Byravee Iyer
Jun 16, 2016

MAGNA upgrades 2016 ad spend forecast for APAC

APAC holds the most promise of any region, according to the latest MAGNA report.

MAGNA upgrades 2016 ad spend forecast for APAC

ASIA-PACIFIC –  Asia Pacific’s  ad spend growth remains significantly ahead of the rest of the world and will continue to grow at 6 percent to touch $139 billion in 2016, an upward revision from its December prediction of 5.2 percent on the back of a stronger-than-expected economic outlook in China and a rebounding Japanese market.

Television remains the largest media format in APAC, but MAGNA estimates the days of 5-10 percent growth are gone. However, in 2016, the television market will be boosted by cyclical events (US elections, UEFA Football tournament and Olympic Games) and stronger television pricing.

Digital, especially social media and video, continues to drive advertising growth. Search remains the largest digital media format, accounting for over half of the region’s total digital budgets. Mobile-centric ad campaigns generated the majority of regional growth, while desktop-based impressions are now stagnating. By 2020, Magna predicts, mobile devices will make up 70 percent of budgets.

"APAC is one of the most significant global regions. Through 2020 it will contribute the most dollars to global growth. India, China and Japan represent three of the top five contributors to incremental dollar growth expected this year," said Vincent Letang, EVP, director of global forecasting, MAGNA GLOBAL. 

According to Letang, India is becoming one of the most significant drivers of global advertising spend. "It is the number 10 market today, but by 2020 it will be the 6th largest market globally, passing markets like Brazil, France, Australia and Canada. APAC arguably holds the most promise of any region."

Globally, advertising revenues will grow 5.4 percent in 2016 to $480 billion, and by 3.1 percent in 2017. The US (revised from 5.7 percent to 6.2 percent) and China (from 5.5 percent to 8.4 percent) are the biggest contributors to the higher 2016 growth forecast.

Global ad spend 2016

 

 

Growth rates (total ad spend)

 

2016 Size (USD bn)

2015

2016

2017

Global

480.9

3.6%

5.4%

3.1%

APAC

 138.8

5.8%

6.0%

4.9%

Emerging APAC

 76.9

9.1%

8.9%

7.7%

China

 53.3

9.4% 

8.4%

6.5%

Japan

 34.1

0.8%

2.5%

0.3%

India

 8.8

15.9%

16.2%

15.7%

Australia

 10.6

5.4%

4.1%

3.9%

South Korea

 8.5

4.2%

3.0%

3.0%

Thailand

 4.2

2.8%

2.1%

3.3%

 

China

China’s upward revision is due to a stronger-than-expected economic outlook for 2016, as well strong digital advertising growth, dominated by search. Not only does China have one of the largest global search advertising markets, dominated by Baidu, but it also has one of the most mobile-skewed search markets: more than half of China’s search ad sales comes from clicks on mobile devices, significantly ahead of the global average of 33 percent.

Australia

Digital investment in Australia is set to hit $6 billion, accounting for 44 percent of all ad spend. By 2020, it is estimated that digital investments will a $9 billion market with almost 56 percent of all media spend being digital.

 Video (+50 percent) and social (+34.6 percent) show the fastest growing areas within digital for 2016; the mature search sector is expected to grow a respectable +8.6 percent.

India

India remains the fastest growing economy, with GDP over 7.5 percent in 2016 and a similar growth estimated in 2017. MAGNA estimates advertising spend in 2016 to grow 16.2 percent and touch 9.3 billion USD driven by sporting events and state elections. 2017 will be an equally good year with the industry growing 15.7 percent. 

While the share of television will continue to grow, digital formats are estimated to post the highest growth at 40 percent. Within that, video is the fastest growing format.

Japan

Magna predicts a mixed bag for Japan. Its advertising market will rebound by 2.5 percent in 2016 to reach JPY4.1 trillion, following stagnation in 2015. However, the market will slow down again in 2017 (+0.3 percent) amid another economic slowdown.

Digital ad spend will grow 10 percent account for 25 percent of the market, while traditional media sales “will stagnate at best”, the report said.

 

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