The analysis covers ad market conditions in 73 individual markets worldwide.
The predicted acceleration in ad revenues is in line with expectations of accelerated economic growth in the second half of 2013 and throughout 2014, says the report. In its April 2013 report, the IMF predicted 2013 real GDP growth to reach +3.3% globally and 2014 to accelerate to +4.0% in 2014. Although the economic forecast is still modest for developed markets, and for Europe in particular, it will in many cases bring the economic environment to the point where business growth triggers ad spend growth, and, in some markets, faster-than-GDP growth, the study finds.
Digital media will continue double-digit growth in 2013, as ad revenues will increase +13.4%. Growth will be driven by search, video, mobile formats, and social formats. Other formats will barely grow, and actually decline in many markets due to the commoditization and deflation of display inventory.
Global Online Ad Spending ($ US Billions; % Change Year Over Year in 2013)
Total digital media
Source: MagnaGlobal, June 2013
Television advertising growth will slow down in 2013 due to the absence of global televised events, notes the report. Following a +5.0% growth in 2012, ad sales will grow by only +2.0% to $196.5 billion, but TV remains the leading media category (40% market share) ahead of digital.
Print formats continue their decline, according to the forecast. In 2013 newspaper ad revenues will decline by -3.3% and magazine revenues by -5.1% to a combined $110 billion (a 23% market share). Radio advertising will grow by +1.1% to $32.5 billion and out-of-home media revenues will increase by +2.9% to $32.6 billion
There continue to be wide regional and national contrasts in the global advertising landscape in 2013. There will be almost no growth this year in Europe, Middle East and Africa (+0.4%) and North America (+0.7%). On the other hand, the study increases the 2013 forecast for Latin America (+12.5%) and for APAC (+5.9%).
However, after years of negative growth in some markets, the report says that most of Western Europe will bottom out in 2013. For 2014 the report forecasts that Central and Eastern Europe will grow by an average +7.6%. The Middle East and Africa sub-region will be growing by +4.8%, with advertising expenditure increasing in the Gulf Cooperation Council countries, and in South Africa but decreasing in Morocco and Kenya.
The US economy is on a slow but steady trajectory towards recovery, says the report. Despite the government sequester and higher payroll taxes that have contributed to the uncertainty that plagued the beginning of the year, 2013 will show moderate economic growth. The second half of 2013 and 2014 are expected to improve, due notably to a stronger housing and job markets and higher business and consumer confidence. The US unemployment rate remains high (7.6%) but is declining month after month. The latest consumer sentiment index (May) showed a surge at 84.5 compared to 76.4 in April, bolstered by optimism stemming from rising stock market, home prices, and employment.
For 2013, the report forecasts +0.4% growth in media owners ad revenues, to $155 billion. These growth rates are not normalized and do not take into account the absence of the incremental Olympics and political spend that occurs in even years. If adjusted for political and Olympic spending in 2012 and 2013, the underlying growth would be stronger by approximately 1.5%.
The forecast shows that total US
television advertising is expected to decline -2.8% in 2013 with -6.8% in broadcast TV due to the absence of Olympics and political spend, and +2.4% for cable TV. Digital media is the only
category to show significant growth in 2013 (+11.5%), although the pace of growth should plateau slightly as a result of deflationary pricing trends affecting display formats. The category will be
driven by mobile advertising continuing its aggressive growth at +61.7% to $5.4B. Print advertising will continue to decline as ad sales will drop by -6.7% for magazines and 6.8% for
newspapers. Radio is expected to remain flat this year and out-of-home advertising will grow +3.5%.
Advertising spend increased by 9.3% in 2012, which was the first time it grew at a slower pace than nominal GDP. In 2013 the forecast shows the advertising market to grow by +11.6% to RMB 302 billion. Television continues to command the highest media market share, growing 7.6% to RMB 109 billion and while digital is rapidly gaining (+27% to RMB 88 billion). Internet penetration will have to expand to older rural demographics for continued gains as the urban youth market has been completely saturated. Supported by robust domestic demand, ad expenditure will grow by 12.1% in 2014 and by 12.6% in 2015 and China will pass Japan to become the 2nd largest media market globally by 2016, according to the report.
In April the IMF raised its real GDP growth forecast to +1.6% for 2013, and to +1.4% for 2014. The IMF is acknowledging a shift in the Japanese economy: after 10 years of deflation, CPI inflation is expected to be flat in 2013 (+0.1%) and up by +3.0% in 2014. The perspective of more dynamic economy and positive inflation in the mid-term has led to a change in the advertising spend scenario, revising growth from +0.2% to +1.5% in 2013 and from +2.3% to +2.9% for 2014.
world’s 10th largest advertising market, advertising sales grew by +11.4% in 2012 and are expected to grow at a similar rate in 2013. Unlike many other large European markets, digital
claims less than 20% of the total spend in Russia, while television controls half of total ad spend. TV advertising cost inflation continues to drive double digit television growth rates (+10.3% in
2013). Russia’s GDP growth should remain robust in the high single digits, which will continue to drive Russia’s advertising market higher in the top 10 global rankings.
Gearing up for the 2014 FIFA Soccer World Cup, the report forecasts stronger advertising demand in Latin America for the next 12 months, notably in the Brazil, and mostly on television. The region’s ad revenues will grow by +12.5% in 2013: growth will be moderate in markets with low inflation (Brazil and Mexico) but explosive in countries with hyper-inflation (Argentina and Venezuela). In 2014, ad growth will accelerate further to +12.9%, says the report.
The study also focused on two major trends affecting digital media advertising: the rise of programmatic buying and social media. Programmatic transactions continue to grow in the US, says the report, commanding an increasingly large share of display advertising revenues. In 2012, programmatic transactions represented $2.4 billion (i.e. 17.4% of total display advertising,) and the forecast expects this to increase to 48% of revenues by 2017. Internationally, most markets still lag the US, but some less advanced digital markets may face smaller legacy issues and resistance to change in the value and therefore evolve more rapidly towards automation.
Vincent Letang, Director of Global forecasting and author of the report, notes that “... social media has become a central part of the online experience... at the expense of portals and emailing... internet users already spend 25% to 30% of their online time on social networks... Facebook is the leader with 1.1 billion users to-date... other forms of social internet are flourishing... notably in Asia (and) Russia... monetization is accelerating in 2013...”
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