TV Remains the Major Advertising Channel in Most Emerging Markets

TV continues to dominate the ad market in most emerging market economies (EMEs), as it helps businesses reach the majority of consumers in these markets. Growth in TV adspend has been strong in Asian Pacific and Latin American EMEs, while it is set to decline in emerging Eastern European countries where TV possession rates have reached saturation point. TV adspend in EMEs will, however, face competition from the online segment, as Internet usage soars and consumers spend more time online.

Key points

  • In 2013, TV adspend accounted for 50.0% of total adspend in all 25 key EMEs, making it the most important advertising channel in these markets. The TV ad segment is most dominant in countries such as Vietnam and Brazil, while it has been less important in the Middle East and North Africa;
  • Growth in TV adspend, however, varies significantly across EMEs, driven by factors such as the popularity of TV over other media and government regulations on TV advertising. Among all EMEs, TV adspend expanded the fastest in China, by 94.4% in real terms between 2008 and 2013. Meanwhile, it contracted sharply by 35.8% in Hungary;
  • Emerging countries in the Asia Pacific region continue to offer good growth potential for the TV ad segment given the relatively low levels of per capita TV adspend. In Indonesia, TV adspend stood at IDR140,571 (US$13.4) per capita in 2013, compared to US$43.8 in Argentina. On the other hand, TV adspend is set to decline in emerging economies in Eastern Europe where the online segment is becoming increasingly important;
  • While TV adspend remains the mainstream marketing platform, online adspend has been soaring in EMEs, owing to its affordability and multi-functionality while Internet usage is rising rapidly. In China, the share of online adspend already increased to 18.9% of total adspend, up from 13.1% in 2008;
  • The number of households possessing a colour TV set in all EMEs will reach 1.3 billion by 2030 (compared to 1.0 billion in 2013), thus continuing to boost TV adspend in these markets. However, the online ad segment will become the primary challenge to the TV sector and emerge as an important advertising channel in EMEs in the coming years.

Continued dominance of TV advertising in most EMEs

  • The aggregate total adspend in all EMEs reached US$106 billion in 2013, representing a strong growth of 27.2% in constant fixed US$ terms since 2008, driven by the expansion of consumer markets in these countries. TV remains the most dominant advertising category, as TV adspend accounted for 50.0% of EMEs’ total adspend in 2013, compared to 47.7% in 2008;
  • In eleven out of 25 EMEs, TV advertising makes up for over half of total advertising expenditure, primarily owing to high TV household possession rates. Within EMEs, Vietnam had the highest proportion of TV adspend, at 80.1% of total adspend in 2013, followed by Kazakhstan (71.4%) and Brazil (70.7%). In 2013, 90.1% of Vietnamese households possessed a colour TV set, while only 17.3% had an Internet enabled computer;
  • Nevertheless, TV has been a less important advertising channel in emerging economies in the Middle East and North Africa such as Saudi Arabia, the United Arab Emirates (UAE) and Egypt. Due to a high level of government censorship on TV broadcasting, TV adspend made up only 3.7% of Saudi Arabia’s total adspend in 2013, while the figure for print adspend was 68.0% in the same year;
  • Although TV continues to be the mainstream advertising category in most EMEs, the proportion of advertising on the web has increased rapidly, supported by growing Internet usage and the uptake of social media. In China and India, the share of online adspend rose to 18.9% and 4.1% of total adspend in 2013, up from 13.1% and 1.6% in 2008, respectively.

Total Adspend by Category in EMEs: 2008-2013

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Source: Euromonitor International Euromonitor International from World Association of Newspapers

Note: (1) Emerging market economies cover 25 key countries which include Argentina, Brazil, Chile, China, Romania, Russia, Saudi Arabia, South Africa, Thailand, Turkey, the UAE, Ukraine, and Vietnam. Adspend data for Morocco are not available (2) Data are in current terms, year-on-year exchange rates.

But growth patterns in TV adspend have been mixed

  • Between 2008 and 2009, the aggregate TV adspend in all EMEs expanded by 34.7% in constant, fixed US$ terms, fuelled by the popularity of TV in most countries;
  • The growth patterns of TV adspend, however, vary significantly across EMEs. Between 2008 and 2013, China witnessed the fastest growth in TV adspend, at 94.4% in real terms, backed by the country’s fast-growing consumer market and increasing TV viewing times, especially in rural areas. Other EMEs which also saw a rapid increase in TV adspend during the same period include Indonesia (86.3% in real terms) and Argentina (78.2%);
  • Meanwhile, nine out of all EMEs experienced a decline in TV adspend during the 2008-2013 period, impacted by factors such as the already saturated possession rate of TV sets and the relative inflexibility of TV advertising in comparison to the Internet. In Hungary and India, for example, TV adspend contracted by 35.8% and 15.7% in real terms between 2008 and 2013, respectively. In India, a 12-minutes-an-hour cap on TV advertising introduced in early 2013 has affected the growth of TV adspend;
  • Overall, growth in TV adspend has lagged behind the expansion of the online segment in all EMEs, Internet usage is on the rise and the cost of online advertising is often lower than on TV. In Argentina, online adspend grew by 438% in real terms between 2008 and 2013, compared to a 78.2% real increase in TV adspend during the same period.

Implications for businesses

  • TV will continue to be an effective advertising channel for companies in most emerging countries as it can reach the majority of consumers in these markets. In 2013, the number of colour TV households in all 25 key EMEs reached 1.0 billion or equivalent to 88.3% of total households in the year, up from 83.8% in 2008;
  • Although the household TV possession rate is starting to stagnate in many EMEs, rapid urbanisation combined with rising disposable income will drive the growth of the pay-TV markets, thus benefiting the TV advertising sector. In Indonesia, the number of cable TV households more than doubled between 2008 and 2013 to reach 3.0 million households by the end of the period;
  • Emerging countries in Asia Pacific offer the largest growth potential for the TV advertising segment given their relatively low levels of per capita TV adspend and expanding consumer markets. In 2013, TV adspend in Vietnam stood at VND145,855 (US$7.0) per capita, remaining significantly lower than in Russia (US$28.0 per capita) or Brazil (US$46.3 per capita);

Per Capita TV Adspend in Selected EMEs: 2013

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Source: Euromonitor International Source: Euromonitor International from World Association of Newspapers

  • Nevertheless, TV advertising will continue to face tough competition from the online segment as the Internet including mobile Internet becomes increasingly popular. Online advertising has the advantage of being more affordable and flexible, while it can also offer additional functions such as on-site purchases, helping businesses to quickly reach their customers;
  • In Eastern European emerging economies where Internet usage is relatively high among the population, TV adspend will continue to see a decline in its importance as consumers are watching less TV and spending more time online. In Poland, for example, TV adspend per capita already declined from PLN108 (US$43.5) in 2008 to PLN88.0 (US$27.8) in 2013. The share of population using the Internet in Poland reached 62.8% in 2013, up from 53.1% in 2008.

Prospects

  • Emerging markets will continue to drive the global TV ad market, as TV adspend remains stagnant in advanced economies. By 2030, there will be 1.3 million colour TV households in all EMEs, equivalent to 93.0% of total households. The share of cable TV households will also reach 663 million or 46.7% of total households (up from 36.9% in 2013). The growth of pay-TV subscriptions will aid the stagnation of the TV segment, thus giving a boost to TV adspend;
  • The online segment will remain the primary challenge to the TV ad sector. The number of Internet users in all EMEs is forecast to almost double during the 2014-2030 period to reach 2.6 billion or 56.6% of EMEs’ population by 2030. The rapid expansion of mobile devices in EMEs will contribute to boost this trend. The urban and young population in EMEs will spend more time online, thus helping online adspend to enter the mainstream as a marketing platform.