Western Europe showed marked improvement in the second half of the year, and, as a result, decreased by only -0.8% in 2013, compared to -2.6% in 2012. The UK and Germany were resilient, as expected, growing by +4.2% and +1.3% respectively. For Greece, a market that has become the symbol of Europe’s economic woes and experienced a total collapse of its advertising revenues over 2009-2012, 2013 will end up a lot less negative than previously anticipated: we expect advertising revenues to decrease by “only” -3%, instead of -11% as of our June update. The turning point took place at the end of the second quarter, and the second half of the year saw positive year-on-year growth for television in particular. We now expect robust growth in 2014 (+5.7%). Spain and France display a similar pattern: stabilization in the second half of 2013 and realistic albeit modest growth prospects in 2014. The market conditions continue to be worrisome, however, in Portugal and Italy. Overall, we are raising our forecast for ad spend growth in Western Europe in 2014 from +1.5% to +2.1%. We believe the 2014 FIFA World Cup will be a net positive in a continent that is mad about soccer, as all the big nations have qualified for the Brazil tournament and the timing of matches (between early evening and late evening) should be optimal to European broadcasters. The fact that the tournament takes place in Brazil adds another layer of interest for European viewers and advertisers.
Central and Eastern Europe (CEE) showed robust growth in 2013 (+7.9%) and is anticipated to accelerate in 2014. Russia and Turkey are the main drivers, with double-digit growth in 2013 and again in 2014, and Poland should return to growth in 2014 after a couple of negative years. The Russian market grew by +11.6% this year to RUB 337bn ($10.9bn), following +13.9% growth in 2012. This strong rate of growth will continue through 2018, with the Russian market expanding by a CAGR of +9.8% to RUB 538bn in 2018 ($17.4). Television remains the dominant media in Russia, representing nearly half of all ad spend (48.3% in 2012). As real GDP growth will increase to +3.0% in 2014, advertising growth will accelerate from +8.5% in 2013 to +10.5% in 2014, with a slight boost coming from the Sochi Olympics and the World Cup. Digital continues to be the fastest-growing media category with an impressive +28% in 2013.
Latin American advertising revenues grew slightly less than anticipated in 2013 but still nearly hit double-digits growth (+9.5%), i.e. a similar level of growth to 2012. Economic activity has gradually slowed down in most of Latin America in 2013 according to the IMF. Real GDP grew by only +2.5% in Brazil and +1.2% in Mexico (vs. January expectations of +3.5% in both countries). The IMF also reduced its 2014 GDP forecast for Brazil from +4.0% (April) to +2.5% (October), whilst the Mexican economy should grow by +3.0%. As always, economic and media inflation will play an important role in ad spend in the region. The highest growth of 2013 was recorded in two markets that are plagued by high inflation (+20% or more): Argentina and Venezuela (+27% and +19% advertising spend growth, respectively). In 2014, we expect inflation and the impetus of the World Cup to offset the sluggish economic environment, and we still forecast double-digit growth of +12.3%, only marginally below our previous forecast (+13.3%). Brazil will be at the center of the media and marketing world in the summer of 2014 when the FIFA World Cup returns to the holy land of soccer for the first time since 1950. This is bound to bring incremental spending from domestic and international advertisers and drive media inflation well above general inflation despite the sluggish economic environment and social discontent. TV in particular should see the effects, as we expect cost-per-thousand to increase by an average of +13% on free TV, and advertising revenues to grow by +14% as a result. Digital media advertising should grow by +20.1% and outdoor media by +12.0%. Overall we expect advertising revenues to increase by +12.7%, marginally below our previous forecast (+13.7%) but significantly higher than the 2013 growth (+6.1%).
Asia Pacific advertising revenues grew by an average of +6.3% in 2013, to $148.7bn, and we anticipate acceleration to +8.7% in 2014.This is up from our previous growth forecast of +7.4% in 2014. Television is the largest media category in APAC, and will grow by +5.1% in 2013, up from +4.3% in 2012 to reach market share of 42.3% of total spend in the region. While television remains the dominant media category, it will gradually fall below 40% share in the next five years. Digital is the fastest growing category and will grow by +22.4% in 2013 to reach $33.6bn. Digital media CAGR of 17.3% through 2018 means its share of total spend will increase from 22.6% in 2013 to 34.0% in 2018. Newspaper and magazines continue to lose ground at -1.4% and -3.1% CAGR through 2018, respectively, and together print will only represent 21.8% of total spend in 2013, down from 32.2% of total spend as recently as 2008. Taken as a whole, the APAC region now represents approximately 30% of total global spend. Within APAC, China and Japan represent nearly two thirds of the total APAC advertising revenues. China is growing more quickly, however, and will pass Japan for the top spot in APAC as soon as 2015. The development of the markets within APAC varies significantly, however, with some very advanced markets such as Australia and some much underdeveloped markets such as India. The strongest growth markets in APAC are Vietnam (+27% growth in 2013), Indonesia (+16% growth in 2013) and the Philippines (+13% growth in 2013). Slower growth rates were recorded in Japan, Singapore, South Korea and Thailand (all around +2% growth in 2013). This variety of development can also be seen by the differing levels of spend per capita across APAC markets. APAC as a whole averages $40 per capita, but this is made up of Australia ($558 per capita in 2013), Japan ($400), Hong Kong ($391) and Singapore ($360) at the high end, and Pakistan ($2), India ($5), Vietnam ($6) and Sri Lanka ($7) at the low end. This disparity can also be seen in the share of digital spend, with India’s digital market share at 7.4% of total spend in 2013 vs. Australia’s at 32.7% of total spend. The Chinese market grew by 12.0% this year to RMB 278bn ($44.1), following 12.1% growth in 2012. Growth will continue to be strong through 2018, with a CAGR of 13.1% to RMB 515bn ($81.7). It will become the 2nd largest advertising market in the world by 2015, passing Japan, and will only trail the United States. Ad spend per capita in 2013 will increase to $29 in China. It is steadily improving but remains significantly below the global average of $84 per capita. China will pass the $50 per capita level by 2018.
Middle-East & Africa advertising was flat in 2013 (-0.3%), due to the political and economic situation in Egypt and a soft market in other parts of the Middle-East while African markets (Kenya, South Africa and newcomer Nigeria) kept growing. For 2014, we expect a recovery in the Middle-East and a +6.3% growth for the region as a whole.
Finally, North America is the only region where we have slightly reduced our 2014 forecast, to +5.5% (vs. +5.6% in June). 2013 has been a flat year, with advertising revenues growing by 1.5% (in line with the 0.7% predicted in June). US advertising revenues grew in line with our modest expectations (+1.3%), with stronger digital growth (+15%) balancing the declines in traditional media (newspapers -10.8%, magazines -5.3%, radio -1.0%). Once again, out-of-home media managed to grow (+4.8% including cinema) due to the migration to digital. Broadcast TV declined by -5.7%, which is not unusual in an odd-numbered year following a presidential/Olympic year; the growth of cable TV (+4.4%) was not sufficient to offset that decrease and total television advertising decreased by -1.3% as a result.
The US economy is still on a slow but real recovery path that will continue in 2014. In its latest update the Survey of Professional Forecasters from the Philadelphia Fed noted a slow-down of economic activity in the last quarter of 2013 and revised its 2014 real GDP forecast to +2.6%. This is marginally below the previous (August) forecast of +2.8% but still significantly higher than 2013 growth (+1.5%). In this environment, MAGNA GLOBAL is expecting normalized advertising spending to grow by +3.4%. When factoring in the incremental spend generated by the Winter Olympics and the mid-term election cycle, actual advertising revenues will grow by +5.5%. This is slightly below our June forecast of +5.9%. The Winter Olympics have an incremental effect on television advertising that is (perhaps counter-intuitively) similar to that of the Summer Olympics. This is because they come during a time (February) when TV viewing and marketing activity are significantly busier than July-August, and TV costs are typically higher. As for political advertising, we believe the inflation in fund-raising and ad spending, which was triggered by the “Citizens United” decision of the Supreme Court in 2010, is still gaining momentum. We therefore expect record levels of political spending, with local television being, as usual, the primary beneficiary, thanks to its capacity to target undecided voters in key markets. On top of those usual cyclical drivers, the implementation of the Affordable Care Act will create one-off incremental spend from Federal and State Government, as well as insurance and health care companies throughout 2014, with the bulk of it in local television. As a result of these 2014 boosters, national TV will grow by +4.3% in 2014 and overall TV will grow by +8.6%. This is a similar rate to the one observed in the last even-numbered year (2012: +8.0%). Newspaper advertising revenues will decrease by -8.2%, magazines by -6.4%, radio by -0.4%. Out-of-home media will grow by +4.8% and digital media will grow by +12.5%.
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Source : https://news.magnaglobal.com/ipgmediabrands/press-releases/magna-global-advertising-forecast-2014-ipg-mediabrands.htm