Key APAC markets driving global adspend growth

APAC is set to drive global adspend growth as Zenith’s Advertising Expenditure Forecasts predict that six out of the 10 markets that will contribute the most to the global growth are from this region. The markets include China (22% of global growth), India (5%), Indonesia (4%), Japan (3%), the Philippines (3%) and South Korea (2%) while APAC is expected to contributed 43% of all the new ad dollars added to the market between 2017 and 2020 ($32.1 billion out of $75.1 billion total).

These findings are also aligned with GroupM's mid-year This Year Next Year forecast, which stipulated that China, Japan, India and Philippines are the top contributors, accounting for 75% of new advertising investment growth along with the US and UK. In fact, the Philippines enters the league for the first time with per-capita ad investment forecast at $60 billion this year compared to the world average of $93 billion. The report noted, however, that the Philippines remains undercounted as digital is still not measured there. 

Overall, Zenith's forecast shows that global advertising expenditure is forecast to grow 4.5% this year, down from the 4.6% growth that it stated earlier in March. The report noted, however, that the readjustment is due to a tougher comparison caused by increased figures calculated in 2017. APAC is expected to account for 33.8% of global adspend in 2029, an increase from 32.6% in 2017. Elsewhere, the Magna report released on Monday pinpointed that ad spend in APAC will reach $165 billion in 2018 out of a 5.9% growth. 

Meanwhile, China is only second to the US in terms of ad dollars spent, according to both Zenith and GroupM's forecast. Although its growth is slowing as the scale increases, China should still expect an average growth of 7.5% a year until 2020. GroupM's forecast agrees with Zenith where it says media investment in China will grow by 6.8% in 2018 and 6.6% in 2019.

Top 10 contributors to adspend growth

The more mature markets in the region — Australia, New Zealand, Hong Kong, Singapore and South Korea, categorised as ‘advanced Asia’ in Zenith's report — are expecting slower 3.4% average annual growth till 2020. The report noted that markets under this category achieved their biggest growth in adspend at 5.3% in 2015, the highest since 2011. Japan, on the other hand, remains stuck in a rut of persistent slow growth at 1.9% a year between 2017 and 2020, behind the annual growth rate of 2.5% between 2012 and 2017.

Average annual growth in adspend by regional bloc 2017-2020 (%)

Growth by medium

As expected, digital advertising continues to grow, tallying up to $198 billion in 2017, $221 billion in 2018 and $243 billion in 2019, according to GroupM. Digital investment grew by 15% last year, higher than the 12% predicted in December, while another 12% is forecast for this year. Excluding China, the Facebook and Google duopoly captured 135% growth in digital advertisment investment in 2017, lower than GroupM's estimation. 

Digital's share will also rise to 39% globally, as compared to the 36% predicted earlier. Essentially, digital is eclipsing TV, which takes its share of 37% worldwide. GroupM explains that it has raised digital's share of ad investment and lowered TV's as the line between these two media are blurring. Digital now includes ad revenue flowing to the IP delivered services of broadcast TV brands.

Meanwhile, mobile advertising, which grew at 35% in 2017, is the main driver in global adspend growth, contributing $83 billion in extra adspend between 2017 and 2020, according to Zenith (the report excludes markets that do not have a breakdown by medium).

Likewise, mobile advertising is expected to account for 30.5% of global advertising expenditure in 2020, up from 19.2% in 2017. Mobile is growing at the expense of a $13 billion drop in desktop advertising, as well as another $13 billion decline in print between 2017 and 2020. Overall, mobile advertising is expected to overtake television in 2021. The report nevertheless sounds a note of caution on the massive shift towards mobile adspend, as it points to results from its Touchpoints ROI Tracker showing that mobile ads are least effective in driving recall among potential customers. Potential customers are 41% as likely to recall a mobile ad compared to 53% for TV ads, the medium which receives the higher score. (Touchpoints ROI Tracker is Publicis Media's brand contact measurement and planning tool, administered on 1 million consumers). 

“The mobile device in our pockets is becoming the gateway to our media world, but its brand-building capabilities are still in question—simply applying old practices to new technology may not translate to brand growth,” said Vittorio Bonori, Zenith’s global brand president. “Having a clear understanding of how the entire ecosystem of paid, owned and earned media works together to drive return on investment is vital.”

Hence Zenith suggests that TV, being a pre-eminent brand awareness channel, does in fact complement paid search. Advertisers are encouraged to run paid search activities to take advantage of increases in searches driven by television campaigns. Audiovisual advertising, which means television and online video combined, accounted for 48.4% of display advertising in 2017, up from 43.6% in 2010, and its share is expected to rise to 48.9% in 2020.

Excluding TV, other traditional media such as newspaper and magazines are on a sliding trend, according to Zenith. However, GroupM says China can expect a slight improvement (-8.6% in 2017 to -5.3% in 2018 and -5.5% in 2019) from the World Cup especially for the CCTV channel groups.

Globally, Zenith says both print categories are expected to shrink at average rates of 5% and 6% a year respectively, while their market shares in 2020 will be 7% and 4% respectively in 2020. 

In terms of OOH spendings, Zenith's report pointed out that China, which overtook the US as the world’s biggest cinema advertising market in 2017 with total spend worth $1.2 billion, is driving global growth in this field, which records growth at 16% a year. GroupM concurs, saying that rising cinema admissions are a natural OOH accelerant while OOH is expected to grow 9.3% in 2018 and 9.0 in 2019.