Buoyancy Returns To Asian Media

An increasingly strong macro environment for media across Asia is providing a firm foundation for renewed advertising growth and a rebound in earnings, as well as more cash to invest in new content and technologies that media owners need to stay ahead.

Economic growth in China remains stellar, though typically there remains much noise about the need for policy tightening on the mainland, while domestic consumption is holding up well in Southeast Asia and India. Taiwan has also been gaining ground, as exports strengthen and external demand improves.

The economies of India and China are expected to grow by 8-10% in real terms over the next one to two years; in Southeast Asia by 5-6%; and in Taiwan and Hong Kong by 5%.

Gross rate-card based data from Nielsen indicates that ad spend has been growing at a decent pace across Southeast Asia (especially Thailand, Philippines and Malaysia) and Greater China in Q1 2010.

China's ad resurgence
According to Nielsen, gross advertising revenues in Asia-Pacific increased by 6.6% in 2009, though media buyer Carat says that advertising in the region dipped 0.5% in 2009 before growing to an anticipated 6.8% in 2010. This represents a more positive upgrade from Carat's previous forecasts of 4.6% regional growth in 2010, as key markets begin to stabilize and China media reverts to rapid growth.

Carat is now pegging last year’s ad growth in China at 12.2%, up from previous estimates of 6.9%, while this year’s adspend is also looking notably stronger at 16.1% growth, revised up from 9.0%.

Despite a generally more sunny outlook overall however, Carat has become gloomier on the outlook for Japan, forecasting a 3.1% dip in ad spend this year, after previously anticipating a flat market. Last year’s ad performance in Japan also worsened in Carat’s eyes, sinking from an estimated 5.5% decline to a steep 12.8% fall.

Optimism for Southeast Asia
The latest estimates from Asia Media Journal publisher Media Partners Asia (MPA) suggest that net advertising volume will grow by 5.8% in 2010, after falling by 4.1% last year. Apart from China and India, which are expected to grow by 11-12% this year, and a welcome recovery in Korea (~9% increase) and Australia (5% gain), most of the stellar performers are emerging from Southeast Asia.

“With the notable exception of Thailand, the level of media growth and resilience in Southeast Asia is impressive,” says MPA executive director Vivek Couto. “TV is a notable beneficiary in markets such as the Philippines, Malaysia, Indonesia and Vietnam. Key drivers include exposure to key events, such as elections and World Cup football, but also growing economic dynamism, fueled by domestic demand.

“Even more significantly, in markets such as the Philippines and Indonesia, media owners are beginning to realize earnings momentum, as net advertising volume reaches a significant scale. The only threat remains competition, which leads to severe rate-card discounting.”

This is an edited extract from a feature published in the Q1 2010 edition of The Asia Media Journal.