewer emerging markets now record enough growth to offset the rapid decline otherwise observed in developed markets.

Digital media revenues will increase by 13.5 per cent; classic PC display format (banners, sponsorship) are now barely growing ( up 6 per cent) as more investment shifts toward online video and mobile-based formats, and paid search remains robust, growing 14 per cent.

Magazines will decline by 4.3 per cent, suffering the combined pressure of television and the growing targeting capabilities of digital media.

Television advertising growth will slow down to 2.3 per cent, mostly due to the US market, while out-of-home ad sales (including cinema) will increase by 3.4 per cent

Radio will grow by an average 1.5 per cent. Given that it is on average five times cheaper than national TV or eight times cheaper than print, radio is in demand and should be able to increase its rates in 2013.