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As the second largest advertising media marketplace in the Asia
Pacific, the positive expectations for China in 2007 and in 2008
will drive the region ahead of the rest of the world in terms of
growth rates. On the downside, concerns about increasing costs of
production brought on by increases in oil prices and resulting impacts
on inflation will dampen consumers' sentiments.
Particularly affected will be the Philippines, where growth is
expected to be just 5 per cent, down from the previous year's 10
per cent primarily due to the effects of increased oil prices that
have dampened consumer spending and postponed high-ticket purchases
such as real estate and automobiles.
The study further adds that Malaysia is expected to grow from 3
per cent in 2005 over 2004, to 5 per cent in 2006 and 4.7 per cent
in 2007. The market is experiencing its highest consumer price inflation
(CPI) in six years, directly affecting consumers' purchasing power.
However with 2007 named as Visit Malaysia Year, media and consumer
spending is expected to be quite buoyant. GDP expectations in the
market have been revised downwards due to uncertainties brought
about by the increase in oil prices.
Other localized factors, beyond those affected by recent oil price
increases, are also dampening the growth of the media communications
industries. In Thailand, 2006 growth versus the previous year is
expected to be only 3.4 per cent, with 2007 only slightly better
at 4 per cent. This is largely because of political instability
and unrest in the south of the country affecting consumer confidence.
Japan, which remains the largest media marketplace in the region,
is expected to grow between 1.8 per cent and 2.5 per cent in 2006
and 2007, significant growth rates considering the size and maturity
of the market. Positive business sentiments on corporate earnings,
the strengthening of the Yen against the US Dollar and the continued
growth of IT and digital-technology-related categories are expected
to fuel the market's media industry growth.
Moreover, the projected 2007 inflation rate is 0.5 per cent points
higher than the expected year-end inflation of 3.4 per cent in 2006
in the Asia Pacific region and will largely be driven by expected
demand for advertising in China and Hong Kong.
Japan is expected to have zero-inflation in 2006 and in 2007. Lower
demand for television, as advertisers rethink their advertising
investments across traditional and digital platforms, is expected
to control the costs of advertising in 2006 and 2007.
In Taiwan, which has been hit by domestic and global issues, is
expected to show media deflation in both 2006 and 2007, given a
lower demand for advertising space among key advertisers.
The Philippines, is expecting a 15 per cent increase in the cost
of advertising in 2007 largely caused by expected increased rates
for ABS-CBN, the second-largest station/network, after a hold-off
on rate increases in the past two years. With the gap between ABS-CBN
and GMA, the two leading stations, narrowed, the former is now in
a position to increase its costs accordingly.
In 2007, Australia is expected to see a slight rise in media inflation
is expected as two of the free-to-air TV networks capitalize on
their increased audience shares. Digital media platforms, as well
as alternative media, such as outdoor, will continue to be limiting
factors on market inflation.
While in Malaysia the introduction of new channels on Astro Cable
TV services will further fragment TV audiences.
Because of weaker economic conditions in New Zealand, there are
no expected rate hikes in 2007 for TV and other major media.
In Singapore interestingly, the effects of the consolidation of
TV stations under one company (MediaCorp) and the continued strength
of the main English and Chinese newspapers (mainly under Singapore
Press Holdings) continues to direct media inflation. Audience fragmentation,
with the emergence of alternative sources of entertainment and information
(mainly from digital and online media channels) will also be affecting
the cost of reaching audiences. On the TV front, Cable TV content
is significantly improving with Starhub offering more channels to
lure free-to-air audiences to pay for their TV entertainment. Nonetheless,
real inflation is expected to be controlled at around 4.7 per cent,
1 per cent higher than in 2006. A negative impact on inflation will
be aggressive evolution of new outdoor media platforms and their
focus in proving effectiveness, coupled with the emergence of digital/online
and continued importance of experiential communications in the marketing
communications mix.
Korea, the market expects a meager 1 per cent increase in media
costs through tighter controls. Audience fragmentation on TV and
in mainstream print is prevalent in the market. However, the additional
usage of digital/online and other communications platforms will
result in controlled inflation.
Lastly, in Thailand given the socio-economic and political challenges
in the market resulting in an economic downturn, Thailand expects
zero inflation in 2007. All major media are expected to keep to
their 2006 prices and demand from advertisers is expected to be
stagnant.
Prepared by in-market experts in the Universal McCann network offices,
this report is part of the company's focus on 'The Next Thing Now'
- developing business ideas that produce sustainable marketing communication
advantages for clients in the areas of traditional and non-traditional
strategic media solutions.
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