Magna Global has revealed its advertising forecast for 2013. According to the prediction, the global economy will grow at a moderate pace in 2013. Real GDP growth will average +3.3 per cent globally, according to the October update from the IMF. This is slightly below IMF’s July prediction (+3.5 per cent). Advanced economies are predicted to grow by only +1.3 per cent, although there is a widening divergence between the slow but steady recovery in the US (+2.2 per cent growth) and protracted weakness in the euro area (-0.4 per cent).
Media owners advertising revenue growth forecast for 2013 is revised to +3.1 per cent, down from +4.5 per cent in June. That prediction is based on the assumption that neither the US nor Europe will fall into their respective fiscal and debt ‘cliffs’ and the current economic forecasts will materialise.
“In Asia, we expect India to re-accelerate after the temporary slow-down of 2012, to +8.7 per cent. Amidst an economic ‘soft landing’ (+7 per cent to +8 per cent GDP growth) that might be more durable, Chinese advertising will grow by +9.5 per cent in 2013 before going back to double-digit growth starting from 2014,” said the report.
In India, media companies will see ad revenues growing by +8.7 per cent next year with internet again leading the growth at +31.2 per cent. Mobile and video advertising is expected to double its revenue while paid search and display will consolidate further. Television will see change in delivery mechanism with the digital foot print increasing to 38 cities. With GOI opening up radio stations for private players in 227 cities, the category will see a growth of +4.6 per cent. Newspaper will benefit from political advertising.
Elsewhere in Asia, the forecast says Japan will return to stagnation (+0.2 per cent) when faced with economic slow-down again, and a strong comparison year 2012; Australia will post modest growth (+1 per cent). Most other markets in Emerging Asia will experience explosive growth: for instance Malaysia (+9.7 per cent) and Vietnam (+13.4 per cent).
The year that was
In 2012, media companies around the world saw their advertising revenues grow by +3.8 per cent to total $479.9 billion (constant USD 2011 basis). This new estimate is slightly lower (-1.0 per cent) than the report’s previous prediction in June 2012, with most of the difference coming from Western Europe (from -0.2 per cent to -2.8 per cent).
Asia Pacific advertising revenues grew by an average +5.5 per cent. Emerging Asia market growth slowed down compared to previous years (especially China +9.2 per cent and India +2.6 percent) but the sub-region still posted robust growth of +8.4%.
India advertising revenue grew by +2.6 per cent to total INR 334 bn. Growth is led by internet (+68.1 per cent) and television (4.53 per cent). Internet has moved up to third largest media category with six per cent market share after television and newspaper. Internet has been the clear beneficiary of decelerating print. Growth is driven by mobile devices which have leapfrogged PC penetration. Online video is considered more and more by TV driven categories such as FMCG and Automobile. Paid social and rich media formats continue to keep the display market invigorated.
In terms of media categories, television was resilient yet again in 2012 (+5.0 per cent), buoyed by quadrennial events. That is especially clear when compared with the declines of newspapers (-4.5 per cent) and magazines (-5.7 per cent) that are feeling the triple blow of audience erosion, weaker demand and cheaper digital competitors. Radio had a positive year (+1.6 per cent), despite a shrinking share of audience, partly because it’s an inexpensive, flexible medium often used to drive traffic and promotions when branding campaigns are reduced in challenging times. Out of home benefitted from the quadrennial events, and is still organically driven by the rise of digital formats (+6.1 per cent).
Print ad revenues to see decline
On a global basis, 2013 will be a seventh consecutive year of decline for newspapers ad revenues (-3.4 per cent) as fewer emerging markets now record enough growth to offset the rapid decline otherwise observed in developed markets. Magazines will decline by -4.3 per cent, still suffering from 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 (US television represents about a third of global television: $62 billion in a $202 billion global market). Out of home ad sales (including cinema) will increase by +3.4 per cent.
Radio will grow by an average +1.5 per cent. Because it’s 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. Digital media revenues will increase by +13.5 per cent; classic PC display format (banners, sponsorship) are now barely growing (+6 per cent) as more investment shifts towards online video and mobile-based formats, and paid search remains robust (+14 per cent).
Vincent Letang, EVP, Director of Global Forecasting and author of the report, said: “Tablets have been the fastest device ever to reach 50 million users in less than three years. As they become more affordable, we are seeing an explosion in the volume and the nature of mobile media usage. Marketers are gradually embracing the new marketing and branding opportunities: mobile advertising already represents $6 billion globally, i.e. six per cent of digital advertising and one per cent of total advertising. Magna Global predicts the format to grow to $24 billion by 2017, reaching 14 per cent of global digital advertising and four per cent of overall advertising revenues.”
2014 and beyond
Although more robust advertising growth is expected from 2014, as global economy stabilises, the report has slightly reduced mid-term forecasts. It now predicts 2014 to grow 6.0 per cent (previously 6.3 per cent) and 2015 by 4.9 per cent (previously 5.3 per cent).