The Asia-Pacific ad market grew by 6.3% in 2019, ahead of North America (+5.1%) and EMEA (+4.3%) Magna says in its latest December ad forecast update. But APAC's pace of growth will slow to 5.9% next year as linear spend continues to shrink, countered by double-digit ad growth. This will put the region just slightly above the 5.7% growth rate Magna is predicting globally in 2020.
But it will also put the region behind Magna's ad spend growth predictions for North America (+6.5%) and Latin America (+6.1%) next year.
The global driver remains digital ads (+15%) albeit at a slower pace than the phenomenal rates seen over the past four years, Magna says, and will still rely on popular formats like search and social media to fuel ad spend next year.
Meanwhile, the US-China trade war has had an impact on global ad spend and will continue to do so, Magna's report authors say.
"Ironically, while the US and Chinese economies remain strong so far, despite the trade war, and marketing spend grew strongly in both markets this year, the trade war made collateral casualties in several countries depending on US or China trade, and marketing spending was hit," said Vincent Létang, EVP, Global Market Intelligence at MAGNA.
Létang predicts the global economic slowdown expected in 2020 will be mitigated by the return of cyclical events (including record political spending in the US), strong tech and entertainment marketing (products and services) and the transfer of marketing budgets from brick-and-mortar retail to ecommerce product search.
- Digital advertising sales increased by an estimated +15% in 2019 to reach $90 billion, representing 49% of total ad sales.
- Mobile ad spend grew by +25% in 2019, to reach 73% of total digital advertising. In 2020, digital ad spend will grow by double-digits again (+13%) to pass the $100 billion milestone ($102m).
- Paid search controls the lion’s share of digital advertising spend, and grew by double-digits again in 2019: +13% to $45bn, half of total digital advertising spending.
- Social media is growing the fastest of all digital formats: ad spend increased by +27% in 2019 to reach $17 billion, i.e. 19% of total digital budgets.
- The Indian sub-continent is the least developed sub-region in APAC but that is where advertising is growing fastest in recent years: Pakistan (+15% in 2019), Sri Lanka (+14%), and India (now among the ten largest ad market globally, growing by +13% in 2019).
- The weakest market performance of 2019 came from Singapore (-3%), Malaysia (-1%), and Vietnam (flat).
- Television advertising sales shrank by -1.3% in 2019 to reach $57 billion, decreasing for the first time since 2009. Viewing continues to erode, especially in the more mature markets like Australia
- Linear advertising revenues (TV, radio, print, OOH) decreased by an estimated -1.2%, while digital advertising revenues increased by +15.4%
More than two thirds of total regional advertising revenue is concentrated in the two largest markets: China (45% of APAC market) and Japan (22%).
- Television still represents 31% of advertising spending, however, close to 50% of the advertising budgets of national consumer brands.
- Print advertising sales continue to decline, with newspapers ad revenues expected to decrease by -8% in 2019, while magazine ad sales will shrink by -10%.
- Radio advertising has weakened since our prior forecast and decreased by -1.2%, the first decrease since 2009. With linear TV, radio and print all showing negative growth in 2019
- Out-of-home is now the only traditional media channel to grow revenues. Ad sales increase by an estimated+7% to $14 billion, fuelled by digital OOH formats, which will increase by +19% in APAC in 2019. Boosted by further digital OOH investment, OOH advertising revenues will increase by +6.4% in 2020.
(This article first appeared in Campaign Asia.)