| 2005 Magazine Advertising Forecast in Asia Pacific by Country |
JAPAN |
Growth over |
Magazine Advertising |
|
-0.4% |
403,500 |
After more than a decade of deflation and flat advertising spending, it appears the Japanese economy is finally coming back to a moderate growth pattern fuelled by increased consumer spending. “We think a corner has been turned” says ZenithOptimedia, which predicts the magazine advertising market will reach ¥417 million ($3.6 billion) in 2005. This is the first time in four years that Japan has emerged from negative growth (at current prices) and 2005 should lift magazine advertising spending slightly higher than the 1996 level. A decade of growth has been lost. These figures are expected to cost Japan its third place in the world magazine advertising spending rankings next year. By 2005, France should jump to third behind the US and Germany. Japan will remain by far the largest magazine market in Asia Pacific, ahead of Australia and China, but that status won’t last indefinitely (see related story on the growth of China). Even though magazines account for only 9.6% of the total advertising spending, Japan still delivers the highest earnings in the region for magazine investors.
AUSTRALIA |
Growth over |
Magazine Advertising |
|
4.2% |
822 |
Australia has been named as the world’s best performing economy for the third successive year in the World Competitiveness Yearbook published by International Management Development, the independent not-for-profit foundation based in Lausanne. Since 1992, Australia’s GDP has been growing every year by more than 3%. The second largest country in magazine advertising spending in Asia Pacific (after Japan) remains one of the best markets in the world for magazine publishers. The main reason is the overall quality of the editorial products, creating a demand from consumers ready to buy magazines with relatively high cover prices (during the first half of 2004, sales of ABC titles grew 3% in volume and 6% in retail value). Following the solid growth of the economy in 2004 (expected to reach 3.6%), overall advertising spending has been increasing steadily in Australia - with TV expanding by as much as 12.9% in the first half. Although the magazine industry will not perform so well, it appears ZenithOptimedia’s projections are on the conservative side and magazine advertising spending should climb by “the high single digits” in 2004 with an expected growth in excess of 5% in 2005. The purchase of Matt Handbury’s Murdoch Magazines by Seven Network’s Pacific Publications will bring some balance to the power of the Australian Consolidated Press (see related story in Magazine Developments section), which is coming close to a 50% market share in both circulation and advertising revenues. ACP recently announced its 2004 fiscal year EBITDA rose 20.4% to A$210 million (US$147 million) on revenues of A$740 million (US$520 million).
CHINA |
Growth over |
Magazine Advertising |
|
60.3% |
2,438 |
Three factors have contributed to the gigantic increase in magazine advertising spending in China - the growth of the economy (+9.7% on average for the last 13 years), the recent appearance of a few well-edited and well-managed magazines (while the total number of magazines is slightly down) and the magazine industry’s increase in market share. Although the magazine share of total spending remains one of the lowest in Asia, it has actually doubled in the last 10 years (from 2 to 3.9%). In 2003, China overtook Korea and Taiwan to become the second largest magazine market in Asia after Japan (and the third in Asia Pacific). Media Convergence believes the trend will continue in the next few years and, as long as the economy keeps expanding steadily, we expect the Chinese magazine advertising market to grow between 20% and 30% in 2004 and 2005. There are two reasons for our prediction - the government’s further limits on TV advertising in 2003 (which reduced TV market share by four points to 40%) and the increase in quality magazines which are becoming more relevant to Chinese consumers. Several American and European magazine groups are planning to launch a Chinese edition of their established publications with a local partner and a few local Chinese magazine publishing groups are being organized to produce better targeted, quality-driven products.
KOREA |
Growth over |
Magazine Advertising |
|
2.0% |
335,609 |
The overheating of the economy in 2002, driven by exuberant consumer spending, turned out to be costly in 2003 when magazine advertising spending growth fell dramatically (it was actually negative by 1.5% in constant prices). The Korean magazine market, which was accustomed to a decade of several important magazine launches every year, has become more frugal and has even seen the recent disappearance of a few international titles. Some initial optimism appeared in the spring of 2004 (the economy grew by 5.5% in the second quarter due to strong exports). However, private spending experienced its third back-to-back contraction in the second quarter and the central bank had to cut its key interest rate to 3.5% in August. Meantime, TV – especially attractively priced cable TV – is gaining market share, along with Internet advertising – which reflects the highest broadband penetration in the world. Although Korea is no longer the third largest magazine advertising market in the region (China took over that position in 2003), the world’s 12th largest economy remains a superb magazine market, which is efficient and delivers high profit margins. ZenithOptimedia predicts 2005 will be the end of the tunnel with the return to a better economy and an expanding magazine market.
TAIWAN |
Growth over |
Magazine Advertising |
|
15.0% |
9,441 |
The economic growth enjoyed by the island since 2002 has created solid expansion in magazine advertising spending and the trend is expected to continue in 2004 and 2005. The economy expanded by 7.6% in the second quarter of 2004 – the fastest since the first quarter of 2000 – partly due to a 4% increase in private consumption.
The magazine advertising share also has significantly increased to about 13% of total spending, indicating that the magazine sector in Taiwan has now become a mature market. Actually, over the last 10 years the magazine advertising market share has doubled (from 6.4% in 1994 to 13.2% in 2003). Two factors have contributed to this rare situation - a qualitative factor with the editorial quality of local magazines improving steadily every year and a market factor of "a serious congestion problem in the TV market" which has driven advertisers to move their schedules from TV to magazines. The Internet also has been growing steadily.
HONG KONG |
Growth over |
Magazine Advertising |
|
0.9% |
1,721 |
For the first time in six years, Hong Kong broke a deflationary streak when consumer prices increased by 0.9% in July 2004. Consumer spending is driving GDP growth, which reached 6.8% during the first quarter - the best performance in three years. Advertising spending growth also is resuming in Hong Kong after several painful years of adjustments and heavy discounts. Both 2004 and 2005 should be good for the magazine industry in Hong Kong, after three difficult years. However, the magazine growth does not follow exactly the total advertising expansion in Hong Kong (+7.5% and +5.6% expected in 2004 and 2005) with television and outdoor dramatically increasing their share of total advertising spending.
INDIA |
Growth over |
Magazine Advertising |
|
7.7% |
7,713 |
This is the first year that ZenithOptimedia has differentiated magazine advertising from the print media category in India. The fact it was not done before (although the analysis now goes back to 2000) shows the complexity of collecting micro-economic data from the world’s second most populous country. Although the young Indian magazines industry is in the process of organizing itself, it is still vulnerable to changes in methodology from one survey to the next. Hence, ZenithOptimedia reports "a recent IRS (Indian Research Study) survey found that magazine readership is declining, so advertisers are moving their budgets elsewhere. In 2004, we expect newspaper ad expenditure to grow 10% while magazine ad expenditure shrinks 5%."
NEW ZEALAND |
Growth over |
Magazine Advertising |
|
12.1% |
194 |
Following a series of impressive economic performances (3.7% average GDP growth for the last 10 years with unemployment down to 4%), New Zealand saw its total advertising spending grow by 12.8% in 2003 due to the increased spending of three major categories - Banking and Finance, Telecommunications and Toiletries & Cosmetics. While TV increased its market share against the newspaper industry - the largest local media - magazines enjoyed significant growth and also are expected to perform quite well through the rest of 2004. As with its home base across the Tasman Sea, Australian Consolidated Press continues to dominate the eighth largest market of the region, following India.
THAILAND |
Growth over |
Magazine Advertising |
|
25.3% |
4,560 |
Double-digit growth in Asia is not rare, but sustained expansion in excess of 20% was, until recently, a monopoly of China. Interestingly, in Thailand the magazine advertising industry is growing faster than any other media and the magazine market share is reaching around 7% of all advertising spending. By 2005, Thailand should become a larger market than Taiwan and will be ahead of India in magazine advertising spending, to become the fourth largest market in Asia and the fifth largest in Asia Pacific. Thailand has been “hot” for a few years, but now it has become a serious magazine market which can no longer be ignored in any strategic expansion plans in the region.
INDONESIA |
Growth over |
Magazine Advertising |
|
28.0% |
667 |
On all three fronts of the economy, magazine advertising spending and magazine share or market, Indonesia has experienced a remarkable growth. For a country which was on the verge of complete bankruptcy in 1997-1998, progress has been spectacular in politics, economic reforms and halving inflation. The fourth largest population in the world is also now equipped with a few quality publishers who have jump-started the local magazine industry with high editorial standards. It will not be long before Indonesia reaches the list of strategic priority markets for most international publishers.
SINGAPORE |
Growth over |
Magazine Advertising |
|
38.5% |
90 |
A dominant local newspaper which, combined with TV attracts 80% of all media spending, makes it hard for the magazine industry to compete. Add to that the largest magazine publisher’s purchase of a strong local competitor (Singapore Press Holding’s magazine subsidiary bought Blu Inc, see related story in Asia Pacific M&A) and it’s no surprise that ZenithOptimedia predicts Singapore’s magazine advertising will continue to shrink to just 4.5% of total advertising expenditure.
MALAYSIA |
Growth over |
Magazine Advertising |
|
0.6% |
159 |
The economy of Malaysia – the smallest market reported here – has experienced growth of about 7% in the first half of 2004. Total advertising spending is expected to jump by 15.5%, but magazine advertising remains flat. While newspapers still are the dominant local medium (with 62% of total advertising expenditure), TV is reported to be increasing its share to about 28%. Unfortunately, the magazine industry has not yet found the way to become more competitive and to stop a market share loss which has varied from 5.7% in 2001 to an expected 3.5% in 2005. The smallest magazine advertising country in the region still represents a market with the advertising volume of only one medium-size US magazine like Details or Elle Décor (on a PIB annual 2003 revenue basis).
PHILIPPINES AND VIETNAM
Unfortunately, no specific magazine advertising spending data is available for these two countries, which still use the “Print” category system.