In its latest report on the global advertising marketplace, Magna Global estimates that media owner advertising revenues grew by +3.2% in 2015 to $503 billion. This is lower than the previous forecast (+3.9% in June 2015) and represents a slowdown compared to the 2014 growth (+4.9%).
In 2016, advertising revenues will be boosted by economic stabilization 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 report predicts ad sales to grow by +4.6%, which is marginally lesser than its previous forecast.
In terms of geographies, Asia-Pacific was the most dynamic region (+6.5%). Latin America and Central and Eastern Europe, once the fastest-growing regions, are both suffering from dramatic economic slowdown reflected in ad spend cuts (-3% in CEE, +3.8% in Latam). Meanwhile, Western Europe continues its recovery (+2.9%), while North America is slowing down (+2.0%).
Of the 73 countries analyzed in the report, 62 experienced ad revenue growth this year while 11 (including Russia, Finland, France, Greece, Peru and Singapore) witnessed downward trend. The biggest contributors to the 2015 slowdown are the two BRICs countries affected by severe economic challenges: Russia, where ad revenues are now expected to decrease by -12% (previously -11%), and Brazil (+4.4%, unchanged). The report forecasts increase in the 2015 growth estimate for China, India and the US. For 2016, it predicts four markets to remain in the red while 69 (including Russia) will experience some level of growth.
Asia-Pacific: this year +5.6%, Next Year +5.2%
Media owners ad revenues increased by an estimated +5.6% in 2015 to $146bn, making APAC the second largest region with nearly 30% of global spend. This is down slightly from previous expectations of +6.3%, despite the fact that growth was slightly stronger than expected in its two biggest markets (China +9.9%, India +16.3%). Growth in 2016 is expected to be slightly weaker, at +5.2%, due to slowing of the region’s economy.
APAC’s GDP growth is expected to be +6.5% in 2015 according to the IMF, down from +6.8% in 2014. Economic growth will again slowdown slightly in 2016 to +6.3% as China continues to transition to a consumer economy while India accelerates.
As China is slowing down (slightly), India has become the most dynamic economy among BRICs. Advertising spend has grown by +16.3% in 2015 to 487 billion rupees (approx. $8 billion) allowing India to become the 12th biggest ad market in the world at the expense of Russia.
India: this year +16.3%, Next Year +18.4%
Advertising revenue increases by INR 68 billion to touch INR 487 billion in 2015.
Television revenue on the back of increased volume will add +18.5% (Dec 2014 +11.9%) to reach INR 200 billion. While television market share is up by a percentage point (41%). While Print is down from 41% to 38% to touch INR 183 billion (growth of +7.7%). In 2016, Television is estimated to grow +15.1% and Print +8.2%.
Digital formats continue to grow the maximum at +49% to touch 57 billion rupees and thereby increasing its market share to 12%. Ad sales generated from Video and Social increasingly will be through mobile impressions, while Desktop in the near future will still be the domain for Search and Display. Share of mobile from 32% will be close to half the pie in 2016. Programmatic outside of Search will grow +5.7%.
Newer formats and revenue streams (Twitter and Instagram opening up new advertising and influencer management platforms) clubbed with bandwidth expansion through 4G launch and traditional advertisers increasing their digital budgets will contribute to the growth of +67.3% in 2016.
According to the report, Radio with a market share of 4% will grow +14% in 2015 and +16% in 2016. While OOH will grow +11.9% in 2015 and by another +10.4% in 2016.
Magna Global also estimates total advertising revenue to touch 576 billion rupees in 2016.
T20 World Cup, encouraging response from audience to non-cricketing leagues, state elections, 4G launch are expected to be some of the drivers for the advertising economy in 2016. E-commerce will continue to pursue GMV’s, most action will be seen in the telecom sector followed by Auto and FMCG advertising.
Digital television and expansion of the measurement panel will allow advertisers to reach more consumers and broadcasters to better monetize their audience in 2016. Digital market shares are projected to equal Print by 2020 as per the forecast.