Asia Pacific has been less affected than other regions by the COVID pandemic and economic recession. However, GDP growth fell by 1% in 2020 compared to the typical economic growth of 6% per year over 2016 to 2019. This was still considered somewhat resilient compared to the global average in decline by 3.3% for GDP last year. Overall, APAC GDP will grow by 8.6% in 2021, powered by large markets such as China (+8.4%) and India (+12.5%), according to MAGNA Media brands report.
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 versus Western markets. That has not stopped consumers in Asia Pacific from changing their behaviour in the same ways as in heavily COVID-impacted markets with 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 spike by 12.8% in 2021, following 2020’s decline in growth by 3.3%.
This will see total advertising budgets in APAC reach US$203 billion, significantly ahead of 2019’s US$186 billion total. In 2021, linear advertising ad sales (linear TV, print, radio, OOH) will grow by 4.1% to reach US$76 billion. This follows 2020’s dismal decline in performance by 19%, 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 US$127 billion, 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 to 2025, to reach US$241 billion in 2025.
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%).
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Singapore’s advertising sales will increase by 7.4% in 2021 to reach SG$2.2billion (US $1.6 billion), following 2020’s decline in performance by 8%. 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, and this provides some reassurance to businesses looking to spend. In this environment, linear advertising revenues will be flat, increasing by a mere 0.7% following 2020’s 16.3% decline. This means that linear advertising revenues will only represent 84% of the 2019 spending total in 2021. Growth in linear advertising 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. TV as a whole, however, will shrink in 2021 by 2% as it is in structural decline in the market, and now represents just under 30% of total budgets.
OOH will see a 25% growth in 2021 and radio will see a 1% growth in 2021.
Both represent around 85% of their prior 2019 totals after the recovery in 2021.
Meanwhile, digital advertising revenues will grow by 19.7% in 2021, to reach SG$867 million, 39% of the total advertising market. Growth will be led by spending on mobile devices which will increase 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.
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Media owners advertising revenues in Malaysia will increase by 15.4% to reach RM5.1 billion (US$1.2 billion), following 2020’s decline of 20% performance. The economy is expected to grow by 7.4% on a real GDP basis, following 2020’s 6.3% decline. This will essentially regain all the economic output lost in 2020.
Unfortunately for the outlook of economic activity, however, COVID cases in Malaysia have begun to rise. Recently, COVID cases spiked up to 8,000 per day, higher than the prior spike of 5,000 per day. In addition, only 7% of the Malaysian population is vaccinated, resulting in relatively little protection so far for further infections. As a result, mobility is still below pre-COVID levels.
In this environment, linear advertising revenues will increase by 10.8% to reach 44% of total advertiser budgets. This follows the huge decline in 2020, where linear advertising revenues declined by 39%. This means that linear advertising revenues will only regain 68% of the prior 2019 spending level, despite the large bounce this year in 2021.
Television spending will increase by 8% to RM879 million, representing 86% of the prior 2019 spending level following 2020’s big dip of 21%. Other linear advertising formats fared even worse, including radio (65% of prior levels) and OOH (67% of prior levels).
Linear advertising revenues have been hit so hard because Malaysia has a very significant exposures to industries vulnerable to COVID-19 shutdowns.
Changes in consumer behaviour as a result of the crisis especially in restaurants, retail and travel/tourism sectors represent 62% of small and medium businesses in Malaysia, and many of them have gone out of business or cut ad spend hugely to survive in the short term. Spending is slow to return, especially in linear formats.
Digital advertising spending, on the other hand, will increase by 19.3% to reach RM2.9 billion (US$680 million). This will represent 56% of total budgets, up hugely from 40% of budgets in 2019. The mix of the entire advertising landscape in Malaysia has been upended because of the COVID crisis. Most of the growth is driven by spending on mobile devices, which will increase by 27% and represent 69% of total digital advertising revenues.
By format, search advertising (+17%), video advertising (+18%) and social media advertising (+25%) are leading the way with growth.
Overall, APAC remains the second largest global advertising region, behind North America but US$59 billion ahead of EMEA. APAC markets now account for 31% of the global advertising marketplace, 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 versus the overall regional average which saw spending decline.
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.
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 its 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 US$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 only 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 other countries such as India it has significantly fallen because of recent COVID setbacks. This will all slow the pace of recovery for OOH.
According to Leigh Terry, CEO Mediabrands APAC, “The rebound in APAC has been strong and swift. GDP will grow by 8.6% in 2021, and economic recovery and organic digital growth fueled by consumer shifts to online behaviour throughout the pandemic will power APAC’s total advertising spend up to +12.8% in 2021. APAC remains the second largest global advertising region now accounting for 31% of the global advertising marketplace. Digital advertising is powering this growth, with most digital ad formats booming in 2021.”
According to Gurpreet Singh, managing director MAGNA APAC: “2021 will see higher than usual growth in ad spend bouncing off of the reduced spend we saw in most of the APAC markets last year. This will largely result in regaining lost ground, however, some markets will take more than a single year for their ad spend to recover from the impact left by COVID-19. Digital continues to be the biggest growth driver across most markets fueling a faster recovery. Linear media was affected most deeply last year so its recovery back to pre-covid levels is going to remain a big challenge across the majority of APAC markets for the next few years.”
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