| Country by Country Projections for 2010 |
Source: GroupM Worldwide Media & Marketing Forecasts - Summer 2010
JAPAN
Growth over
previous yearMagazine Advertising
(in million Yen and
at current prices)
2009
2010
2011
-25.6%
-20.7%
-8.6%
303,400
240,597
220,000
Although Japan's economy is expected to rebound in 2011, the magazine industry still cannot expect to see the end of a long advertising spending erosion. In its World Economic Outlook (July 2010), the International Monetary Fund (IMF) expects Japan’s real Gross Domestic Product (GDP) to grow by 1.8% in 2008 compared with an expected 2.4% increase in 2010.
But the economic growth does not translate in more advertising pages for Japanese magazines. With the exception of 2005, Japan’s magazines have not had one year of advertising growth in the last ten years. Magazine advertising spending should suffer a decrease of 8.6% in 2011, following the painful drop of 20.7% expected for 2010. The Japanese magazine industry should therefore experience a reduction in its market share among all media categories to 5.2% in 2011 compared to 10.1% in 2005.
Yet, with expected advertising expenditure of about US$2.5 billion in 2010, Japan is still one of the largest markets in the world for magazine publishers, even though it dropped to the fourth position in 2010 behind the US, Germany and France.
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CHINA
Growth over
previous yearMagazine Advertising
(in million RMB and
at current prices)
2009
2010
2011
12.8%
9.0%
5.0%
6,174
6,729
7,066
After a booming 11.9% GDP growth in the first quarter, the Chinese economy expanded by 10.3% in the second quarter 2010. China is well on target to meet IMF’s GDP growth projections of 10.5% in 2010 and 9.6% in 2011. In the meantime, GroupM predicts an overall increase in advertising spending of 10.6% in 2011, following a 16.3% growth in 2010. ZenithOptimedia is even more bullish on China’s advertising and projects a 17.5% growth in 2011 compared with an expected 14.8% increase in 2010.
Unfortunately, the magazine industry should not experience the same magnitude in advertising spending and only grow by 5% in 2011, compared with an expected 9% increase in 2010. TV and internet (especially paid search) seem to take the lion share of the 2011 projected RMB 338 billion (US$46 billion) advertising industry, which will make China the second biggest advertising market in the world. With slightly more than US$1 billion in advertising spending, the Chinese magazine industry reaches the second position in Asia Pacific but far behind Japan. However, Media Convergence believes that a significant portion of the budgets from Hong Kong (see below) is directed to the Chinese market and its locally published magazines with their respective website.
The reason Chinese magazines are not getting their fair share of the increased advertising spending is due to their limited distribution to the three main cities: Beijing, Shanghai and Guangzhou. Yet, advertisers have marketed heavily their products and services for many years in these three urban centres where they have reached their maximum client potential. In order to continue to grow by more than 20% annually – as several international companies have enjoyed for several years – advertisers need to expand their distribution deeper and reach new consumers in other cities. There are 30 cities – referred as the “second-tier cities” – with a population in excess of five million people out of the 270 Chinese cities with more than one million inhabitants.
Unfortunately, magazine distribution in the second-tier cities is patchy, complex and inefficient. Since, there are no circulation audited standard in China, many publishers have been reluctant to expand their magazine distribution significantly beyond the three main cities. Therefore, several advertisers have started to shift part of their budget to television and on-line media (there are 243 million broadband users in China), where they reach a large audience. The strategy – yet expensive – has worked in most cases and it explains why magazines have received a lower share of the country’s increasing advertising expenditure.
However, the future of the magazine industry in China is bright. Probably brighter than any other country in the world. The multi-platform development of magazine contents – with dedicated websites and iPad – will allow Chinese publishers to expand the reach of their contents deeper and probably beyond the second-tier cities. Furthermore, the Chinese authorities are moving to switch the current export-driven economy towards a more consumer base (private consumption only represents 36.4% of China’s GDP, compared to more than 60% in most developed countries). Therefore, with more consumers to reach – which will create bigger advertising budgets – and improved access to readers, Chinese publishers should be in a good position to offer an efficient alternative with engaging audiences to advertisers. They just need to concentrate on producing quality magazines with better content.
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AUSTRALIA
Growth over
previous yearMagazine Advertising
(in million A$ and
at current prices)
2009
2010
2011
-9.0%
-2.9%
0.8%
820
796
803
The Australian media industry is vibrant with an expected overall increase in advertising spending of 7.2% expected for 2010 and 3.8% in 2011. Despite the limited on-line audience – from a wealthy but limited population of 22 million – internet and on-line search are growing by 20% on average each year. Television has performed well by attracting large audiences with new imaginative programming – like Master Chef – and overall media consumption is increasing. Furthermore, Australia has one of the best performing economies in the developed world (the IMF predicts a 3% GDP growth in 2010 followed by a 3.5% increase in 2011).
Although the Australian economy “technically” avoided a recession in 2009 – with only one quarter of negative growth – the Australian magazine industry experienced its worst year on record. It is clear that 2010 will not be another “Annus Horribilis” as some limited growth have been experienced by the largest magazine companies. Compared to the above GroupM’s projections, ZenithOptimedia predicts a slightly better performance for the Australian magazine industry with a 1.2% increase in 2010 and 4.8% in 2011.
Since 2010 has suddenly become an election year – which was not known at the time GroupM and ZenithOptimedia prepared their market analysis – Media Convergence believes Australia’s advertising growth (including the local magazine industry) will be significantly better than the above projections.
An improved market condition is what CVC Asia Pacific hopes for to float PBL Media, Australia’s largest media group. The private equity company acquired PBL Media in 2006 and 2007 and has injected A$5.5 billion in the group, which owns ACP Magazines, the Nine Network, Ticketek, NineMSN and Carsales.com.au. Things did not go as planned and PBL had to be recapitalised with about A$3.2 billion in senior debt and close to A$800 million in mezzanine debt. There are also speculations another private-equity firm, KKR, is considering its options for its half ownership of the second largest media group, Seven Media Group (Pacific Magazines, Seven Network and Yahoo! 7).
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HONG KONG SAR
Growth over
previous yearMagazine Advertising
(in million HK$ and
at current prices)
2009
2010
2011
-10.0%
5.0%
2.0%
4,670
4,904
5,002
The small increase in magazine advertising spending projected for 2011 does not reflect the economic growth of Hong Kong SAR which is expected by the IMF to increase by 4.4%, following a strong performance of 6% in 2010. The task of monitoring the city’s magazines industry becomes more challenging every year. Several large advertising agencies based in Hong Kong still decide on the advertising budget for China, following their clients’ regional headquarters (also based in Hong Kong) and in connection with their affiliates in Shanghai, Guangzhou or Beijing. The decision centres also fluctuate constantly between these cities and magazine advertising sales executives need to follow each client closely on a group – or even brand-by-brand – basis.
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SOUTH KOREA
Growth over
previous yearMagazine Advertising
(in million Won and
at current prices)
2009
2010
2011
-8.7%
0.3%
-4.5%
438,800
440,000
420,000The Korean economy has recovered well after the recession experienced during the global financial crisis and the IMF predicts GDP growth to reach 5.7% in 2010 and 5% in 2011. In the meantime, GroupM predicts the overall advertising expenditure of 6.2% and 3.1% during the same period. Television gets the lion share of the media spending in South Korea with close to a 40% market share, while internet is taking nearly as much revenue as newspapers. Unfortunately, the magazine industry is struggling to come out of the difficult situation in 2009, despite a modest increase in 2010.
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INDIA
Growth over
previous yearMagazine Advertising
(in million Rupees and
at current prices)
2009
2010
2011
-4.9%
0%
6.9%
8,080
8,080
8,640
India’s magazine industry surprised everyone over the last two years with a flat or even negative growth which followed several years of double digit expansion. Despite an overall advertising market growth of 8.4% expected in 2010 and 13.8% in 2011, the local magazines cannot seem to increase their small market share among all media: the 3.3% figure expected in 2010 has been steadily eroding since 2003, when it stood at 5.6%. Despite its robust economic growth (the IMF predicts a 9.4% GDP growth in 2010 and 8.4% in 2011), India’s diversity with its mosaic of cultures continue to represent a challenge for the local magazine industry.
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NEW ZEALAND
Growth over
previous yearMagazine Advertising
(in million NZ$ and
at current prices)
2009
2010
2011
-9.2%
2.7%
1.3%
226
232
235
The magazine industry in New Zealand normally follows the performance of the Australian market, provided the economy goes in the same direction. The IMF projects GDP growth of 3% and 3.2% in 2010 and 2011, which is almost identical to Australia. However, the overall advertising spending is expected to increase by 6.3% in 2011, following an expected growth of 4.8% in 2010, which is better than its close neighbour. New Zealand is still one of the countries in the Asia Pacific region whose magazine industry still maintains more than 10% of the market share among all media expenditure.
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INDONESIA
Growth over
previous yearMagazine Advertising
(in million Rupiah and
at current prices)
2009
2010
2011
15.0%
10.0%
10.0%
1,203,205
1,323,526
1,455,879
Again, Indonesia continues to have the best performance in magazine advertising sustained growth in the Asia Pacific region, with another double digit increase. Yet, it started from a low base, but the market has doubled in size over the last five years. Indonesia is now a larger market than Thailand and the size of its magazine advertising spending is coming close to India. The IMF expects a steady GDP growth of 6% in 2010 and 6.2% in 2011. International publishers are looking closely at the market and respond to the local publishers request for licensing agreements. Equity deals remain prohibited by the Indonesian government. Hence, the list of magazines which were launched in 2010 or will be launched in 2011 is impressive: Marie Claire, Elle Deco, In Style, Martha Stewart Living, Hello! and Forbes.
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TAIWAN PROVINCE OF CHINA
Growth over
previous yearMagazine Advertising
(in million NT$ and
at current prices)
2009
2010
2011
-19.6%
-10.0%
5.6%
4,863
4,377
4,620
The light is coming out of the tunnel for the Taiwanese magazine industry. After suffering from a steady erosion of advertising revenues almost constant since 2005, growth is expected to resume in 2011. The performance in 2010 is disappointing despite the return to a steady economic growth of 7.7% expected by the IMF, which foresees the expansion to remain strong in 2011 (+4.3%). However, the island’s magazine industry continues to enjoy one the strongest market shares of advertising spending in the Asia Pacific region (10.4% expected for 2010, down from a peak of 13.3% in 2005).
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THAILAND
Growth over
previous yearMagazine Advertising
(in million Baht and
at current prices)
2009
2010
2011
-9.5%
-2.0%
11.6%
4,317
4,230
4,720
The highly reported social unrest in Bangkok during the first half of 2010 affected the performance of most media (except newspapers) and magazines were no exception. A strong come back is expected for 2011, along with a good economic growth of 4.5%. The Thai magazine industry still holds well its market share among all media at about 5%.
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SINGAPORE
Growth over
previous yearMagazine Advertising
(in million Sing$ and
at current prices)
2009
2010
2011
-7.0%
-0.7%
-0.3%
79
78
78
“This is a conservative forecast” admits GroupM in its presentation of this country, where overall advertising media spend is expected to increase by 4% in 2011 compared with an expected growth of 3.3% in 2010 (most of the increase should go to the interactive media). Indeed, the IMF foresees a robust economy (+9.9% in 2010 and +4.9% in 2011), which should bring more advertising spending, including for the magazine industry.
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VIETNAM
Growth over
previous yearMagazine Advertising
(in million US$ and
at current prices )
2009
2010
2011
23.7%
8.2%
7.5%
49
53
57
Solid economic growth is seen by the IMF in 2010 and 2011 (+6.5% and +6.8%) and the tiny magazine industry should expect a nice increase from a small base. However, magazine advertising spending is now slightly larger than Malaysia, which was not the case three years ago.
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MALAYSIA
Growth over
previous yearMagazine Advertising
(in million Ringgit and
at current prices )
2009
2010
2011
-11.1%
-0.5%
2.0%
139
138
141
The smallest market in the Asia Pacific region, Malaysia, – which appears in GroupM’s forecasts – should experience a small increase in 2011, along with a steady economic growth expected to reach 5.3%.
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