Magnaglobal’s global forecast, released at the UBS 39th Annual Global Media and Communications Conference 12/5, shows media owners’ revenue growth for 2011 and 2012 to be slower than previously projected, but still on the upswing. 2011 global growth was revised down to +4.7% (downgraded by -0.5%), totaling $427 billion. The previous estimate of +5.2% was published in June 2011. The ad revenue projection includes television (pay and free), Internet (search, display, video, mobile), newspapers, magazines, radio, cinema and out-of-home (traditional and digital). It excludes direct marketing categories such as direct mail or traditional yellow page directories. In the U.S., Magna sees its 2011 growth forecast, which it recently lowered to 2.9% to stay at that number.
The strongest growth rates came from Argentina (+37.9% in the context of a strong inflationary economic growth), China (+22.5%), Kazakhstan (+25.6%), Russia (+20.4%), India (+15%) and Brazil (+10.2%). Eleven countries (out of the 63 analyzed) suffered a decline in ad revenues, including countries in Southern Europe hit by protracted economic turmoil and political instability (Greece: -19.3%; Portugal: -6.9%; Spain: -6.3%; Italy: -2.5%); emerging markets temporarily destabilized by the Arab Spring (Egypt -21%); and Asian countries hit by natural disasters (Japan -2.0%, Thailand: -2.0%). Many of the large markets of Western Europe and North America wound up in the middle, typically showing low single-digit growth (UK: +1.8%; Germany: +3.0%; U.S.: +2.9%).
Quadrennial events such as the Summer Olympics, European soccer championship and U.S. presidential elections, combined with the scale and dynamism of the BRIC (Brazil, Russia, India and China) countries will help sustain global growth despite worsening economic outlook. They contribute to 45% of the global growth in 2011. Internet will become the second biggest media category in 2011, reaching a 20% global market share in 2012.
Among media categories, television, an unexpected winner in 2010 (+12.7%), continued to show strength in 2011, despite the absence of cyclical sporting events or elections in the U.S. broadcasters’ ad revenues grew +4.8% to $175 billion, in 2011, maintaining TV’s leadership with a 41.0% market share globally. Radio grew +2.2%; newspapers’ revenues were down -2.4% and magazines declined -0.9%. Of course, declining circulation, shrinking readership, Internet competition and short term media buying patterns (which penalizes monthly magazines), all contributed to print’s decline in developed markets.
Strong audience levels and audience measurement improvements – such as the integration of time-shifted DVR viewing into ratings for the first time (e.g. France) – made the medium attractive. Out-of-home (OOH) media fared even better. Including cinema, OOH grew +6.4% globally, driven by the incremental revenues generated through digital billboards (+19.9%), which have rolled out in various parts of continental Europe and Asia. Other traditional media categories, however, had a tougher year.
The big winner of 2011, of course, was Internet media. Total Internet ad revenues increased +16.9% to $78.5 billion. While Display subcategories increased +15%, Paid Search reaped the benefits of usage growth and algorithm improvements to reclaim its position as the largest digital revenue driver (+19%). Within Display, online video continues to show impressive growth (+58.5%), reaching $4.7 billion in revenues. Pre- and mid-rolls in online videos now generate 6% of total Internet advertising revenues and one percent (1.1%) of global advertising revenues. Even more than online video sharing specialists, TV broadcasters offering free, ad-funded online “catch-up” of long-form, full-length episodes are driving category growth.
2012 estimates
2012 global growth is revised to +5.0% (downgraded by -1.5%), totaling $449 billion. For 2012, That’s down from 6.5% estimated growth from July. China will become the second largest ad market in 2012, outgrowing Japan. More than ever, emerging economies drove global ad revenue growth in 2011, posting an average +15.0% growth during the year. Among these developing economies, Latin America posted the strongest growth rates, averaging +13.2%, closely followed by Central and Eastern Europe (+13.0%). Developed markets, meanwhile, grew at much slower rates, such as +1.6% in Western Europe and +3.1% in North America, due to a number of factors including: a strong 2010 comparison (revenues were up +8.2% compared with 2009); macro-economic slow-down and persistent financial uncertainties; the absence of major sporting events or U.S. elections; and natural disasters in Asia.
In 2012, advertising revenues will grow by +12.4% in emerging economies, with Latin America still leading the charge (+13.0%) followed by Central and Eastern Europe (slowing down at +7.7%). Asia Pacific will re-accelerate to +8.3% due to the recovery of Japan and the continued growth of China. Western Europe will slow down at +1.1%. Greece, Portugal, Spain, Ireland will decrease again (between -2% and -6%); Italy and France will be flat at best. UK and Germany will grow below +2%.
The biggest growth rates of 2012 will come from Argentina (+26.4%), Ukraine (+21.0%), Indonesia (+16.0%), China (+16.1%), Brazil (+12.0%), India (+13.5%) and Russia (+9.6%).
Internet will grow by 11.2% and outrank newspapers to become the second biggest media category globally, accounting for nearly 20% of global advertising dollars (19.5% at $87.4 billion). The category already stands at 23% in both North America and Western Europe (where it even takes the #1 spot in a few markets, such as the UK). Television will receive the bulk of the “quadrennial” bonanza and will benefit from the typical concentration of advertisers into leading media at the expense of secondary media during harsh times.
TV will grow by +6.7% globally to $187.1 billion. Newspaper and magazine revenues will shrink by an average -1.0% and -1.3% respectively, with much deeper drops in Western markets, where circulation losses of 2011 will be reflected in 2012 ad pricing. Radio will grow by +1.6% to $30.4 billion. OOH will also benefit from the quadrennial events and the roll-out of new digital (+6.3% to $28.3 billion) platforms. In the UK, the innovative upfront auction process conducted last summer to allocate the most premium London inventory during the Games did not quite meet the high expectations, but the industry is still expected to grow healthily next year.
