Asia’s ad markets are picking up a little more speed after an unwelcome deceleration last year, although sustained momentum remains uncertain and vulnerable for much of the region.
Analysts from Media Partners Asia (MPA) are projecting a 5.5% rise in net ad spend (calculated after discounts) across Asia-Pacific in 2015, after a 5.2% gain in 2014, a Fifa World Cup year, and a 5.7% lift in 2013.
Forecasts suggest another slight slowdown to 5.2% growth across the region’s ad markets next year.
In general, Asian economies are settling into a gentler growth trend long-term, with little to suggest that macro conditions will substantially improve in the foreseeable future.
Year-on-year, prospects for nine of the 14 ad markets covered by MPA are brighter this year, although the pace in 2015 is set to slow in China, Japan, New Zealand, Taiwan and Vietnam.
A cooler outlook
Ad growth in China, one of the region’s biggest dynamos, is starting to trend in single digits, at 9.1% this year and 7.8% in 2016, as the economy continues to cool.
The ad market in Vietnam is also slowly decelerating from relatively high single-digit growth. The broader outlook in Taiwan, meanwhile, remains more positive after a sluggish 2013.
Singapore’s ad market will experience another year of contraction, although at a slower pace than last year before returning to growth in 2016.
On the whole, attempts to recharge softening domestic demand by governments in China and India, as well as in several Southeast Asian markets, have delivered modest spending increases by cutting nominal interest rates, but more needs to happen for a sustained improvement.
Exports are failing to pick up the slack, fostering uncertainty and vulnerability in the marketplace.
There are some bright spots in the region, notably in the Philippines, experiencing a resurgence after a lackluster few years, while India continues to show promise after returning to double-digit growth last year.
By media, television is faring pretty well, projected to boost ad revenues by 4.6% this year after a 3.4% gain in 2014. Digital ad spend meanwhile is maintaining its double-digit trajectory off a lower base, slipping to 15.8% this year after a 19.2% surge in 2014.
Television’s share of the Asia-Pacific ad market stands at about 41.4% this year, according to MPA, while digital media’s slice will rise to about 25.4%.
In Australia, the ad market is showing more signs of a life, projected to rise to almost 3% this year after an almost flat 2014. Stronger growth, however, remains elusive for now.
The TV ad market is looking a bit healthier, projected to expand by 2% this year after a 2% contraction in 2014. Online media remains the main engine of growth, thanks to double-digit year-on-year increases in spend.
Digital media already accounts for about 40% of Australia’s ad market. By comparison, TV’s share stands at about 34%.
A brighter outlook in India has restored ad market expectations to double-digit growth after an 8.4% rise last year, led by TV at about 13% this year, and digital media at ~30%. Online will represent about 12% of Indian ad spend in 2015 according to MPA, with TV accounting for 38%.
India’s stock market is still buoyant after a change of government last year, although the rally is unlikely to last without more visible signs of improvement in the domestic economy.
Ad spend in Indonesia meanwhile remains relatively robust, picking up to 10.3% growth this year after 8.9% in 2014.
However, market dynamics are starting to shift as FMCG advertisers, traditionally big spenders on TV, recalibrate their media strategies.
Television, while still dominant, is slowly losing market share in favor of digital media, set to represent just under 9% of the ad spend by the end of 2105, compared with 65% for TV.
Growth in the Indonesian economy is also falling short of expectations following the election of a new government, prompting a downgrade to the ad market by MPA analysts earlier this year.
By contrast, the ad market in the Philippines has bounced back after an almost flat 2014 to 8.4% growth this year, and is set to rise further on the back of elections to a projected 17.6% surge in 2016.
Television remains resilient, retaining a 71% share of the ad market, with the onset of digital terrestrial channels shoring up the medium’s advertising appeal.
Thailand, another strong free-to-air market, is also primed for a recovery in 2015, with MPA analysts calling for a 7.2% rebound in ad spend, after the market contracted by 8.0% last year.
TV, which represents 62% of Thai ad spend, will do even better, increasing ad revenues by 9.6% this year, according to MPA.
Ad growth in the larger, mature North Asian markets is more modest. After a double-digit acceleration in 2011, Korea’s ad market has crawled forward at a 1-2% growth rate since, although this year’s forecast, at 2.7%, marks a notable improvement.
The rewards are unevenly distributed however, with market leaders picking up most new ad dollars coming into the market.
The rise also comes as digital ad spend growth slows to a single-digit rate this year, about 7% according to MPA.
Growth in Japan meanwhile, another large but mature ad market powered by digital and TV, should hit 2.6% this year, following a 3.5% advance in 2014.