Indiantelevision.com Team

(29 June 2007 2:30 pm)

MUMBAI: Carat, the independent media communications agency, has issued revised forecasts for global advertising expenditure in 2007, and has published forecasts for 2008.

The company report cuts across global ad spends with a region specific analysis and forecast for this year and 2008. It looks at key media influencers within these regions and discounts the fact that traditional media is dying in some parts of the world due to the onslaught of digital technology. Monitoring the growth curve in the Asia-Pacific region, the company has infact revised its 2007 growth forecast from 7.4 per cent to 7.8 per cent. The report also boosts forecasts for 2007 elsewhere in the region including China, Australia, Hong Kong, India, Malaysia and Thailand. This estimate will further increase of 9.3 per cent in 2008.

Aegis Media CEO Mainardo de Nardis said, "Looking beyond individual country trends, the global picture is one of healthy growth. At 5.8 per cent this year and 6.4 per cent next, global adspend is comfortably outgrowing world GDP. 2007 is an exciting moment in advertising: media, entertainment and consumer behaviour are evolving on a daily basis. But while digital continues to outpace all other media in every corner of the world, rumours of the death of so-called 'old media' are exaggerated. In some parts of the world, demand remains vibrant. At the same time, we are watching a variety of new hardware, formats and services with interest."

According to an official statement issued by the agency, overall patterns of growth in 2007 are relatively consistent with 2006. Global growth in adspend is expected to be 5.8 per cent, fractionally down on last year's 5.9 per cent. Digital investment continues to be the single biggest driver of adspend growth in every region and country. Globally, the next two fastest-growing media are out-of-home and cinema. Trends in television and radio vary significantly market by market.

In publishing, newspapers are usually the slowest growing segment. Within this, free titles are generally taking advertising share. Magazines are out-performing newspapers in the majority of markets. Investment by publishers in online services, to compensate for declining hard copy sales, is continuing; the success of these investments will become clearer over time.

In 2008, the Beijing Olympics will drive further acceleration in growth rates in the USA and Asia-Pacific to 5.6 per cent and 9.3 per cent, with the former receiving a boost from the presidential election. Online will continue to outgrow the rest of the industry by some margin, but the expectation is to see increasing impacts from new hardware and technologies, including 3G, HD radio and multi-casting and IPTV and other forms of interactive broadcasting.

Regional Analysis

Demand in the USA remains good, and is forecast to improve slightly from 4.9 per cent in 2006 to 5.1 per cent in 2007. Western Europe falls back slightly from 4.4 per cent in 2006 to 4.1 per cent in 2007, as 2006's good growth in France (4.8 per cent) and Spain (4.6 per cent) moderates to 3.1 per cent and 4 per cent respectively, closer to the regional trend. Asia-Pacific continues to see a step up in growth rates, rising from 7.3 per cent in 2006 to 7.8 per cent this year, with the major contributor the continuing dynamism of the consumer economy in China.

Despite concerns in some quarters about the overall economic outlook, the USA, still accounting for nearly half of global adspend, is expected to remain a steady grower at 5.1 per cent this year (previous forecast: 5.2 per cent). Within this, online media remains the fastest growing space. With internet services taking approaching 8 per cent of spend, while US households spend approximately 15 per cent of their media time online, there remains further headroom for rapid expansion. With some early adopters of digital direct sales starting to see slowing returns on their investment, we forecast future growth drivers to be the move online of later adopters, such as consumer packaged goods and apparel industries.

US cinema will also produce strong double-digit growth. Although cinema today takes less than 1 per cent of total advertising expenditure, the dual appeal of longer formats and a captive audience is becoming increasingly attractive to advertisers.

Despite a quiet year for sports and US politics, the company expects to see respectable growth in US television, at around 4 per cent, ahead of radio. Once again we expect to see better growth from magazines than newspapers, with the former offering an environment to reach upscale consumers.

We have upped our 2007 growth forecast for Asia-Pacific to 7.8 per cent from 7.4 per cent. We have scaled back our forecast for Japan from 2.1 per cent to 1.1 per cent. This mainly reflects the negative impact of online on traditional media, with declining markets for newspapers, magazines and radio, while television remains flat. Having overtaken radio in 2005, we expect online to overtake magazines in the course of this year.

At the same time, we have boosted forecasts elsewhere in the region: China, Australia, Hong Kong, India, Malaysia and Thailand. The single biggest impact comes from the continuing expansion of the market in China: at 20.9 per cent growing over three times faster than the global advertising industry, and achieving double-digit growth in every single major medium. The highest spending categories on advertising this year will be mobile communications; automotive; entertainment; fast-food; and jewellery, reflecting the growing wealth of Chinese consumers. We also expect to see early signs of brand investment ahead of the 2008 Beijing Olympics.

Our forecast for Western Europe in 2007 is unchanged at 4.1 per cent, although the mix has been revised. We have held our UK forecast steady at 4.1 per cent, with online accounting for almost all this growth. The UK is one of the most sophisticated and developed online advertising economies, with display accounting for only one quarter of total investment. Digital television services will continue to grow well throughout the year, although total spending on television is likely to be flat. In published media, we expect national newspapers to decline by 2-3 per cent in advertising revenues over the year. Within magazines, weeklies are currently outperforming monthly titles. A good releases schedule will support moderate growth in cinema.

We now expect the German market to grow by 1.0 per cent (previous forecast: 1.5 per cent). Economic growth is being somewhat tempered by the impact of the VAT rate rise on disposable income. As a result, spending is expected to be flattish across television, radio, newspapers and magazines. Increasing broadband connections continue to drive growth in the online market, with direct campaigns and gaming/virtual worlds expected to be of particular interest to advertisers this year.

We have revised our forecast for France up to 3.1 per cent from 2.0 per cent. Deregulation of the retail sector, previously not permitted to advertise on television, will increase demand and result in ratecard rises in the largest single media channel. We expect national and free daily newspapers to perform well, while regional press comes under pressure as retail advertisers switch spending into television. Total spending will also see a minor boost from the Rugby World Cup this autumn.

The Italian market is expected to grow by 2.7 per cent. Extremely rapid growth in internet will account for most of this growth. Growth in television will be driven by growth in digital platforms and channels. After a good 2006 for new launches in both newspapers and magazines, 2007 will be quieter.

Spain is forecast once again to be strong at 4 per cent. Another strong year of growth in television advertising is forecast, with newer channels and the relatively recent introduction of digital terrestrial services making for a dynamic market.