Magnaglobal, a division of IPG Mediabrands, released an updated global advertising forecasts, showing media owners’ revenue growth for 2011 and 2012 to be slower than previously projected, but still resilient. The report has revised its 2011 global growth down to +4.7% (downgraded by -0.5%) to total $427 billion, while the forecasts for 2012 global growth has been revised to +5.0% (downgraded by -1.5%) to total $449 billion.
The report predicts that Internet is set become the second biggest media category in 2011, reaching a 20% global market share in 2012, and BRIC countries will help sustain global growth despite the worsening economic outlook. The countries contributed to 45% of the global growth in 2011.
For 2012, the report forecasts advertising revenues to grow by 5.0% to $449 billion. However, this is 1.5% below their previous prediction published in June 2011 (6.5%) due to deteriorating macro-economic perspectives.
Commenting on the forecasts, Shashi Sinha, chief executive officer, Lodestar UM, said, “Compared to the global outlook, the India scenario looks a lot better. However, it definitely shows a substantial cut back in comparison to the previous years. I would yet like to be optimistic and continue to hope that we may yet surprise ourselves by the end of next year.”
The report forecasts that at the end of 2012, emerging markets will represent 24% of global advertising revenues (compared to 7% in 1999) and the four BRICs alone will account for 14% (compared to 3% in 1999). The report points out that BRIC countries contributed to 45% of the global market growth in 2011 ($9 billion out of $19billion). However, BRIC countries lag behind the global average advertising spend per capita ($80), with India at the lowest at $4.
In terms of media market share, the report forecasts internet to grow by 11.2% and outrank newspapers to become the second biggest media category globally, accounting for nearly 20% of global advertising dollars (19.5% at $87.4 billion), while TV will grow by 6.7% globally to $187 billion. Newspaper and magazine revenues will shrink by an average -1% and -1.3% respectively while radio will grow by 2.2% to $30.4 billion.
The report highlights that emerging economies drove global advertising revenue growth in 2011, posting an average +15.0% growth during the year. Among individual countries, the strongest growth rates came from: Argentina (+37.9% in the context of a strong inflationary economic growth), China (+22.5%), Kazakhstan (+25.6%), Russia (+20.4%) and Brazil (+10.2%). Meanwhile, Indian media owners are set to have an advertising revenue growth of over 15% in 2011.
Among media categories, television, an unexpected winner in 2010 (+12.7%), continued to show strength in 2011 by growing over 4.8% to $175 billion, and maintained its leadership with a 41.0% market share globally. Out-of-home (OOH) media fared even better: including cinema, OOH grew 6.4% globally, driven by the incremental revenues generated through digital billboards (+19.9%), which have rolled out in various parts of continental Europe and Asia. Other traditional media categories, however, had a tougher year. Radio grew only +2.2%; newspapers revenues were down -2.4% and magazines declined -0.9%.
The report cites the declining circulation, shrinking readership, Internet competition and short term media buying patterns, contributed to print’s decline in developed markets. It added that things are different in emerging markets, however, where literacy is still increasing and broadband access is still relatively low. In those markets, magazines are growing along with the middle class, and there is enough advertising demand for every media to benefit beyond TV. Overall, print advertising revenues are up by a high single digit percent in emerging markets.
The report points out that Internet has emerged as the biggest gainer in 2011, with the total internet advertising revenues increasing by over 16.9% to $78.5 billion. The report notes that while display subcategories increased +15%, paid search reaped the benefits of usage growth and algorithm improvements to reclaim its position as the largest digital revenue driver (+19%). Within display, online video continues to show impressive growth (+58.5%), reaching $4.7 billion in revenues. Pre- and mid-rolls in online videos now generate 6% of total internet advertising revenues and one percent (1.1%) of global advertising revenues. Even more than online video sharing specialists, TV broadcasters offering free, ad-funded online “catch-up” of long-form, full-length episodes are driving category growth.