| Country by Country Projections for 2010 |
Source: GroupM Worldwide Media & Marketing Forecasts - Summer 2009
JAPAN
Growth over
previous yearMagazine Advertising
(in million Yen and
at current prices)
2008
2009
2010
-11.1%
-17.4%
-14.7%
407,800
336,917
287,255
The world's second largest economy appears to be coming out of its deepest post-war recession. After a 14.2% contraction in the economy during the first three months of 2009, analysts forecast a 2.3% GDP growth for the second quarter and an overall -6% for this year. Despite a 5.2% five-year high unemployment rate, household spending increased by 0.3% in May - the first rise in 15 months. Investor optimism seems to be returning, as demonstrated by the 37% gain in the Nikkei 225 Stock Average by early July following a 26-year low on March 10.
Magazine advertising spending experienced the most severe contraction of 17.4% in 2008 and it is expected to decline by another 14.7% in 2009 to a level of ₯287 billion (2.1 billion or US$3 billion). The Japanese magazine advertising market is now 40% below its 2005 peak and has shrunk to fourth place in the world market behind the US, France and Germany. These difficult conditions caused a drop in advertising pages of about 18% in fashion magazines during the first six months of this year, underlined by the closure of the local editions of Esquire and marie-claire.
Although Japan's growth prospects are limited, the market cannot be ignored. The Organisation for Economic Co-operation & Development (OECD) reports that Japan has the oldest population of its member countries, with just 2.6 people of working age for every person aged over 65. That compares with an average of four working age people per person over 65 in the other OECD countries. However, Japan's magazine industry still has a 7% market share of the nation's advertising spending of ₯4 trillion (30 billion or US$42 billion) and plenty of room for magazine pages.
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CHINA
Growth over
previous yearMagazine Advertising
(in million RMB and
at current prices)
2008
2009
2010
23.4%
0%
4.0%
4,048
4,048
4,210
China's economy is already in recovery mode. Fuelled by massive government spending and large bank lending, China's economy grew higher than expected by 7.9% year-on-year in the second quarter, compared with a 6.1% in the first quarter. This represents an estimated 16.5% annualised growth based on a quarter-on-quarter basis. Therefore, China's GDP is likely to grow 8.3% this year and 10% in 2010.
Although the export sector is still feeling the impact of the world economic slowdown, the domestic economy is reacting positively to the government's huge RMB 4 trillion (420 billion or US$586 billion) fiscal stimulus package. Hence, property sales jumped by 45.3% in the first five months of this year, while car sales rose 47% in May, making China the world's largest automobile market ahead, even, of the US.
The most important figures for advertisers and magazine publishers come from the retail sector, where sales rose 15% in June (+15.2% in May), exceeding economists' expectations. Yet, we are far from the 23% retail spending growth experienced in the final quarter of last year. However, at that level an increase in advertising and promotion becomes a must for advertisers who want to maintain their market share.
Furthermore, the enthusiasm of investors is evident with the stock market's sharp increase: the Shanghai's benchmark index has gained 75% since the beginning of the year. Meantime, China's foreign currency reserves are the largest in the world with the recent record surge to US$2.13 trillion at the end of June.
Magazine advertising spending has recorded sustained double digit growth every year since 2002, but for the first time is expected to be flat this year and climb by only 4% in 2010. China now becomes the second largest market in the Asia Pacific region after Japan a position which was held by Australia until this year.
The performance of magazines in 2009 was affected by the internet which attracted an increase in advertising of 20% and is expected to grow by 50% in 2010 and by the decision of the L'Orιal group to shift a large part of its budget to TV. The move was followed by several cosmetics and fashion advertisers, who tried to put more pressure on magazine rates. Of course, it takes a large magazine budget to pay for a small TV schedule. Hence, fashion magazine advertising pages dropped by about 12% for the first six months of 2009.
China is becoming a more competitive market. Advertisers now require magazine publishers to have good distribution in the second-tier cities, beyond the main urban centres of Beijing, Shanghai and Guangzhou. This is a challenge as the distribution system is far from adequate and there are now 273 Chinese cities with a population in excess of one million.
However, besides the complexity of the legal system for foreign publishers, the key for success rests with the quality of the editorial product, which too many magazines have not improved systematically to match the expectations of the increasingly demanding Chinese customers. With these hurdles in mind, China remains a highly attractive and rewarding market.
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HONG KONG SAR
Growth over
previous yearMagazine Advertising
(in million HK$ and
at current prices)
2008
2009
2010
22%
-10%
5%
5,189
4,670
4,904
The IMF forecasts a contraction of the economy of 4.5% in 2009 before returning to a marginal 0.5% growth next year.
As several advertising agencies and advertisers keep their Asian (or Greater China) headquarters in Hong Kong, it remains difficult to evaluate what portion of advertising spending strictly belongs to Hong Kong. However, it appears 2009 would have been the worst on record with a contraction of 17% in 2009. Surprisingly, the magazine industry's share of market was able to marginally increase to a respectable 14.3% and it is looking at a solid 15% growth in 2010.
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AUSTRALIA
Growth over
previous yearMagazine Advertising
(in million A$ and
at current prices)
2008
2009
2010
0.3%
-9.0%
2.1%
901
820
837
After a small contraction of its economy in the last quarter of 2008 (-0.8%), Australia has avoided a technical recession due to a marginally positive first quarter in 2009 (+0.4%) and is now showing surprising strength. Whereas a small shrinking of the economy was originally expected for this year, it is now predicted that Australia should perform better than most of the G7 or G20 economies and experience a marginal growth of 0.3% in 2009. Projections for 2010 show Australia's GDP growing around 2%.
In 2009, Australian magazine publishers suffered their worst year on record with an expected contraction of their advertising revenues of 9% (mostly driven by consumer magazines dropping 11%). Although the worst appears to be over, this year's magazine spending is expected to drop to A$820 million, roughly the equivalent of spending in 2005. The recent appearance of new weekly magazines in the market puts stress on the monthly magazines and contributes to an increase in rate negotiations. Like everywhere, Australian advertisers shifted larger budgets to internet display and paid search, two categories which now collect more advertising dollars than the magazine industry.
However, with a 7.2% share of the advertising market, the magazine industry is better placed to resist the on-line assault than the TV and newspaper sectors. A 2.1% growth in magazine advertising spending is expected for 2010.
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SOUTH KOREA
Growth over
previous yearMagazine Advertising
(in million Won and
at current prices)
2008
2009
2010
3.0%
-2.0%
1.0%
498,623
488,651
493,537During the steep economic down-turn of 1997 referred to as the Asian Crisis or locally as the IMF crisis Korea was one of the first countries to fall, but also was among the first to return to growth.
Following a 5.1% contraction of the economy in the final quarter of last year, a surprising marginal growth appeared in the first quarter, to be followed by a likely 1.7% increase in the second quarter. The OECD recently published a report predicting Korea will be one of the first countries to return to economic growth. Unemployment rose to 4%, the highest point in eight years but domestic consumption increased by 7.5%. Although it is forecast the economy will contract by 2% in 2009, the Korean government expects economic growth of 4% in 2010 (1.5% for the IMF).
After a steady 3% growth in magazine advertising spending in 2008, the market is predicted to contract by only 2% in 2009 despite a difficult first half of the year. During that time, women's fashion magazines experienced a decrease in advertising pages of about 19%, with some titles like marie-claire or Harper's BAZAAR falling by about 30% compared with the same period in 2008. The second half of the year appears healthier, with a return to full year growth in 2010 and the size of the market similar to the highest ever of 2008.
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INDIA
Growth over
previous yearMagazine Advertising
(in million Rupees and
at current prices)
2008
2009
2010
11.8%
-5.0%
0.1%
8,500
8,075
8,080
Following a GDP growth of 6.7% in the fiscal year ending March 31, the Indian economy is expected to grow by 6.5% in 2010. Although these figures are below the average 8.8% rate of expansion over the last five years, investors are betting on a stronger than predicted growth. The Bombay Stock Exchange's benchmark 30-share Sensex has jumped by about 50% since January.
For the first time since 2002, magazine advertising spending in India is expected to finish this year with a 5% contraction. This is the first time in four years that India is not experiencing a double digit growth. The internet has now overtaken magazines (with the same amount of spending collected by magazines in 2008). In 2010, internet advertising is expected to increase its market share at the expense of newspapers and magazines, which should be down to 39.8% and 3.2% of the 252 billion Rupees advertising market (3.7 billion or US$5.1 billion).
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TAIWAN PROVINCE OF CHINA
Growth over
previous yearMagazine Advertising
(in million NT$ and
at current prices)
2008
2009
2010
-6.3%
-20.0%
-1.0%
6,050
4,840
4,792
After Singapore, the island this year has suffered the most brutal recession in Asia, with a contraction of the economy expected by the IMF to reach 7.5% in 2009, followed by a zero growth next year.
Magazine advertising spending is expected to finish this year with a 20% drop, in the wake of a 6.3% contraction in 2008. The conditions for next year remain bleak for the magazine industry, which has now been overtaken by on-line advertising and experienced a 2% drop in market share to 11.6% of the total advertising expenditure.
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INDONESIA
Growth over
previous yearMagazine Advertising
(in billion Rupiah and
at current prices)
2008
2009
2010
27%
20%
20%
1,046
1,256
1,507
The recent re-election of President Susilo Bambang Yudhoyono sent the world an image of a more predictable and stable country, previously known for its corruption and upheaval. Actually, Indonesia - with its population of 230 million and 17,500 islands stretching over the same distance which separates New York and Los Angeles now appears as the new China. The worldwide recession did not affect the Indonesian economy, which grew 4.4% in the first quarter this year and could expand at the same rate for the rest of this year. Since the beginning of 2009, the Rupiah has increased in value by 9% against the US dollar and the Jakarta Composite index is up by 54%. GDP may not grow by 7% in 2010, as pledged by the President, but Indonesia should be the fastest growing economy in Asia after China and India.
Magazine advertising spending is expected to increase by 20% this year and another 20% in 2010, which is in line with the growth of total advertising expenditure in the country. Indonesia now represents a market larger than Thailand and it will most likely reach the size of Taiwan Province of China's magazine advertising spending by 2010 or 2011. In a country where newspapers are still expanding their market share of advertising and the internet is not growing, the magazine industry should expect to expand its current modest 4% market share.
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THAILAND
Growth over
previous yearMagazine Advertising
(in million Baht and
at current prices)
2008
2009
2010
1.8%
-15.0%
3.0%
4,771
4,055
4,177
The political unrest of recent times did not help either the Thai economy which is expected to contract by 3% this year or the magazine industry, which suffered a 15% reduction in advertising spending from the previous year. Marginal economic growth of 1% is expected to return in 2010 with a 3% increase in magazine advertising spending, bringing the industry back to the size of the market in 2003. New launches this year and possibly next year could prevent the erosion of the share of market which is hanging at 6% of the country's total adverting spending of Baht 67 million (1.4 million or US$1.9 million).
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NEW ZEALAND
Growth over
previous yearMagazine Advertising
(in million NZ$ and
at current prices)
2008
2009
2010
-3.1%
-8.4%
-7.0%
249
228
212
Like its Australian neighbour, New Zealand could technically avoid a recession in 2009 or experience a mild recession. The IMF currently expects GDP to contract by 2% this year before growing marginally by 0.5% in 2010.
However, the magazine industry is expected to continue to struggle. With an expected drop of 8.4% in advertising revenue this year and a further decrease of 7% next year, the magazine industry risks losing a full point in market share next year and finish at 10.5% of the NZ$2 billion advertising (900 million or US$1.25 billion) market.
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SINGAPORE
Growth over
previous yearMagazine Advertising
(in million Sing$ and
at current prices)
2008
2009
2010
-3.4%
-11.2%
5.6%
85
75
80
After experiencing its deepest recession in 44 years, Singapore's economy appears to be on a V-shape recovery trend. The economy grew 20.4% in the second quarter compared to the previous quarter which was down by 12.7% from the previous three month period. Yet for 2009, Singapore's GDP is still expected to contract by 4 to 6%. A return to a small positive growth appears likely for 2010.
Magazine advertising spending suffered its most severe reduction ever, taking the industry back to the level of 2005. The dominant local media company, Singapore Press Holdings publisher of 17 newspapers including the local largest daily and about 100 magazines in the region just announced its results for its third quarter ending May 31, 2009. Newspapers and Magazines advertising revenue fell 16.4% to Sing$ 494 million (242 million or US$338 million). However, the magazines industry held to its 5.5% market share of the total advertising spending and it is expected to return to a positive growth of 5.6% in 2010.
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VIETNAM
Growth over
previous yearMagazine Advertising
(in million US$ and
at current prices )
2008
2009
2010
6.1%
13.6%
5.3%
40
45
47
The government recently announced that the Vietnamese economy expanded by 4.5% in the second quarter, following 3.9% growth in the first quarter. Vietnam's GDP growth reached 6.2% in 2008 after 8.5% in 2007. The country is on the verge of creating a high inflation risk (inflation is currently running at 5.8%, down from 28% in 2008) because of a massive injection of loans into the economy by state banks. The stock market benchmark index is up by 86% since March.
For the first time, Vietnam enters our list of the Asia Pacific countries with a potential credible magazine industry. Malaysia has been deleted, as its small and culturally diverse population (26 million) along with a fragile advertising spending (less than US$37 million) makes the country less promising than the 85 million people in the Vietnamese market. Vietnam starts from a small base US$ 45 million in magazine advertising spending expected this year but it is growing quickly at a rate of 13.6% this year and 5.3% in 2010. Magazine market share of the US$646 million total advertising market is expected to grow to 7.3% next year.
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