Carat lowers APAC growth rate for 2016 to 4.4%
Carat’s latest forecast for 2016 showed positive global outlook led by the continued investment in digital media spending. Growth in the Asia Pacific region by 4.4 per cent in 2016 is forecast at a marginally lower growth rate than the global growth rate of 4.5 per cent, and has been revised down from the +.7 per cent previously forecast in the September 2015 report, driven by more conservative growth forecasts for China (+5.8 per cent, down from +6.5 per cent) and Australia (+2.5 per cent, down from +2.8 per cent).
Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global forecasts highlights that advertising spend will reach USD 538 billion in 2016, accounting for a 4.5 per cent year-on-year increase. Fuelled by high-interest media events taking place during the year – including the US presidential elections, Rio 2016 Olympics and Paralympics and the UEFA EURO 2016 championship the positive outlook for 2016 is predicted to continue into 2017, with Carat’s forecast highlighting a consistently strong year-on-year global advertising growth of 4.5 per cent.
Carat’s latest forecasts reconfirm the rise of digital as the established driver of global advertising spend growth. Powered by the upsurge of mobile (+37.9 per cent), online video (+34.7 per cent) and social media (+29.8 per cent) in 2016, the strength of digital is expected to continue to grow at double digit prediction levels of +15.0 per cent this year, and a further +13.6 per cent in 2017. Overall, Carat predicts the upsurge of digital to account for 27.0 per cent of advertising spend in 2016 and extend significantly to 29.3 per cent in 2017, reaching USD 161 billion globally.
In 2015 all regions reported positive growth, from Western Europe at +2.8 per cent, +4.3 per cent in North America, +3.6 per cent in Asia Pacific and Latin America at +11.0 per cent. Regional confidence is predicted to continue in most regions in 2016, despite volatility in some individual markets. Despite a decline in global growth forecasts due to China and Brazil’s economic volatility, Asia Pacific and Latin America advertising markets remain strong in 2016, achieving +4.4 per cent and +10.5 per cent year-on-year growth respectively.
By media, digital continues to be the star performer for growth level globally with Hong Kong & Estonia now joining the list of 12 markets where digital is now the principle media used based on spend.
Whilst digital is constantly closing the gap, TV continues to command the majority of market share with a steady 42.0 per cent in 2015 and spend is predicted to grow by +3.1 per cent this year as the Olympic Games and US elections are predicted to generate significant TV viewership across various markets. In addition, Carat’s forecasts reconfirm the steady decline in print in 2016 and into 2017 with newspapers declining by -5.4 per cent and magazines by -1.7 per cent in 2016 whilst highlighting positive year-on-year growth in 2016 for all other media, including outdoor (+3.4 per cent), radio (+2.2 per cent) and cinema (+2.8 per cent), with the latter expected to grow further at +5.0 per cent in 2017.
Commenting on the forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said, “Carat’s latest advertising forecast and its first analysis of the 2017 landscape gives us reinforced optimism for global advertising spending. Whilst economic volatility has impacted some major markets, solid growth has been maintained globally, with stability foreseen for this year and next. The strength of digital continues to be the dominant element in the growth of the global advertising expenditure whilst TV spend remains as the foundations of our industry. As advertising becomes more data-driven and complex, it’s crucial to move rapidly to navigate and meet the needs of the digital economy and this is reflected in the innovative capabilities and approach we provide to our clients.”
In Asia Pacific, the Indian advertising market continues to be buoyant as growth prospects in the country remain high at +12.0 per cent in 2016 and +13.9 per cent in 2017.
“The influence of Digital media is significantly more complex than the 27 per cent figure might suggest. We are using a truly digital mind-set to plan TV: we buy TV airtime programmatically and use TV to drive Search. We leverage Social to boost linear TV ratings and amplify user-generated content. With this mind-set we combine TV and rich consumer data to buy against people, not schedules,” said Sanjay Nazerali, Chief Strategy Officer Carat Global.
Forecasts for 2016 have also been revised down for South Korea (+2.4 per cent, down from +3.1 per cent), Taiwan (-0.4 per cent, down from +0.3 per cent) and Malaysia (+3.3 per cent, down from +3.5 per cent) as business and consumer sentiment in these markets continue to be dampened by an uncertain economic outlook.
Increased growth is forecast for major advertising market Japan, which is predicted to see advertising spending increase by +1.8 per cent in 2016, revised up from the +1.6 per cent previously predicted in September 2015.
“Carat’s advertising forecast shows optimism for growth in Asia Pacific for 2016 and into 2017. Spend was revised from 4.7 per cent to 4.4 per cent in the region this year due to more conservative forecasts in China and Australia but there is general positive momentum. Double digit growth rates that were common in China before 2011 have been replaced by more moderate, mid-single digit advertising spend growth. Australia’s falling currency has fuelled tourism and is reflected in retail sales supporting a predicted 2.5 per cent growth, but ad spend numbers were marginally revised due to uncertainty surrounding how China’s slowdown would affect the Australian commodity sector and financial market,” said Nick Waters CEO Dentsu Aegis Network Asia Pacific.
“There is an increase for major advertising market Japan in the lead up to Tokyo 2020 Olympics and the Paralympic Games, and India continues its double digit accelerated growth this year after a strong 2015, supported by the Cricket World Cup and state elections. Digital continues to be a key driver of advertising growth and it is increasingly important that our clients utilise data, technology and creativity to navigate the complex digital economy,” Mr Waters added.
Advertising expenditure in the Asia Pacific region will account for a third of global advertising expenditure, 33.8 per cent, in 2016. The Asia Pacific advertising market is forecast to increase by +4.7 per cent in 2017.
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