Higher ad revenues hit APAC due to strong traditional TV and online growth, says IHS Markit
Revenue from advertisements in Asia Pacific rose 4.5% in 2016 compared to a year ago, hitting $139b according to research house, IHS Markit.
APAC ad revenue driven by TV and online media growth, says IHS Markit
The latest analysis covers APAC countries such as Australia, China, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore and South Korea.
This region accounted for one third of the total global advertising market in 2016 according to IHS Markit. The region is also home to app ad revenue overtaking mobile web and could possibly overtake the US on ad spend.
“The Asia Pacific ad market last year, bolstered by robust performance of traditional TV media and rapid online growth, saw stronger growth that was underpinned by structural drivers, such as rising consumerism, the emerging middle class, as well as rapid mobile device adoption by a younger demographic in the developing markets,” said Qingzhen Chen, senior analyst at IHS Markit.
“These factors will continue to propel the growth of advertising in the longer term. In contrast, growth for mature ad markets like Australia and Japan continues to be predominantly driven by innovation, better audience measurement, and digital adoption of traditional media via ‘out-of-home’ access,” she added.
Traditional TV still dominates APAC in 2016, with 39% of total ad revenue. TV commercials are still expected to grow with a compounded annual growth rate (CAGR) of 2.2% between 2016 and 2021 for the APAC countries in the report. However, IHS Markit expects TV’s share to decline to 34% by 2021, as stronger online media cuts a bigger slice of ad revenue.
The online ad market has seen a surge in growth with a CAGR of 301% between 2011 and 2016, and a forecasted CAGR of 11.9% between 2016 and 2021.
“While traditional TV media still remains an important revenue generator in Asia Pacific, print ads are expected to see imminent change over the next few years. Print ad has been growing in India, for instance, and it remained the dominant advertising medium in Singapore in 2016. However, we expect publishers to further trim their newspaper business moving forward, which has already taken place in Australia, New Zealand and Malaysia,” said Kia Ling Teoh, analyst at IHS Markit.
“Despite the double-digit rate, online ad revenue is still small compared to traditional TV media. Structural factors such as poor connectivity and broadband infrastructure cap the level of growth possible in Asia Pacific’s online ad markets,” she added.
China continues to lead the online ad market in APAC, with a 63.1% cut of the total online ad revenue of the ten APAC markets collectively by 2021. The online population of China, 650m, only represents half of China’s population, making it the most attractive ad market in the region.
“Domestic online companies continue to invest aggressively into digital advertising, and foreign publishers show no sign of retreat from trying to enter the market, notwithstanding tightening content and ad regulations,” Chen said.