APAC ad spend to hit US$229bn in 2021, Olympics a significant driver

Asia Pacific ad spend is expected to grow by 8.0% to US$229 billion this year, with Australia and India forecasting especially high growth rates. Dentsu's latest ad spend report said 2021 growth in those to countries is expected to surpass pre-pandemic levels in China.

In Asia Pacific, the 6.2% rise in digital spend last year is forecast to grow by 12.8% in 2021 to reach US$124.5 billion, representing a 54% share of total ad spend. Forecasts for social (33.4%) and video (10.8%) will also rise, with search also growing (7.8%) reaching US$23.1 billion in 2021. Offline/linear ad spend will see a return to growth 2.8% to US$104.8 billion, following a 15% decline in 2020. However, it is predicted that spend levels in Asia Pacific will remain below pre-pandemic levels in 2021.

dentsu ad spend

China's ad spend forms 17.6% of the global ad spend in 2021, coming in second after the US (37.8%). Japan came in third (9.4%), followed by the UK (5.15) and Germany (2.8%). Meanwhile, Australia (12.7%) and India (10.8%) were among the top five markets by year-on-year ad spend growth rate in 2021.

Ad spend for China is expected to grow 8.5% this year to reach US$111.6 billion, 3.2 percentage points above predictions in the January report. Growth is expected to be driven by digital(+12.6%) and OOH in China while other traditional media are expected to dip. In particular, the report said digital is expected to account for 69.7% share of spend in China. Meanwhile, the number of mobile Internet users continues to increase as there were 8.2 million additional users year-on-year in March this year. Overall, the China ad market is forecast to grow by a further 6.9% in 2022.

Japan's ad spend is expected to witness a gradual recovery, with 4.4% growth in 2021 ad spend generating US$59.9 billion. Increased mobility as the pandemic eases, the hosting of the Tokyo 2020 Games, and the House of Representatives election all constitute important elements in the recovery, the report said. TV ad spend is expected to grow 4.8% in 2021 as a result of the Tokyo 2020 Olympic and Paralympic Games.

Digital ad spend is forecast to increase by 10.0%, an upward revision from the previous forecast of 7.8% in January 2021 driven by a larger than expected increase in digital spend during Q1the first quarter of the year. A further 4.2% increase in overall spend forecast for 2022.

In Australia, stronger than expected economic recovery in the country has led to improvements in overall ad spend. Following a 11.2% decline in 2020, ad spend is expected to recover in 2021 and grow by 12.7% to US$12.8 billion. The recovery has been much faster than expected in the first half of the year - particularly for TV and digital. TV is the key beneficiary of broad market ad spend in addition to government COVID-related campaigns, whilst digital ad spend has been driven by a surge in retail advertising and will represent 61.1% of spend in this market. Dentsu predicts the second half of 2021 to be further buoyed by the Tokyo Olympics in the third quarter and a possible federal election in the fourth quarter, with a further 2.9% increase expected in 2022, reaching US$13.2 billion in ad spend.

India's ad spend is predicted to grow by 10.8% this year to reach US$9.0 billion, following a steep 12.9% decline last year. TV continues to be the most popular media in India, with a leading 40.9% share of spend that shows resilience despite the pandemic and a 7.7% growth compared to 2020 spend.

Digital’s share of ad spend has grown rapidly, from 20.0% in 2019 to 29.4% in 2021, and is expected to reach 32.7% by the end of 2022. Dentsu also predicted India's ad market to grow by a further 12.4% next year, recovering to pre-pandemic levels, particularly led by digital and TV versus a longer recovery for print, cinema, OOH and radio. Data for Southeast Asia and Hong Kong was unavailable at the time of writing.

While regional live events such Tokyo Olympics and Paralympics Games continue to be a significant driver of growth in linear TV ad spend in Asia Pacific (3.9% increase in 2021 to reach US$59.2 billion), dentsu's data suggests a shift towards CTV and OTT and audiences moving more towards digital media consumption mean linear TV spend will remain below pre-pandemic levels until beyond 2021.

With restrictions lifting on social activity, OOH will see a bounce back post impact of the pandemic, rising 7.5% in 2021 in the region. Cinema has a slightly longer recovery, with a further decline in 2021 (-5.0%) but expected to bounce back in 2022. Radio will also see growth (4.3%) in 2021.

While most channels will return to growth in 2021, except for cinema which is predicted to do so in 2022, dentsu's report said print is seeing a slight decline in 2021 (–2.7%). The medium is expected to continue declining in 2022, as it continues to evolve towards new modes of digital delivery.

Meanwhile, government spending remains a key growth area, supporting the COVID-19 vaccine rollout and other related initiatives. In Asia Pacific's key markets, the travel and transport sectors will still be affected by the uncertainty of the past year and see a muted increase in demand (4.9%), while media and entertainment is forecasted to see a growth of 9.7%.

According to dentsu, the decline in Asia Pacific advertising spend prompted by the pandemic in 2020, has proved to be less severe than originally anticipated. While 2020 remains the weakest performing year since the global financial crisis, the decline in growth has been raised since dentsu’s January 2021 forecast (from -8.0% to -5.2%.)

In 2021, the market is seeing a recovery in growth (8.0%), an improvement (2.1% pts) on January’s predication. Looking to 2022, recovery is set to continue when spending is likely to reach US$243.6 billion and grow at a rate of 6.3%.

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