ADVERTISING & YOUTH/
INTRO: A BIG BUSINESS
Advertising is defined as any openly sponsored offering of goods, services, or ideas through any medium of public communication. Of course, this is a very simplified view of advertising. For sure, it’s a colossal, global business…
North America still rules the ad world. Of the top 5 spending markets, however, China is the one to watch…
- the global advertising business will hit US$363 billion (US$474 billion) in 2005 off a growth rate of 5.8%. The United States dominates, accounting for almost 50% of the world’s total advertising expenditure. However, over the next few years, it’s anticipated that Asia will overtake Western Europe as the second largest advertising region, driven by growth in Japan and China; (1)
- the American ad market in 2004 was worth US$154 billion and was still bigger than 18 of the next highest ad spending countries combined - they include Japan (US$37.3 billion), the United Kingdom (US$17.2 billion), Germany (US$16.1 billion), China (US$13.8 billion) and Australia (US$6.4 billion) - ninth overall;
- the advertising volumes of the US as a single market are impressive - TV is worth US$60 billion, radio US$20 billion and the internet US$10 billion;
- after severe declines in 2001 and 2002, the internet enjoyed a boom. Advertising expenditure on the internet at the global level grew by a massive 11.6% in 2003 versus 2002 and it was forecasted to grow by an even greater 19.3% in 2004. The Internet is growing steadily; taking 2.7% of ad-spend in 2004, up from a share of 2.5% in 2000. The global internet ad market, including North America, is worth US$14 billion;
- following the internet, cinema is the second fastest growing medium. Global cinema advertising expenditure was up +7.0% in 2003 year-on-year and was set to accelerate to +12.9% in 2004. Despite this massive compound growth, cinema is set to remain the smallest medium, reflecting its niche value to advertisers. Cinema advertising expenditure was forecasted to reach US$1.1 billion by the end of 2004;
- press advertising in the US - that is, magazines and newspapers - is worth US$65 billion in a global market totalling US$135 billion and it's here that some interesting statistics are tucked away in the Spheres of Influence global report released on February 2005 by Initiative Media;
- TV is the world’s largest media vehicle for advertising: globally, network and pay TV lifted their ad revenues from US$120 billion to US $152 billion between 2000 and 2004 and TV's share of ad expenditure rose from 37.7% to 42.1%;
- newspapers and magazines have headed in the opposite direction with the same velocity. Ad spending for press has gone backwards - from US$140 billion in 2000 to US$135.9 billion in 2004. That equates to a huge drop in global market share for print, from 44.3% in 2000 to 39.6% in 2004. Press is the 2nd largest medium but only the 5th fastest growing;
- radio ad spend grew by +2.6% in 2003 year-on-year, and was forecasted to grow by +3.8% in 2004 versus 2003 to reach a global total of US$29.5 billion;
- Initiative's overall global advertising growth forecast for 2005 is 5.8% - newspapers and magazines will rise 3.9%, TV 6.8%, and the internet 20.4%. Locally, Initiative is predicting overall ad market growth of 9%. Pay TV will lead the charge with 20% growth, followed by the internet (19.7%), free-to-air TV (12) radio (8), newspapers (6) magazines (6) and outdoor (8).
- in 2000, China was the 6th largest advertising market. In 2001, it rose to 4th, overtaking France and UK and in 2003, it overtook Germany as the world’s 3rd largest advertising country;
- Nielsen Media Research statistics indicate in 2004, the advertising expenditure of Mainland China (based on the range of TV and Print media monitored by Nielsen Media Research) soared to RMB 261,4 billion Yuan (about US$31,58), this is an increase of 32% over 2003, of which the TV advertising accounted for 76%;
- as ever, in 2003 North America was (and still is) the dominant global player. However, the US is experiencing relatively modest percentage increases when compared with the rates of the rising stars of the East. Combining all markets in Asia and Asia-Pacific, this region accounts for 22.2% of global advertising expenditure. Volume is driven by Japan and China: Japan alone accounted for 11.3% of 2003 spends and China, 6.3%. In 2004, the advertising income of Asian main countries had increased 28% compared to 2003; furthermore, China’s market was the most animate;
- according to Initiative Futures’ forecasts, if there will be a change in the world order over the next few years, it will be that Asia overtakes Western Europe as the 2nd largest advertising region. This could be as soon as 2005, if the current rates of growth continue. Asia’s increasing power will be driven by a combination of high growth volume in its larger economies (Japan and China) and high percentage growth in its smaller advertising economies, such as India, Indonesia and Thailand; (1)
- Western Europe, however, has recognised the increased competition on the global playing field and is looking to the East for future strength; ten more markets joined the EU on 1st May 2004, eight of which are in Central and Eastern Europe (CEE). CEE has experienced several consecutive years double-digit growth in advertising expenditure and was forecasted to register a further 11% rise in 2004.
(1) Remarks from: Paul McIntyre, “TV's feather duster becomes a rooster”, FairFax Digital, February 10, 2005. Data from: Spheres of Influence 2004, a detailed analysis of global advertising expenditure produced by Initiative Futures Worldwide. All information has been supplied by local experts in Initiative and partner offices in 44 markets from all key regions around the world.