Internet advertising in Asia Pacific grew 22.4 percent in 2015 to $44.62 billion, and APAC has now overtaken EMEA to become the second-largest region globally. China remains the second-largest individual national market for internet advertising (behind only the US) and dominates Asia-Pacific.
Japan’s share of the region’s online ad spend dropped to below 20 percent, down from nearly 33 percent in 2011. By 2020, Japan will account for just 13.4 percent of regional revenue, ahead of Australia and South Korea.
Even though it’s starting from a very low base, Indonesia’s CAGR forecast of 35.2 percent is nonetheless impressive. It is expected to generate more than $3 billion of internet advertising revenue by 2020.
Paid search will continue to be the most popular Internet advertising sub-component in Asia Pacific: worth $14.97 billion in 2015, it is forecast to generate $27.70 billion by 2020. However, while Google dominates in most regions, in Asia Pacific much of the growth in search revenue will come from local Chinese players.
See part one of our coverage of the PwC Outlook report:
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Total display Internet advertising revenue will continue to be the second-largest contributor, with revenue of $14.61 billion in 2015, equivalent to 32.7 percent of total Internet advertising revenue in the region. Given continued investment in new ad formats, the display market is forecast to grow at a 12.3 percent CAGR to reach $26.13 billion in 2020. Display is the most popular online advertising format in many Asia Pacific markets, including Japan and South Korea, but search remains the key online advertising format in markets such as China and Australia.
Mobile Internet advertising is forecast to grow in Asia Pacific at a 22.2 percent CAGR in the next five years, which will see its revenue grow from $6.22 billion in 2015 to $16.97 billion in 2020.
TV advertising continues to dominate adspend. Asia-Pacific's total TV advertising revenue is expected to grow at a 6.4 percent CAGR between 2015 and 2020, rising from $48.85 billion to $66.63 billion. Terrestrial TV advertising revenue is the largest contributor, making up 84 percent of total TV advertising revenue in 2015, although this will drop to 78.9 percent in 2020.
“For all the excitement around mobile and internet advertising, in absolute terms for markets like Indonesia there is still room for TV growth, particularly in FTA,” said Oliver Wilkinson, managing director of strategy at PwC Singapore.
Indonesia is growing the fastest at a 15.7 percent CAGR to rise from being the seventh to fourth-largest market globally between 2015 and 2020. Vietnam will grow at a 13.8 percent CAGR, while the Philippines will rise at a 9.6 percent CAGR.
Online TV advertising revenue is the fastest-growing sub-component in the region, at a 38.6 percent CAGR, albeit from a low base, with the launch of services such as Netflix in the region.
“Those territories which already have high levels of broadband penetration, such as Australia and New Zealand, will see TV's share of advertising come under pressure, particularly from the internet,” observed the report.
Australia is a more mature market in the region. At $3.22 billion in 2015, Australia produced 6.6 percent of Asia Pacific's total TV advertising revenue in that year but will account for a slightly smaller proportion in 2020 with an average annual growth of 5.4 percent.
Globally, news print publications have been decreasing in circulation, yet Asia-Pacific still stands as the world’s highest-grossing news publishing market with a combined $46.46 billion in total newspaper revenue in 2015. The region has seen a slight increase in its print newspaper circulation, with subscriber revenue rising slightly from $23.120 billion in 2014 to $23.191 million in 2015.
Meanwhile, total newspaper revenue (circulation and advertising combined) has been falling consistently, though not at dramatic rates—2015's total newspaper revenue of $130.52 billion was down 2.0 percent compared with 2014.
Magazines in Asia-Pacific have also doing better than the global average, with consumer and trade magazine revenues combined expected to grow to $19.91 billion in 2020, rising at a 0.9 percent CAGR. Last year, combined magazine revenue was $19.07 billion.
Despite the growth in digital publications and the apparent decline of print, consumer print magazines still account for the majority of revenue, at 84 percent in 2015. Newspapers too are having trouble monetising digital readership with print still hogging 97.3 percent of circulation revenue.
Digital advertising too is lagging behind print due to many consumers being unwilling to subscribe to online publications, increased use of ad-blocking software and increasingly difficult competition with free content online, said the report. Digital growth is not expected to make up for print losses.
Having said this, in some specific areas, digital advertising is expected to surpass print with digital projected to overtake print advertising in trade magazines by 2018.
Digital is also developing its presence with consumer and trade magazine circulation on the rise from a combined $522 million in 2014 to $782 million in 2015, and is expected to grow to $1.654 billion by 2020. On the other hand, print circulation is steadily decreasing at a -0.7 percent CAGR for trade magazines and -0.4 percent for consumer magazines.
However, the potential for growth in emerging markets must not be overlooked, stated the report. Pakistan, for example, is a developing market in which print newspapers are forecast to show growth in circulation spending over the next five years, from $301 million 2015 to $333 million in 2020, a 2 percent CAGR.