Asia Pacific Advertising Economy Grew by 8.2% This Year says MAGNA

APAC growth was higher than the global average of +5.5%.

Asia Pacific Advertising Economy Grew by 8.2% This Year says MAGNA

APAC growth was higher than the global average of +5.5%.

According to the winter update of MAGNA’s “Global Ad Forecast,” global media owners’ net advertising revenues will reach $853 billion this year, putting revenues +5.5% above the 2022 level.  Magna added that advertising revenues will grow by +7.2% in 2024.

“As expected by MAGNA back in June, advertising spending re-accelerated in the second half of 2023 after four slow quarters from mid-22 to mid-23,” said Vincent Létang, EVP, Global Market Research at MAGNA and author of the report.

“The recovery is driven by easier year-over-year comps and stabilizing economic conditions (inflation slowdown), and these improvements mostly benefit pure-play digital advertising formats. Search formats are driven by retail media; Social and Video formats recover to double-digit growth thanks to better monetization of the fast-growing short vertical video impressions.”


 

Létang added that “traditional media owners’ ad revenues – including their digital ad sales – are down by -4% this year (TV -6%). The cyclical events of 2024 (sports, elections) will make reach media and contextual advertising attractive again and stabilize TMO ad revenues: overall +2%, TV +3%.”

APAC Ad Forecast +8.2% for 2023

According to MAGNA, the Asia Pacific advertising economy grew by +8.2% this year, higher than the global average of +5.5%.

This exceeds prior expectations for APAC in 2023 of +7.1%, the report said adding that growth this year was powered by India, Pakistan, and China, which will all grow by more than +10% in 2023. In 2024, APAC advertising revenues will increase by +6% to $304 billion. This also represents a growth acceleration vs. prior APAC expectations of +5.2%.


 

MAGNA said that growth will consist of linear advertising revenues shrinking by -0.4% to reach $74 billion (26% of total APAC budgets) and digital advertising revenues growing by +11.6% to reach 74% of total budgets. The majority of that $74 billion of linear advertising revenues comes from television revenues (linear and digital) of $47 billion, shrinking by -1.9% YoY.

Print and radio continue to decline (by -2.6% and -2.2% respectively). Radio will represent just 2% of budgets in 2023, and print will be just 3% of budgets. OOH remains the only linear advertising format that is seeing growth, up by +8% in 2023 to reach 4% of total budgets.

Television budgets will stabilize somewhat in 2024 due to the tailwinds of sporting events – primarily the Paris Olympics in 2024. Other significant global sporting events, such as the UEFA Euro 2024 tournament, will have a minor impact in APAC markets.

Digital advertising revenues are the driver of growth. Search remains the largest portion of digital advertising revenues, representing $100 billion total. Search advertising revenues increased by +9.9% in 2023 and represented 48% of total digital advertising revenues.

Search advertising in APAC is substantially driven by retail media platforms, especially in China where Alibaba, JD.com, Pinduoduo, and Meituan all drive search advertising revenues. Core search growth has also rebounded, with both Google and Baidu performing better than they did in 2H22.

Leigh Terry, CEO Mediabrands APAC said: ” “The Asia Pacific advertising economy grew by 8.2% this year, higher than the global average on 5.5%, and powered by growth markets like India (+12%) Pakistan (+11%) and China (10 %).”

“APAC as a region is still dominated by China, which represents approximately half of total ad revenues. The country’s population, a massive 1.4 billion, makes it a key player in the global advertising market. GDP growth remains robust when viewed against other large and mature markets; however, consumer spending has remained resilient.”

Markets

MAGNA said the strongest growth this year comes once again from India (+12% to $14bn), becoming the 11th largest ad market globally. China, the second-largest market, recovered faster than expected from the stagnation caused by zero-COVID in 2021-22 (+9.8%).

At the other end, according to MAGNA, Northern European markets underperform due to sluggish economic activity: UK (#4) +3.9%, Germany (#5) +2.5%, with TMO ad revenues down heavily in both markets. For once, Southern Europe shows more resilience this year, including France (#6, +5.7%), Italy (#12, +5.8%), and Spain (#14, +7.8%).

In 2024, economic stabilization, lower inflation, and the return of major cyclical events (US elections, Paris Olympics, Euro Football) will drive ad spend +7.2% to $913 billion, with an 8.4% increase in the US. TMO ad revenues will recover by +2.2%, while digital pure players’ ad sales will increase by +9.4%.

Ten Takeaways

MAGNA released the following summary of the Global Ad Forecast update

  1. The winter update of MAGNA’s “Global Ad Forecast” predicts that global media owners’ net advertising revenues (NAR) will reach $853 billion this year, +5.5% above the 2022 level, and will grow by +7.2% in 2024.
  2. Advertising spending accelerated by +6.3% YoY in the second half of 2023 following a weaker first half (+4.7%) to average +5.5% growth for the full year.
  3. Traditional media owners from the TV, Audio, Publishing, and OOH industries are typically vulnerable during this slow, uncertain macro-economic climate, causing 2023 TMO ad revenues to shrink by -4% to $266 billion.
  4. TV advertising revenues are shrinking by -6% this year to $158 billion, while Publishing ad sales drop -5%, Audio Media drops -2%, and Out-of-Home keeps growing +7% to reach $32 billion (back to pre-COVID market size).
  5. Digital Pure-Play media owners (DPP) ad revenue, on the other end, grew by +9.4% to $587 billion (69% of total ad sales). DPP ad sales are driven by organic growth factors, including the rise of ecommerce and retail media.
  6. Keyword Search remains the most popular ad format, approaching the $300 billion milestone this year (+9% to $298 billion). Social Media owners (e.g., Meta, Tiktok) re-accelerate (+15% to $182 billion), while short-form pure-play video platforms (e.g., Youtube, Twitch) grow by +9% to $70 billion.
  7. The fastest-growing market this year is once again India (+12% to $14 billion) while China recovers from zero COVID (+9.8%), while Northern European markets slow down: UK +3.9%, Germany +2.5%.
  8. The Asia Pacific advertising economy grew by +8.2% this year, higher than the global average of +5.5%. Growth this year is powered by India, Pakistan, and China, which will all grow by more than +10% in 2023.
  9. Digital advertising revenues are the driver of growth in APAC. Search advertising revenues increased by +9.9% in 2023 and represented 48% of total digital advertising revenues.
  10. Automotive, Travel, and Pharma will be among the fastest-growing ad spending verticals next year. CPG/FMCG brands will benefit from lower inflation, retail media opportunities, and sports events. On the other hand, Entertainment marketing may suffer from the lower-than-usual volume of US shows and movies being released.

Image by Jezael Melgoza

 

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