APAC ad spend to outperform global: Dentsu Aegis Network
Dentsu Aegis Network has updated forecasts for worldwide advertising expenditure in 2014 and 2015, with market optimism demonstrated through strong global and regional forecasts. Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Dentsu Aegis Network’s latest forecast show overall global advertising revenues accelerating by 5 per cent in 2014, an increase on the 4.8 per cent predicted in March 2014, and reaffirming positivity for 2015 with year-on-year growth predicted at 5 per cent.
Whilst forecasts show a slight decline in growth when compared with predictions from March 2014, Asia Pacific and Latin America are forecast to outperform global predictions, with growth rates for 2014 of 5.4 per cent and 12.1 per cent respectively, and the only regions to see double digit growth in some markets. Dentsu Aegis Network’s data also highlights that the outlook for 2015 continues to be encouraging with all key markets forecast to return to positive growth.
APAC outperforms global as markets witness mixed growth
Giving a more elaborate analysis, Nick Waters, CEO Dentsu Aegis Network Asia Pacific commented, “Southeast Asia is seeing strong growth in ad spend, particularly in Indonesia and Vietnam, as disposable income of large population groups increases. With the election of Joko Widodo as Indonesia’s new President there is optimism for sustained economic growth amongst the business community which will be supportive for advertising.”
Mr Waters also added that as China’s rate of economic growth moderates the ad market slows to reflect this. The large beverage, food, and real estate categories have all been negatively impacted by regulation, scandal, and cooling markets respectively. Despite this China is still seeing year-on-year growth of over 30 per cent in digital media. Out of home also continues to be a vibrant sector driven by increasing digital screens and transport infrastructure investment.
Despite the recent economic slowdown in Japan following the increase in sales tax, advertising growth of 2 per cent is forecast in 2014. This has been supported by the major sporting events of the Sochi Winter Olympic Games, the FIFA World Cup, and the award of the 2020 Olympics to Tokyo. This is the third consecutive year of gains and growth is expected to continue with an increase of 1.7 per cent in 2015.
“In Australia, the region’s third largest advertising economy, total expenditure is predicted to remain stagnant this year at 0.1 per cent. The major sporting events have had minimal impact on spend and current sentiment points to a cooling of consumption as households seek to reduce debt in an environment of uncertainty brought on by the Liberal Federal Government. We don’t see material acceleration into 2015,” added Mr Waters.
Conversely in India business and consumer sentiment is improving following Narendra Modi’s election success. Mr Waters explained, “The rate of advertising growth will pick up to high single digits again following a couple of years of relatively slower growth linked to the previous government’s policy paralysis. India is the world’s fastest growing smartphone market which is driving acceleration in digital and mobile spend. With relative political stability across the region supporting solid economic growth, large numbers of emerging consumers, and increasing access to digital communications the advertising market retains a positive outlook in Asia.”
From a regional perspective, Dentsu Aegis Network predicts further positive momentum in 2014 for North America and Western Europe, compared with figures announced in March 2014. The US continues to show strong on-going market growth, with levels of advertising spend in North America expected to exceed the pre-recession peak in 2007 for the first time by the end of 2014. Western Europe is predicted to see a return to positive growth of 2.7 per cent after two consecutive years of declining advertising spend, driven by a strong UK advertising market forecast to grow by a robust 7.5 per cent this year.
Digital challenging traditional
By media, Digital outperforms previous predictions for 2014 with year-on-year growth forecast at 16.1 per cent. Digital will also increase its total share of spend, reaching 20.5 per cent in 2014 and 22.6 per cent next year, when it will outpace the combined magazines and newspaper global share for the first time. Whilst the steady decline in print is expected to continue, all other mediums are predicted to achieve year-on-year growths of approximately 3-5 per cent in 2014 and 2015.
Figures in brackets show previous forecasts from Mar 2014
Commenting on the Dentsu Aegis Network’s advertising expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said, “Dentsu Aegis Network’s latest advertising forecast gives us increased optimism for the outlook of global and regional advertising spend. With the global recession further behind us and a healthy trend of 5 per cent year-on- year global ad growth, there is positive momentum building across the industry. Whilst digital continues to headline market trend discussions, the components within this dominant media now provide the interesting chapters, with the opportunities in mobile leading the debate. With changes and trends in consumer behaviour driving business opportunities, brands need to deliver innovative and integrated solutions to reap the rewards ahead.”
