Magna Global says India's growth is lowest recorded since 2004

Magna Global downgrades 2013 media owner revenues forecast; expects 3.1 per cent growth Magna Global expects media owner revenues to grow 3.1 per cent

Magna Global said the revision is mainly due to a slowdown in economic growth and continued economic uncertainty in Europe and the US. The“cautionary marketing spend” during the second half of the year is another factor, it added.

The global advertising market reached US$495 billion this year, up 3.8 per cent on 2011. The US remains the largest market with $153 billion in advertising revenues. Japan, China, Germany and the UK complete the top five.

Asia-Pacific advertising revenues grew by an average of 5.5 per cent. While China and India growth slowed, the sub-region still posted robust growth of 8.4 per cent.

Post-Tsunami Japan also recovered more strongly than expected following four consecutive years of declines, while Australian advertising revenues decreased slightly (0.5 per cent).

The report comes at the same time as ZenithOptimedia's advertising forecast, which suggests advertising expenditure in Asia-Pacific in 2012 will hit around US$140 billion and then increase by 5.5 per cent in 2013 to reach nearly US$148 billion (excluding Japan).

ZenithOptimedia also predicts that China will lead as Asia’s biggest contributor of new ad dollars to the global market. 

Magna Global said India is expected to re-accelerate in 2013 following the temporary slowdown in 2012, to see growth of 8.7 per cent.

Gurpreet Singh, managing director, Magna Global, Asia Pacific, said India’s economic growth rate in 2012 was the lowest recorded since 2004, which has resulted in dropping confidence.

The economy has been “hostage to coalition politics, political expediency, policy paralysis and high interest rates", which together contributed to this slowdown, Singh said. “Reflection of this has clouded the media economy too," he added. "But again we expect a recovery in 2013-2014, and the potential for growth is huge in the long-term.”

The report also predicts Chinese advertising to grow by 9.5 per cent in 2013 before going back to double-digit growth starting from 2014.

Japan is expected to return to stagnation (0.2 per cent) while Australia is expected to post modest growth (1 per cent).

But “explosive growth” is forecast in emerging markets in Asia, with Malaysia expected to grow 9.7 per cent and Vietnam to increase by 13.4 per cent. 

However, the report said, the prediction of 3.1 per cent growth globally in media owner advertising revenue in 2013 is based on the assumption that neither the US nor Europe will fall into their
respective “fiscal and debt cliffs” and that the current economic forecasts will materialise.

Meanwhile, Magna Global said 2013 globally will see a seventh consecutive year of decline for newspapers ad revenues (down 3.4 per cent), as fewer emerging markets now record enough growth to offset the rapid decline otherwise observed in developed markets.

Digital media revenues will increase by 13.5 per cent; classic PC display format (banners, sponsorship) are now barely growing (6 per cent) as more investment shifts towards online video and mobile-based formats, and paid search remains robust, growing 14 per cent.

Magazines will decline by 4.3 per cent, suffering the combined pressure of television and the growing targeting capabilities of digital media.

Television advertising growth will slow down to 2.3 per cent, mostly due to the US market, while out-of-home ad sales (including cinema) will increase by 3.4 per cent. 

Radio will grow by an average 1.5 per cent. Given that it is on average five times cheaper than national TV or eight times cheaper than print, radio is in demand and should be able to increase its rates in 2013.

Source: Campaign Asia-Pacific