Singapore – IPG Mediabrands’ intel arm MAGNA has released its APAC ad market forecast for the period of June 2023. One of the main findings indicates that digital growth is primarily being driven by mobile advertising campaigns in the region comprising nearly 84% of total digital budgets.
Overall in APAC, digital advertising is powering total market growth. According to the report, digital advertising revenues are seen to increase by +10% and will increase by another +8% in 2024 to represent 76% of total advertiser budgets at the said period.
In terms of format, this year’s growth comes from social (+12%) and video (+11%), with search also increasing by +9%, but is said to already represent a huge 47% of total digital budgets.
In 2024, mobile advertising spending will increase further (+10% to reach 86% of total digital budgets), with social and video leading growth, both to increase by +9%. Search is also forecasted to grow by +7% in 2024.
“Smartphones are not just the dominant way that most consumers access the internet; in many APAC [markets,] they are the only way most consumers access the internet. Because GDP per capita has only increased lately, many consumers skipped the desktop hardware generation and conduct their digital lives solely on their smartphones,” said the MAGNA report.
Furthermore, in China, smartphones are more integrated into consumer lives than they are in almost every other market. Consumers regularly conduct not just their shopping and communications, but also their banking, insurance, and many work functions on their smartphones. By 2027, mobile advertising spending in APAC will represent 88% of total digital budgets, said MAGNA.
The forecast indicates search/commerce to remain the largest ad format, approaching the $300bn milestone (+9.1% to $296b).
Within Search/Commerce, Commerce/Retail players will grow ad sales by 12% this year (to $121b ) i.e., faster than traditional Search Engine companies like Google or Baidu. Within Commerce/Retail players, e-commerce specialists like Amazon or Alibaba are by far the most developed (83% of the segment) but traditional retail chains like Walmart or Carrefour are leveraging first-party consumer data to attract CPG brands into spending on their retail media networks or third-party media partners.
Meanwhile, traditional retailers are seen to grow Search-like ad revenues by +24% this year to $21b.
Furthermore, the report finds social media formats to re-accelerate by +9.4% this year to $172b.
The industry seems to have turned a corner in 1Q23 when Meta reported a return to YOY growth on an FX-adjusted basis after two consecutive quarters of flat or negative growth. Meta and other established social media vendors seem to have finally recovered from the loss of workable consumer data in the Apple ecosystem since late 2021, and they are making inroads in the monetization of the short vertical videos that have completely changed the user experience, challenging ad optimization, in less than two years.
Finally, pure-play short-form digital video (instream platforms like YouTube or Twitch, plus outstream networks) will grow ad sales by +8.6% to $71b this year.
Gurpreet Singh, managing director of MAGNA APAC, commented, “After experiencing a slowdown in 2020 due to covid, bouncing back with double digit growth in 2021, ad spends growth rates in most Asia [Pacific] markets are now getting back to the levels/trends we saw pre-covid. After 2020, the gap between digital & linear media spends has widened at a much higher pace than predicted.”
“Current growth across most APAC markets continues to be largely driven by digital which is getting the dominant share of spend in the majority of markets, taking it away from linear media which shows a decline in most markets. In the next 5 years, digital spends are expected to further consolidate and increase dominance,” concluded Singh.
