JAPAN

Magazine Advertising Growth over previous year (Million) 2001 +4 .3% ¥418,000 2002 -5 .5 395,000 2003 +0 .5 397,000

Big news. After five consecutive years of negative growth, Zenith Optimedia forecasts the end of the cycle. Although half of one percent can hardly be called growth, it appears the Japanese magazine industry has hit bottom in advertising spending and the next two years should be either flat or slightly up. The end of 2002 already shows some positive signs in magazine advertising spend. The industry has lost a substantial amount of advertising revenues (next year it should come back approximately to the 1996 level). However, Japan remains the third largest magazine market in the world (after the US and Germany) with a gigantic amount of wealth and enormous disposable income from consumers.

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The extraordinary growth in Hong Kong advertising spend in the late 1990's seems to have stopped with the current economic stagflation and growing unemployment. Advertisers are spending conservatively and are not prepared to be more aggressive until they see evidence of economic improvement, which does not appear likely. Zenith Optimedia predicts a difficult year for magazines in 2003 and no growth in advertising spending which is something unknown in Hong Kong since 1998.

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After a painful year in 2001 and a flat growth this year, Zenith Optimedia sees Australia's economic good health translate in solid magazine advertising spend for 2003. Whereas the economy grew by 3.8% in the twelve months ending July 2002, advertisers were too nervous to push for any increase in magazine spending. As a consequence, several important magazines had to close down and a few important international publishers - Hachette Filipacchi Média and Condé Nast - ended their direct presence in the market. The remaining titles will enjoy reduced competition and a return to a noticeable advertising growth. However, the improved market will have to wait until 2004 to return to the levels of the year 2000 of magazine advertising spend.

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Zenith Optimedia does not expect the 2002 record growth in magazine advertising spending to continue in 2003. This year was inflated by extraordinary spending like the World Cup football tournament, the Pusan Asian Games and the Presidential election. However, several important new magazine launches will occur in 2003 and offer advertisers attractive new vehicles in demographic segments usually dominated by newspapers or TV. The competition will become stronger in the teens and the women's fashion segments, which will continue to attract more international brands.

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Expansion should finally return after two consecutive years of negative growth. Taiwan's magazine industry experienced its first recession since the market was started in 1949. Says Zenith Optimedia: "WTO entry and interaction with mainland China will be a crucial driver over the next two years. Imported products will bring in new advertising money, but this will be cancelled out by local brands shifting marketing to the mainland". However, the largest success in the local magazine industry occurred during this past difficult period, with the launch of the weekly Next, which became the largest selling magazine with an (audited) circulation close to 200,000 copies.

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Following its WTO entry in November 2001, China has seen a substantial increase in demand for new products, which triggered a dramatic increase in advertising for categories such as toiletry (+47% in 2001) and automobile (+25%), while IT spending dropped by 20%. GDP growth is on track to reach 7% this year, with consumer confidence remaining strong and disposable income increasing. Although it is starting from a low base with a small market share in overall spending, magazine advertising spending should continue to experience double digit growth in 2003 and 2004.

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In a country where significant progress has been made in the political and economic structure, overall advertising spending has been growing at more than 20% a year since 1999. Yet, Indonesia started from a very low base and TV continues to attract almost 63% of the advertising spend; however, a young emerging magazine industry has started to develop and is beginning to provide adequate marketing solutions to advertisers, who still remain highly promotion-driven.

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A good opportunity for Thailand's magazine industry may come from TV, which is still very expensive for many advertisers of targeted goods and services, who are still looking for efficient advertising vehicles. Hence, Zenith Optimedia points out there is still a tendency for local advertisers to believe that: "promotion activities play a major role in driving sales for all products". This factor represents another opportunity to gain market share for the local magazine industry, which should experience noticeable growth in advertising spending next year.

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Although there are mixed signals in the economy between a weakening consumer confidence and retail spending holding up, New Zealand has performed better than expected this year. Zenith Optimedia noticed client budgeting is more positive for next year and "there appears to be a general return to longer-term brand planning, with less emphasis on short-term and tactical activity". With close to an increase of 4% in expected advertising spending, magazines should start to experience a noticeable improvement in 2003.

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Zenith Optimedia points out that the figures "need to be treated with some caution as research only tracks top magazines, and titles in this bracket can vary from year to year". However, magazines (and radio) posted a gigantic growth last year. Whereas 2002 is good, the industry should continue on its expanding trend next year. However, 2003 will be affected by the tobacco category (5% of the total advertising spend) which will start self-regulation.

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The power of the dominant newspaper The Strait Times, which has historically dominated the city-state advertising spend seems to be eroding, against other media such as radio and television. The magazine industry - which had almost no growth this year - could benefit from the expansion of the entertainment industry which became the largest advertising category last year. However, long term prospects for the magazine industry in Singapore remain strong, starting in 2004.

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Unfortunately, no reliable data is available for these countries, where specific magazine advertising spending is not isolated from the "Print" category. However, it seems that the young magazine industry in the Philippines is gaining momentum.

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