Growth And Disruption In North Asia
The latest numbers from Media Partners Asia (MPA), publisher of Asia Media Journal (AMJ) indicate that net advertising revenues in Asia-Pacific will increase by 5% this year and 7.3% in 2012, fairly steady forecasts since last quarter's estimates, which had pegged 5.1% growth for 2011 and 7.5% for 2012.
The latest forecasts imply that China, India and Indonesia will grow in the 13-15% range next year with the Philippines, Thailand and Vietnam at 9-11%, while Korea and Malaysia will come in with 7-8% growth.
The large but mature media economies of Japan and Australia will see a turnaround in 2012 (~2.5% growth) after a weak 2011. Ad growth will slow in three markets: Hong Kong, Singapore and Taiwan.
“With the notable exception of Indonesia, there has been a slowdown in advertising demand in Asia through Q4 2011, especially in Southeast Asia, although spends in India, Korea and Japan have started to firm up in recent months,” notes MPA's director of research and content Vivek Couto.
In Japan, while media buyers are enthusiastic about the extent of recovery after the tragic earthquake in March, the key remains maintaining sustained growth in both the economy and advertising market.
TV spot advertising, an important demand indicator, was fairly robust in Q3 and up 7% year-on-year in Tokyo during October. However, it slowed to about 4% in November. Visibility on December and Q1 2012 remains unclear.
Encouragingly, domestic demand in Japan remains resilient, boosting ad spends from FMCG, retail, IT and telecom categories. Media agencies say that spends from most of these categories should be robust in Q1 2012.
Korea’s media market meanwhile has also seen strong growth since Q3 2011. Advertising sales for terrestrial TV stations, which have about 37% of the total advertising market, were up by a strong 11% year-on-year in October.
There is much positive expectation and noise around the deregulation of the TV ad market structure as well as the recent launch of general program channels.
In addition, online ad spends remain particularly buoyant (approaching 20% market share with 12% growth in 2011), driven in recent times by the exponential growth of advertising on mobile.
With respect to the TV market, growth and disruption are expected to prevail in equal measure. Market regulator Korea Communications Commission has introduced a number of measures to increase the ad market from less than 0.7% of GDP a year ago to more than 1% by 2015, implying an average annual growth rate of 20–25%.
Practically, this will prove to be challenging given that the total ad market has grown at an average annual rate of only 3% since 2006, admittedly impacted by market declines in 2008 and 2009.
MPA analysis indicates that the Korean advertising market should grow at an average annual rate of about 6% in net terms over the next five years.
Mixed outlook for reforms
The forecast reflects gains in the terrestrial TV advertising market from the introduction of private market representatives (allowing broadcasters to sell airtime directly) as well as growth in the pay-TV ad market from the launch of the new general program channels.
The promise of in-program ad breaks for terrestrial TV channels is not factored into MPA forecasts, as this may not materialize due to mounting political opposition.
Meanwhile, the new general program channels will likely require another two years before generating sustained audience share to deliver a critical mass of advertising, though two of the new networks are targeting ambitious ad sales numbers of about US$100-200 million next year.
This is an edited extract from content published in the Q4 2011 edition of The Asia Media Journal. The latest issue of The Asia Media Journal is available in full here.