NEW YORK, USA – MAGNA releases its ‘Magna Global Advertising Forecast 2021’. Citing the global advertising spending will grow by $78bn in 2021 (+14%) to $657 billion, a new all-time high, following a decline of -2.5% in 2020. The marketplace will continue to grow in 2022 (+7%). The APAC market will grow by 12.8% to reach $203 billion, with digital ad sales up +19% and linear ad sales up +4.1%. For more information visit https://magnaglobal.com/. See below for Asia Pacific, Philippines, and Singapore findings.
According to Vincent Létang, EVP, Global Market Research at MAGNA and author of the report: “As economic recovery is stronger and faster than anticipated in several of the world’s largest ad markets (US, UK and China, in particular) and consumption accelerates, brands need to reconnect with consumers. At the same time, the acceleration in ecommerce and digital marketing adoption that started during COVID, continues full speed into 2021, fueling digital advertising spending from consumer brands as well as small and DTC businesses. This unique combination of cyclical, organic and structural drivers will lead to the strongest advertising annual growth ever monitored by MAGNA: +14% globally (+15% in the US).”
New @MAGNAGLOBAL ad forecast out today. Global ad spend will grow by 14% to $657 billion in 2021. Free executive summary on https://t.co/kOmv18ToXx. pic.twitter.com/foZVg9isTL
Sponsor— Vincent Letang (@vletang_magna) June 13, 2021
ASIA PACIFIC
Asia Pacific has been less affected than other regions by the COVID pandemic and economic recession. Still, GDP growth fell by -1% in 2020 compared to typical economic growth of 6% per year over 2016-2019, but that was resilient compared to the global average of -3.3% for GDP last year. GDP will grow by +8.6% in 2021, powered by large markets such as China (+8.4%) and India (+12.5%). This is slightly higher than prior expectations, with overall APAC GDP revised up by +0.6% vs. October’s IMF forecast.
While the rollout of COVID vaccines has not been as aggressive as many Western markets (either due to lack of availability such as India, popular or political reluctant as in Korea or Japan), there were fewer cases, fewer deaths, and fewer shorter shutdowns vs. Western markets. That has not stopped consumers in Asia Pacific from changing their behaviour in the same ways as in heavily COVID-impacted markets: more streaming, more Ecommerce, and more integration of digital platforms into their day-to-day lives. As a result, economic recovery and organic digital growth will power APAC’s total advertising spending to +12.8% in 2021, following 2020’s – 3.3% growth. This will see total advertising budgets in APAC reach $203 billion, significantly ahead of 2019’s $186 billion total.
In 2021, linear advertising ad sales (linear TV, print, radio, OOH) will grow by +4.1% to reach $76 billion. This follows 2020’s dismal -19% performance, however, and results in a 2021 linear ad sales total that is only 84% as large as the pre-COVID 2019 levels. In fact, while linear advertising spending will bounce in 2021 because of the extremely weak growth comparison, linear advertising sales are still in a long-term decline. By 2025, linear advertising sales will represent just 28% of total ad sales in APAC, down from 38% of budgets today. Digital advertising revenues, on the other hand, will charge ahead, growing by +19% this year (to $127bn), following a resilient performance in 2020 (+12%), to reach 63% of total budgets.
Beyond the 2021 rebound, MAGNA expects APAC advertising spending to grow by an average +4.4% annually over 2022-2025, to reach $241 billion in 2025. This will continue to reflect divergent growth trends between linear formats (-2.6% CAGR through 2025), and digital formats (+8% CAGR through 2025).
APAC remains the second largest global advertising region, behind North America but $59 billion ahead of EMEA; while EMEA may close the gap slightly through 2025, APAC’s lead will remain significant overall. APAC markets now account for 31% for the global advertising market place, compared to 27% in 2010.
The APAC advertising market is concentrated around the two largest markets China and Japan, combining to represent 71% of total regional ad spend and ad revenues. This has increased over the past year, as China was one of the few markets to grow in 2020 because of strong digital performance, gaining share vs. the overall regional average which saw spending decline. In 2021, the strongest growth rates will come from China (+16%), the Philippines (+16%), Hong Kong (+15%), and Malaysia (+15%). The weakest performance, on the other hand, will come from Pakistan (+5%), Singapore (+7%), New Zealand (+8%), and Vietnam (+8%). All markets will grow in 2021, however, because even markets facing structural headwinds have an extremely easy growth comparison with 2020.
In APAC (like everywhere else) digital advertising is powering total market growth. Most digital ad formats are booming in 2021: Search (+19%), social media (+24%), and video (+21%) remain the growth engines of APAC digital ad market, while static banner formats show only modest growth (+3%). Mobile digital ad sales continue to be where most growth in consumption and spending lies as mobile ad format spending will grow by +23% this year, following 2020’s tremendous +19% growth. Smartphones and feature phone continue to play a larger role in the digital life of APAC consumers, and the Chinese market is one of the most advanced large mobile digital market globally, in terms of both features and in share of digital spending. Mobile advertising spending represents nearly 80% of total digital spending in APAC in 2021, and will increase to 87% of total digital spending by 2025.
In APAC, like in most global regions, lower funnel direct digital ad formats held up better because of COVID slowdowns compared to upper funnel brand advertising. These trends have continued even after the COVID crisis, as Ecommerce spending becomes even more integral to APAC consumer lives. China was always ahead of Western markets in terms of the total amount of retail spending that was transacted online, and Ecommerce in China got a boost just as it did in most other global markets because of COVID. As a result, Ecommerce sales are now comparable to offline sales and the trend continues to shift away from physical purchases. This will continue to power spending on search and social advertising formats, especially as social commerce is so integrated into daily life in APAC markets. Big online retailers, such as Alibaba, JD.com, Rakuten, and Pinduoduo continue their rapid growth.
Television advertising spending will grow by +4.3% in 2021 to reach $49 billion, bouncing off the 2020 lows of -14.7% growth and $47 billion. This will leave the TV market far short of 2019’s $56 billion total, however. Furthermore, television budgets will represent just 24% of total spending in 2021 in APAC, down from 38% in 2015. Through 2022, TV budgets will shrink by an average of -3.4% annually, meaning that TV spending will never again regain the 2019 totals. In addition, the Olympics in Tokyo were expected to be a supporting factor for brand advertising and television spending in 2020, but their postponement and the controversy around hosting the games in Japan will likely result in a smaller impact. Uncertainty around whether they will take place, the absence of foreign spectators, and potentially some reluctance to be associated with the controversy of the event, will result in some brands choosing to spend elsewhere.
Print ad sales will be flat this year (-0.3%), following 2020’s weak -28% performance, resulting in total print spending that is just 71% of the level of spending in 2019. Print represents such a small portion of total spending, however (just 5% in APAC) that these declines do not have a huge impact on total regional growth. Many verticals or brands that might consider deeper print cuts have already cut print formats entirely from their media plans. Radio ad sales will increase by +1.7% in 2021 to reach $4.6 billion, following a -23% decrease in 2019. Prior to 2019, radio had been growing since the recession of 2008, and COVID has eroded its importance in consumer media experiences. As a result, radio will continue to decline slightly through 2025, shrinking to just under 2% of total budgets. Out of home had been strong in APAC pre-COVID, but not surprisingly, COVID eroded its place in media budgets significantly. OOH spending fell by -22% in 2020, and will bounce by +8% this year, regaining some of the lost spending. This growth will be across both traditional OOH (+7%), and digital OOH formats (+11%). Cinema, however, fell by -67% in APAC in 2020 and will only regain a small fraction of the lost spending (+17%). Mobility has recovered in some markets (Japan, Korea), but in others like India it has significantly fallen because of recent COVID setbacks. This will all slow the pace of recovery for OOH.
New @MAGNAGLOBAL ad forecast out today. Following tremendous growth in the first half, MAGNA is raising its global digital advertising full-year growth forecast to +20% (from +10% previously). It's going to be +24% in the US and even more for the main pure players. pic.twitter.com/DyR37cGkTL
— Vincent Letang (@vletang_magna) June 14, 2021
PHILIPPINES
Advertising spending in the Philippines will increase by +15.8% in 2021, to reach PHP 118.9bn ($2.4bn), following 2020’s -14.9% performance. Real GDP is expected to increase by +7% this year, which although strong, will not quite offset the -9.6% decline in GDP in 2020. Part of the headwind for the economy in 2021 is that COVID cases have spiked up to 7k per day in recent weeks, after being below 5k per day for most of the entire crisis. Furthermore, because only 4% of the population has been vaccinated, only recovered COVID patients provide a base of immunity in the Philippines. Because the Philippines has implemented nearly zero controls against COVID, however, business activity can continue even if cases increase.
In this environment, linear advertising revenues will increase by +13.7% to reach PHP 99.4bn or 84% of total advertiser budgets. This follows 2020’s -18.1% performance, and means that linear spending totals will be at 93% of the prior 2019 level. Spending remains weak because some industries like travel (tourism is nearly 13% of GDP) or export manufacturing are still facing headwinds due to COVID. Television is expected to lead the way for linear advertising spending with +11.7% growth. TV still represents 60% of total spending in the Philippines.
Digital advertising spending, on the other hand, will grow by +27.7% and represent 16% of the total spending in the Philippines. While this is a low share of spending relative to other markets in APAC for digital advertising formats, it still provides a growth engine going forward. By 2025, digital ad formats will represent 22% of total budgets.
SINGAPORE
Singapore’s advertising sales will increase by +7.4% in 2021 to reach SGD 2.2bn ($1.6bn), following 2020’s – 8% performance. Singapore’s economy is expected to increase by +7.6% on a real GDP basis, essentially offsetting the weakness in 2020’s -6.8% real GDP growth. In addition, COVID cases have declined significantly in the market, falling to around 30 per day, down from nearly 1,000 per day early in the COVID crisis. This provides some reassurance to businesses looking to spend.
In this environment, linear advertising revenues will be flat (+0.7%) following 2020’s -16.3% decline. This means that linear advertising revenues will only represent 84% of the 2019 spending total this year in 2021. Growth will be led by TV, which has had a peculiar growth trajectory over recent years. TV spending actually increased in 2020 due to the Singapore government stepping in to purchase TV inventory to support COVID safety campaigns. In addition, the government increased overall spending and represents 20% of total spending in the market. Finally, there was an easy comparison (-10%) from 2019. As a result, however, TV will shrink in 2021 (-2%) as it is in structural decline in the market, and now represents just under 30% of total budgets. OOH (+25% in 2021) and radio (+1% in 2021) will both represent around 85% of their prior 2019 totals after the recovery in 2021.
Digital advertising revenues will grow by +19.7% in 2021, to reach SGD 867 million, 39% of the total advertising market. Growth will be led by spending on mobile devices (+24.4% to represent 79% of total digital spending). By format, search (+18%), video (+20%) and social media (+27%) will lead growth forward. Digital advertising spending will grow to represent 57% of total budgets by 2025.
New @MAGNAGLOBAL advertising forecast out today. Global ad spend will grow by almost +14% this year following a decline of -2.5% in 2020. Read full story: https://t.co/kOmv18ToXx. pic.twitter.com/YvSkBGHbWj
— Vincent Letang (@vletang_magna) June 14, 2021
For more information visit https://magnaglobal.com/.
