Global advertising spend is expected to grow to $375 billion by 2007. This represents an annual compounded growth rate of 4 per cent, contrasting with the one per cent growth the market showed in 2002.
"The growth in 2003 has been modest as lingering economic weakness has restrained spending. (But) overall ad spends in the future are likely to be boosted by events like Olympics, elections -- not just in the United States but in other important economies also," says Marcel Fenez, Asia-Pacific leader, Entertainment & Media practice, PricewaterhouseCoopers.
Fenez was speaking at the Federation of Indian Chambers of Commerce and Industry's Frames 2004 conference in Mumbai on Tuesday.
In a presentation on the emerging trends in the global entertainment industry, Fenez spoke about the three ad spends in the global and the Asia Pacific region in existing and emerging media like television and broadband, respectively.
According to Fenez, in terms of ad spend the Asia-Pacific region has a strong growth forecast for 2004. Overall, the market is expected to grow at a compounded annual growth rate of 6 per cent. In 2002, entertainment and media spend in the region was $209 billion.
It would be higher, but for Japan, says Fenez.
Continuing weakness in Japan, the region's largest market, offsets the high growth in ad spend in India and China. In India, ad spend grew at 9.5 per cent in 2003 and is expected to post similar numbers in 2004.
"Ad spend usually follows GDP growth. It's not like the Japanese ad spend is contracting. But it is growing at 1 or 2 per cent which compared to 8 or 10 per cent in India and China is very small," says Fenez.
According to him, radio and television are the mediums of the future and they will gain significant market share especially at the expense of the print medium. Newspapers and magazines will be the slowest growing mediums, says Fenez.
But broadband is the one to watch out for, he counsels. Globally, broadband is expected to grow from 42 million homes in 2002 to 400 million in 2008.
This means that online advertising is going to be back with a bang, or so feels Fenez.
"In Asia-Pacific, the Internet is the fastest growing segment at 15 per cent growth, followed by video games at 9 per cent. The Net emerging as a very interesting medium and advertising on the Internet is slowly coming of age," says Fenez.
India has 22 million Internet users and by 2008, it is expected to go to 70 million. Consequently, Internet related ad spend is expected to grow at 27 per cent to $4.6 billion but it will still be a small element of the total ad spend in the country.
