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MAGNA GLOBAL ADVERTISING FORECASTS
Global Advertising Market Back on Track
MAGNA GLOBAL predicts global ad revenues to grow 6% in 2014
Top Stories
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Media Owners Advertising Revenues will grow by +3.0% in 2013 to $515 billion and
accelerate to +6.1% in 2014.
In 2013 APAC and Latin America growth will offset the stagnation in EMEA and
North America.
In 2014, US and European ad markets will benefit from economic recovery, US midterm elections and global sports events. China remains a reliable growth engine and
Japan confirms a surprise return to growth.
Digital Media will grow by +13.4% in 2013, reaching a 23.3% market share.
Social media generated $5.9 billion in advertising revenues in 2012 and we
anticipate an impressive 39.6% growth in 2013.
Automated “programmatic” buying already represents 17% of online display
transaction in the US and up to 30% in some other advanced markets.
MAGNA GLOBAL predicts the global advertising market to grow by +3.0% this year, to
$486 billion, thus slowing down from 2012 (+3.9%), and then accelerate by +6.1% in
2014, to $515 billion. Compared to MAGNA’s previous forecasts, published in December
2012, this represents a small downgrade for 2013 (-0.1%) and a small increase for 2014
(+0.1%). MAGNA’s analysis covers ad market conditions in 73 individual markets,
adding three new markets this time: Sri Lanka, Pakistan and Kenya.
The predicted acceleration in ad revenues is in line with expectations of accelerated
economic growth in the second half of 2013 and throughout 2014. In its April 2013
report, the IMF predicted 2013 real GDP growth to reach +3.3% globally and 2014 to
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2. accelerate to +4.0% in 2014. Although the economic forecast is still modest for
developed markets (+1.2% and then +2.2%) and for Europe in particular (+0% and then
+1.3%), it will in many cases bring the economic environment to the point where
business growth triggers not only ad spend growth but, in some markets, faster-thanGDP growth. In markets where marketers have been cautious, they may at last switch
from optimization mode to expansion mode.
Digital media will continue their double-digit growth in 2013, as ad revenues will
increase +13.4% to $113.6 billion. Growth will be driven by search (+14.6% to $52
billion), video (+21% to $6.6 billion), mobile formats (+54% to $12 billion) and social
formats (+39.6% to $8.2 billion). Other formats will barely grow, and actually decline in
many markets due to the commoditization and deflation of display inventory.
Television advertising growth will slow down in 2013 due to the absence of global
televised events. Following a +5.0% growth in 2012, ad sales will grow by only +2.0% to
$196.5 billion, but TV remains the leading media category (40% market share) ahead of
digital. Print formats continue their decline: in 2013 newspaper ad revenues will
decline by -3.3% and magazine revenues by -5.1% to a combined $110 billion (a 23%
market share). Radio advertising will grow by +1.1% to $32.5 billion and out-of-home
media revenues will increase by +2.9% to $32.6 billion.
2013-2014 across geographies
There continue to be wide regional and national contrasts in the global advertising
landscape in 2013. There will be almost no growth this year in EMEA (+0.4%) and
North America (+0.7%). On the other hand, we are increasing the 2013 forecast for
Latin America (+12.5%) and for APAC (+5.9%).
EMEA: ad markets hit by European recession
EMEA will barely grow in 2013, with the sub-region going through varied states.
Plagued by economic recession and record unemployment levels (12.2% in the
Eurozone, 8.4% in the UK), Western Europe ad revenues will decline by -1.6%.
Resilience of the two biggest markets – the UK (+2.2%) and Germany (+0.6%) - will
partially offset the decreases in Southern Europe (France -3.3%, Spain -10.4%, Italy
-9.4%). However, after three, four and sometimes five years of negative growth in some
markets, we believe most of Western Europe will bottom out in 2013. For instance, there
are signs already that television pricing may stabilize in the second half of the year and
increase, however slightly, in 2014.
Central and Eastern Europe will grow by an average +7.6%, in line with previous
expectation, but again reflecting national contrasts, with double-digit growth in Russia
(+11.7%) and Turkey (+10.2%) partially offset by stagnation in several smaller markets
(Poland, Czech Republic, Hungary).
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3. The Middle East and Africa sub-region will be growing by +4.8%, with advertising
expenditure increasing in the Gulf Cooperation Council countries (+3.8%) and in South
Africa (+5.5%) but decreasing in Morocco (-2.1%) and Kenya (-20%).
US: light at the end of the tunnel
The US economy is on a slow but steady trajectory towards recovery. Despite the
government sequester and higher payroll taxes that have contributed to the uncertainty
that plagued the beginning of the year, 2013 will show moderate economic growth. The
second half of 2013 and 2014 are expected to improve, due notably to stronger housing
and job markets and higher business and consumer confidence. The US unemployment
rate remains high (7.6%) but is declining month after month (+175,000 non-farm jobs
in May). The latest consumer sentiment index showed a surge at 84.5 compared to 76.4
in April, bolstered by optimism stemming from rising stock market, home prices, and
employment.
For 2013, we expect +0.4% growth in media owners ad revenues, to $155 billion. These
growth rates are not normalized and do not take into account the absence of the
incremental Olympics and political spend that occurs in even years. If neutraled for
political and Olympic spending in 2012 and 2013, the underlying growth would be
stronger by approximately 1.5%.
We anticipate total US television advertising to decline -2.8% in 2013 with -6.8% in
broadcast TV due to the absence of Olympics and political spend, and +2.4% for cable
TV. Digital media is the only category to show significant growth in 2013 (+11.5%),
although the pace of growth should plateau slightly as a result of deflationary pricing
trends affecting display formats. The category will be driven by mobile advertising
continuing its aggressive growth at +61.7% to $5.4 billion. Print advertising will
continue to decline as ad sales will drop by -6.7% for magazines and -6.8% for
newspapers. Radio is expected to remain flat this year and out-of-home advertising will
grow +3.5%.
China: a successful soft landing
The Chinese economy successfully engineered a “soft landing” in 2012, with real
GDP growing by +7.8% compared to +9.3% in the previous year (source IMF) and
inflation coming under control (it was +1.8% in 2012 following +7.8% in 2011). The
Chinese government can thus afford to continue stimulus programs and maintain highsingle-digit real GDP growth rates in the mid-term. In its April report, the IMF forecast
+8% of real GDP growth this year and +8.2% next year. When factoring inflation, that
translates into low-double-digit nominal GDP growth for the next five years.
Advertising spend had its own soft landing last year; it increased by 9.3%, which was the
first time it grew at a slower pace than nominal GDP. In the mid-term however, MAGNA
GLOBAL believes the ad market still has the potential to grow faster than the economy
because domestic and international brands are competing for the attention of Chinese
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4. consumers while media inventory is limited, therefore driving media cost inflation. In
2013 we expect the advertising market to grow by +11.6% to RMB 302 billion. Television
continues to command the highest media market share, growing 7.6% to RMB 109
billion and while digital is rapidly gaining (+27% to RMB 88 billion). Internet
penetration will have to expand to older rural demographics for continued gains as the
urban youth market has been completely saturated. Supported by robust domestic
demand, ad expenditure will grow again by 12.1% in 2014 and by 12.6% in 2015 and
China will pass Japan to become the 2nd largest media market globally by 2016.
Another “sleeping giant” is waking up in Asia: Japan. Following the general elections of
December 2012, Shinzo Abe from the Liberal Democratic Party became the new Prime
Minister. Prime Minister Abe introduced an aggressive unorthodox, expansionist
economic policy – that has become known as “Abenomics” – to break the pattern of
deflation/stagnation that has plagued Japan in the last fifteen years. In April the IMF
raised its real GDP growth forecast to +1.6% for 2013 (+0.4) and to +1.4% for 2014
(+0.7). The IMF is acknowledging a shift in the Japanese economy: after 10 years of
deflation, CPI inflation is expected to be flat in 2013 (+0.1%) and up by +3.0% in 2014,
which, by Japanese standards, sounds like hyperinflation. The perspective of more
dynamic economy and positive inflation in the mid-term has led us to change our
advertising spend scenario too. We revise our ad revenue growth forecast from +0.2% to
+1.5% in 2013 and from +2.3% to +2.9% for 2014.
In Russia, already the world’s 10th largest advertising market, advertising sales grew by
+11.4% in 2012 and are expected to grow at a similar rate (+11.7%) in 2013. Unlike many
other large European markets, digital claims less than 20% of the total spend in Russia,
while television controls half of total ad spend. TV advertising cost inflation continues to
drive double digit television growth rates (+10.3% in 2013), and despite recent
regulation requiring no TV sales house to control more than 35% market share, there
are still only a handful of dominant points of sale and therefore limited competition. The
Winter Olympics in Sochi in 2014 will also benefit television ad spend. Russia’s GDP
growth should remain robust in the high single digits, which will continue to drive
Russia’s advertising market higher in the top 10 global rankings.
Latin America bracing for the World Cup
As Latin America is gearing up for the 2014 FIFA Soccer World Cup (the first to be
organized in the region since Mexico 1986), we anticipate stronger advertising demand
in the next 12 months, most notably in the host country Brazil, and mostly on television.
The region’s ad revenues will grow by +12.5% in 2013: growth will be moderate in
markets with low inflation (Brazil +10.7%, Mexico +5.5%) but explosive yet again in
countries with hyper-inflation (Argentina +28.7%, Venezuela +15.7%).
In 2014, ad growth will accelerate further to +12.9%. The entire region will benefit from
domestic and international brands investing to be associated with the event. The Brazil
market will grow by +13.6%, Argentina by +21.9% and Chile by +4.7%. Television will be
the biggest winner, growing +13.6% to $25.5 billion and strengthening its leadership in
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5. the region (59% market share) but digital media and social are also expected to thrive,
with ad revenues growing by +19.7% and +43% respectively. Brazil is already the second
biggest market for Facebook with more than 70 million users and the big sports events
of 2014-2016 are bound to accelerate social usage even further.
2014: strongest growth since 2010
For 2014 MAGNA GLOBAL predicts global advertising revenues to grow by +6.1% to
$515 billion, which is a slight acceleration compared to our December forecast (+6.0%).
This will be the highest annual growth since 2010, when the global advertising market
grew by +8.2%, having rebounded from the worst recession year on record, 2009 (-11%).
The global ad market will be driven by a stronger economy (+4.0% of real GDP growth
according to the IMF), aggressive economic policy in China and Japan and stabilization
in Western Europe. In addition, ad spend will be driven by the even-year events: Soccer
World Cup in Brazil (with soccer becoming increasingly popular in markets like Japan,
China and the US), Winter Olympics in Sochi, Russia, and the mid-term election cycle in
the US. Since the “Citizen United” decision of the Supreme Court that removed any
limitation to fund-raising and campaign spending, ad spend around mid-term
congressional elections and “propositions” has become almost as big as a presidential
race year.
We have increased our 2014 forecast for North America from +5.1% to +5.6% (US: from
+5.4% to +5.9%) and our forecast for EMEA from +3.2% to +3.3%. APAC will grow by
+7.4% and Latin America by +12.9%.
Focus on Digital Media
In its new report, MAGNA GLOBAL is also focusing on two major trends affecting
digital media advertising: the rise of programmatic buying and social media.
Programmatic buying is a method of buying and selling digital display inventory
through automated, data-driven platforms and, sometimes, through real-time bidding
(RTB). It fundamentally allows the demand side to buy audience for online display and
video formats as they buy key-word search. Programmatic transactions continue to grow
in the US, commanding an increasingly large share of display advertising revenues. In
2012, programmatic transactions represented $2.4 billion (i.e. 17.4% of total display
advertising), and we expect this to increase to 48% of revenues by 2017. Internationally,
most markets still lag the US at this point, but some less advanced digital markets may
face smaller legacy issues and resistance to change and therefore evolve more rapidly
towards automation. Some Western European countries are showing robust RTB
growth such as the Netherlands where 29% of digital ad sales are already transacted via
programmatic methods. Expansion in APAC and South America is still in more nascent
stages.
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6. For the first time, MAGNA GLOBAL is publishing estimates and forecasts on the size of
social media within internet advertising revenues. Says Vincent Letang, Director of
Global forecasting and author of the report: “In recent years, social media has become a
central part of the online experience, partly at the expense of portals and emailing.
Everywhere, internet users already spend 25% to 30% of their online time on social
networks. Facebook is the leader with 1.1 billion users to-date, but other forms of social
internet are flourishing, notably in Asia or Russia, and monetization is accelerating in
2013”. Global social advertising revenues are estimated to be $5.9 billion in 2012,
growing 36.8% compared to 2011. Social media advertising is expected to increase
further from $8.2 billion in 2013 to $24.3 billion in 2018, representing a 24% CAGR in
the next five years.
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The next MAGNA GLOBAL forecasts will be published in December 2013.
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7. KEY FORECASTS
Figure 1: Global Advertising Market (Media Owner Revenues)
$700
15%
$600
10.0%
10%
8.2%
7.6%
$500
6.1%
4.5%
5%
3.9%
$400
3.0%
0%
$300
-4.3%
-5%
$200
-10%
-10.4%
$100
$0
-15%
99
00
01
02
03
04
05
06
07
08
09
10
11
Ad revenues in billion constant USD (Left Scale)
12
13
14
15
16
17
18
Year-on-Year Growth (Right Scale)
Figure 2: Advertising Revenues by Media Category (Growth Forecasts)
20%
15.4%
15%
13.4%
12.5%
10%
5%
7.9%
6.1%
6.0%
5.0%
4.0%
1.7% 1.1% 1.7%
2.0%
3.9%
2.9%
3.0%
0%
Television
-5%
Internet
Newspapers
Magazines
-2.6%
-3.3%
-5.2%
Radio
OOH
All Media
-2.2%
-5.9%
-5.1%
-10%
2012
2013
2014
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8. Figure 3: Top 10 Markets
Rank
2013
$m
2014
1
United States
154,996
United States
2
Japan
51,713
Japan
53,238
China
76,907
3
China
42,836
China
48,019
Japan
58,613
4
Germany
23,605
Germany
23,998
Brazil
30,807
5
United Kingdom
21,618
United Kingdom
22,158
Germany
25,735
6
Brazil
18,338
Brazil
20,835
United Kingdom
24,914
7
France
13,124
Australia
13,610
Russia
16,589
8
Canada
13,113
Canada
13,438
Australia
16,031
9
Australia
13,099
France
12,971
Canada
15,090
Russia
10,624
Russia
11,567
France
13,733
10
$m
164,073
2018
United States
$m
191,798
Figure 4: Revisions for 2013 growth
14%
12.5%
12%
Dec 2012
10%
June 2013
8%
5.9%
6%
4%
3.0%
2%
0.7%
0.4%
0%
Total
APAC
Latin
America
EMEA
North
America
Figure 5: Revisions for 2014 growth
12.9%
14%
12%
Dec 2012
June 2013
10%
8%
6%
6.1%
7.4%
5.6%
3.3%
4%
2%
0%
Total
APAC
Latin
America
EMEA
North
America
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9. About MAGNA GLOBAL Advertising Forecasts:
For more than 40 years, MAGNA GLOBAL forecasts have been the industry’s leading
source for measuring and forecasting advertising revenues. MAGNA GLOBAL forecasts
media owners’ advertising revenues in the US and around the world through financial
analyses of media companies’ public filings, government reports, trade association data
and local market expertise. MAGNA GLOBAL’s new methodology was introduced to the
industry in 2009 and has redefined measurement for the advertising-supported media
economy, delivering unparalleled authority and accuracy. Our Global Media
Suppliers Advertising Revenue Forecasts include television (pay and free),
internet (search, display, video, mobile), newspapers, magazines, radio, cinema and outof-home (traditional and digital). Our report monitors media suppliers’ revenues in 73
markets, including all major countries, representing 95% of the world’s economy. Three
new markets have been added in the June 2013 report: Sri-Lanka, Pakistan and Kenya.
Our forecasts are updated twice a year and available to our subscribers. Our US
Advertising Revenue Forecast study includes detailed data for more than 40
categories of media on a quarterly basis from 1990 to 2012 and on an annual basis from
1980 to 2017, updated quarterly.
Please contact vincent.letang@magnaglobal.com for further details.
About MAGNA GLOBAL:
MAGNA GLOBAL is the strategic global media unit of Interpublic Group, driving
forecasts, insights and negotiation strategy across all media channels. The
MAGNAGLOBAL Intelligence Unit delivers the industry’s most accurate and
authoritative forecast of media value. The MAGNA GLOBAL Investment Unit harnesses
$36 billion of Mediabrands global media billings. Follow us on Twitter for updates
@MAGNAGLOBAL.
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