Global advertising expenditure expected to grow by 4.7% this year

According to Zenith Malaysia chief executive officer Gerald Miranda(pic), the industry estimated adex for 2015 to be softer by around 3%.

According to Zenith Malaysia chief executive officer Gerald Miranda(pic), the industry estimated adex for 2015 to be softer by around 3%.

PETALING JAYA: Global advertising expenditure (adex) is expected to grow to US$579bil this year, up 4.7% from last year, underpinned by major hikes in conjunction with quadrennial events like the Rio Summer Olympics, US presidential elections and European Football Championships.

The global ad market, which had enjoyed stable growth rates ranging between 4% and 5% a year since 2011, is expected to maintain this pace between 2016-2018, according to a statement from Zenith Media.

In Malaysia, adex for year-to-date November 2015 slipped 3.2 % to RM12.395bil from RM12.811bil in the corresponding period in 2014. Pay TV accounted for the lion’s share of adex with RM5.2bil, followed by newspapers at RM3.81bil and fee-to-air TV with RM2.603bil.

With the exception of Pay TV, which experienced a 6.4% increase, adex for free-to-air TV and newspapers dropped by 11.3% and 10.7% respectively.

According to Zenith Malaysia chief executive officer Gerald Miranda, the industry estimated adex for 2015 to be softer by around 3%.

Zenith Media predicts Internet adex, which grew 18% year-on-year by the end of 2015, to register growth rates of an average of 13% annually between 2015 and 2018.

By 2018, Internet advertising was expected to account for 36% of all global advertising, overtaking television for the first time to become the world’s largest advertising medium, it said, adding that last year, Internet advertising accounted for 29% of global ad expenditure, up from 25.5% in 2014.

“Mobile is now the main driver of global adspend growth and we forecast this medium to contribute 87% of all the extra adspend between 2015 and 2018.

“Television and desktop Internet will be the second and third-largest contributors respectively, accounting for 13% and 6% of new adex respectively,” it noted.

Over the last 10 years, Internet advertising had risen from 6% of total global spend in 2005 to 29% in 2015.

Meanwhile, newspapers’ share of global spend fell from 29% to 13% while magazines’ dropped from 13% to 7%.

“We predict spend on newspapers and magazines to shrink, at average rates of 4% and 3% a year respectively, between 2015 and 2018, ending with respective 10% and 5% market shares,” it added.

The figures for newspapers and magazines include only advertising in printed editions of these publications, not on their websites or in tablet editions or mobile apps, all of which are reflected in the Internet category.

The performance of print editions does not wholly describe the overall performance of newspaper and magazine publishers.

On a regional basis, China, India, Indonesia, Malaysia, Pakistan, the Philippines, Taiwan, Thailand and Vietnam – categorised as fast-track Asia economies – recorded the highest growth rate among all the regions, at 9%, in the global market between 2015-2016.

Fast-track Asia was followed by Latin America (4.8%), Western and Central Europe (4.1%), North America (3.8 %) and Japan (3%).

Advanced Asia comprising a grouping of Australia, New Zealand, Hong Kong, Singapore and South Korea increased by 1.9% while Eastern Europe and Central Asia registered a 1% growth, with Middle East and North Africa experiencing a deficit of 6.8%.

Miranda said the Fast-track Asia economies grew extremely rapidly as they adopted Western technology and practices while benefiting from the rapid inflow of funds from investors hoping to tap into this growth.