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Singapore registers decline in growth in otherwise buoyant APAC ad market, according to Magna report

Singapore is the weakest market when it comes to growth in ad revenue in an otherwise flourishing Asia-Pacific, according to the Magna Advertising Forecast, put together by IPG Mediabrands.

Through 2019, ad revenue declined by 3.2% in Singapore bringing the total advertising economy to S$2.1 billion or US$1.6 billion. Other markets in the region that experienced decline included Malaysia by 1% while Vietnam remained flat. 

The slump in Singapore marked the fourth consecutive year of decline and the prognosis for 2020 is not much better. Magna estimates a further decline of 2.2%.

Outlining the reasons for shrinking ad revenues, the Magna report identified the decline of television with revenues dropping by 12%. The report said: “The TV landscape is dominated by MediaCorp, and the vendor had to cut its airtime prices significantly to meet a dwindling demand. 

“TV vendors have struggled to stabilise ad sales in the past few years because costs have become unattainable for many advertisers. MediaCorp was hoping to capture a higher market share by cutting its price for new smaller advertisers while big consumer brands were already taking advantage of discounts, triggering a general deflation in the market (CPM -8%).” 

Magna cited MediaCorp’s attempts to align costs with digital formats and packaging its physical and digital properties as an omnichanel offering as something that could potentially stabilise TV pricing or help it recover in 2020. 

Digital advertising in Singapore increased by 25% in 2019 and was expected to grow by 13% in 2020. It however accounted for only 25% of ad budgets. 

The estimations for the rest of the AsiaPacific region are more positive. The region is still dominated by China and Japan which corner 67% of the advertising market. 

China’s ad market increased by 8.8% in 2019 and is expected to rise by 7.9% in 2020, driven by digital ad spending.

Japan grew by 3.2% in 2019 and is expected to grow by 3.8% in 2020 buoyed by the Olympics. Digital was the driver of growth in 2019 at 14%, offsetting a decline in linear formats by 2%. Traditional media is expected to further decline by 3% in 2020. 

Among the high growth markets are India which grew at 12.9% through 2019 and is expected to grow at 12.6% in 2020. Magna recorded a decline in estimated growth for India which had previously been pegged at upwards of 15% due to an economic slump. Both digital at 33% and traditional advertising at 7.8% were still growing in the market, though. In 2020, it was expected that digital will overtake print as the second largest media with a share of 26.9% compared to 25.4% for print. 

Other countries in the Indian subcontinent also registered double digit growth with Pakistan at 15% and Sri Lanka at 14%. 

The report pegged global growth in ad market by 5.7% in 2020, a marginal increase from 5.2% in 2019. The Asia-Pacific region is reckoned to be a major contributor to growth, increasing by 6.3% in 2019. It is expected to grow by 5.9% in 2020. 

Commenting on the report, Magna executive vice president of global market intelligence and author of the report Vincent Létang said: “The global advertising market grew on par with Magna’s forecasts, at around +5%, but it was the result of the US market growing beyond expectation while the rest of the world grew less than expected. 

“Ironically, while the US and Chinese economies remain strong so far, despite the trade war, and marketing spend grew strongly in both markets this year, the trade war made collateral casualties in several countries depending on US or China trade, and marketing spending was hit. 

“Three growth engines should mitigate the global economic slowdown expected in 2020, to generate an eleventh year of growth for advertising spending and revenues.

“The return of cyclical events (with record political spending in the US), the marketing activity of the tech and entertainment sectors (promoting new tech products and VOD offerings) and the reallocation of trade marketing budgets from brick-and-mortar retail to ecommerce platforms’ product search.”

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