Media owner advertising revenues will increase by 5% in 2019, approaching a US$600 billion figure globally, according to a report conducted by Magna.
In its latest report on global advertising market trends, Magna adjusted its forecast for 2019 growth from 4.7% to 5%. This was a response to the first half of 2019, when the company saw stronger-than-expected ad activity in key markets, namely the US and China. It’s expected that ad spend in the US will grow by 3% this year, while growth in China will reach 10%.
In APAC advertising growth is continuing to be driven by digital formats. Digital advertising sales will increase by 16% in 2019 to reach US$90 billion, representing 49% of total ad sales. Mobile impressions and clicks are now attracting the bulk of digital advertising spend in the region (26% increase in 2019, compared to a 5% drop for desktop-centric spending), reflecting the unceasing assimilation of smartphones or feature phones into the daily lives of APAC consumers.
However, global market growth is slowing down compared to 2018’s record of over 8%, due to the lack of major cyclical events, such as the 2018 United States elections and the FIFA World Cup. Neutralising the effect of cyclical events in both 2018 and 2019, global growth would be +7% and +6% respectively.
This slowdown will likely not hamper the continuous rise in global advertising. Even when the 2009 recession brought with it a -12% drop, what followed was positive, with 2019 being the 10th consecutive year of growth for global advertising. The market has expanded at an average of 5.5% per year between 2010 to 2018, growing by 60% throughout the period.
Traditional linear advertising sales, such as broadcast TV and radio, newspaper and magazine ad pages, and OOH will decrease by 3% to US$290 billion, while digital advertising sales will continue to grow by 14% this year. Digital ad sales will represent more than half (51% or US$304 billion) of global ad sales for the first time this year.
The report also gave a mention to the outlook for specific regions. In Hong Kong, advertising sales will increase by 4.9% in 2019 to reach HK$27.4 billion (US$3.5 billion), a similar growth rate as 2018. In 2020, it’s expected that the advertising economy in Hong Kong will increase by 4.8% to reach HK$28.8 billion.
Television in Hong Kong will grow by 2.9% in 2019, a slowdown from last year’s 7.5% performance. Connected TV services and online television tools such as myTV Super are gaining traction, but ad sales are growing from a low base. Digital formats are the engine of growth in Hong Kong for 2019 as well, with an increase of 18%. Despite this growth rate, digital formats still only represent 25% of total budgets, far below the standard in many other markets. But within that, video content and mobile apps are the leading areas of digital spend.
In contrast to digital, print retains a 22% share of Hong Kong budgets, one of the highest in the world. Furthermore, while newspapers and magazines are seeing negative growth, print properties are still doing well in Hong Kong as many have successfully transitioned their business models online. Notable examples include premium fashion properties and international titles like Hearst Publications and the New York Times.
Meanwhile, in Singapore, advertising sales are bouncing back, with an expected growth of 1.2% in 2019 after three years of decline, bringing the total Singapore advertising economy to SG$2.2 billion (US$1.6billion). In 2020, the advertising economy of Singapore is expected to increase by 2.3% to reach SG$2.3 billion.
Digital advertising formats in Singapore will increase by 21% in 2019, which is being led by strong growth in social (+28%), video (+27%), and search (+20%). Like Hong Kong, digital formats still only represent 25% of total budgets, so strong growth is expected to continue to the end of the forecast period.
Jumping over to Malaysia, advertising revenues will increase by 1.5% this year, 0.7 percentage points higher than the 0.8% growth reported for 2018. In 2020, Malaysia’s advertising economy will increase by 3.0% to reach MYR 5.4 billion (US$1.3billion).
Television ad revenues for Malaysia will decrease by 3.2% in 2019 as double-digit cost-per-mile (CPM) inflation is not looking enough to offset the significant declines in viewership on traditional linear television. Since there is relatively slow growth for the low penetration of digital advertising formats in Malaysia, digital advertising formats will increase by 13% in 2019 to reach a third of total budgets. Since 2017, the share of internet users consuming videos digitally in Malaysia has risen from 26% to a 57% figure this year. Top brands in Malaysia have been transitioning towards digital and away from linear advertising media faster this year than at any time previously.
Finally, in Indonesia, the advertising economy will grow by 6.8% in 2019, in line with 2018’s +7.0% growth, and slightly below prior expectations. The total market in 2019 will reach IDR 98 trillion. Ad spend growth has been in the high single digits for the past six years, spurred by strong economic growth (+8.7% nominal GDP growth expected in 2019). In 2020, the advertising economy in Indonesia will increase by +7.9% to reach IDR 105 trillion.
Indonesia held landmark general elections in April this year. It was the first time in Indonesian history that the president, vice president and members of the Consultative Assembly were elected on the same day. Many brands are hesitant to spend around the elections given political and economic uncertainty. However, television was stronger this year (+9%) than it will be going forward (mid-single digit % growth).
“Political parties are permitted to buy TV commercials in Indonesia, although television stations are limited to 10 spots from any one political party in a day. In addition, many political candidates have ownership stakes in media companies which can create a tailwind for political investment in television,” explained the report.
Meanwhile, newspaper spending will decline by 15%, and magazine spend will be even worse at -25%. Radio is stable, and OOH will grow, while still significantly below its peak because of declines in OOH spending from 2015-2017. Digital advertising spend is expected to grow by 19% in 2019, a relatively modest growth rate compared to the massive nearly triple digit growth rates of several years ago. That digital growth is led by video (+33%) and social (+27%).