Shanghai: GroupM has released its revised forecast for media spending in China, lifting its estimates for 2009 and 2010 to reflect the improved outlook for China’s broader economy.
GroupM now expects 2009 ad spend in China to increase by 5.8% to RMB254.5 billion, and by 9.8% to RMB279.4 billion in 2010, with Internet spending expected to lead the way. The figures update GroupM’s previous forecast of 3.2% in 2009 and 8.9% in 2010, issued in June this year.
Economists, including those from the World Bank and Goldman Sachs, have recently raised their forecasts for Chinese GDP growth by about 1.5%, with the consensus view now seeing the Chinese economy growing around 8% in 2009, then returning to double digit growth next year.
“The pessimism that surrounded the outlook for the Chinese economy as we entered 2009 appears to be passing. Confidence and revenue have returned to the broader marketplace in the second quarter as key sectors increased spending patterns,” said Bessie Lee, CEO, GroupM China.
In 2008, China saw media investment growth of 22.6% in 2008, driven by strong economic performance and additional impetus derived from the Beijing Olympics.
Government restrictions on outdoor advertising in the key cities surrounding major events, especially in Shanghai in preparation for the World Expo next year, will cause many OOH media suppliers to withdraw from the market. With less competition and inventory, OOH media suppliers with substantial market share will become even stronger, giving media suppliers more bargaining power.
Looking to 2010, China’s media spend is expected to see support from two major events – the World Expo in Shanghai and the Asian Games in Guangzhou. These events, coupled with China’s fast growing economy and its increasingly wealthy consumer base, suggest more optimism about the prospects for the Chinese media market in 2010.
“We think it is likely that media investment in 2010, whilst failing to reach the dizzy heights of 2008, will far exceed the growth rate in 2009,” said Lucy Zhang, Futures Director, GroupM Knowledge, China.
The Internet is expected to be the fastest-growing advertising medium in both 2009 and 2010. China currently has an estimated 338 million Internet users, easily surpassing the US as the world’s largest Internet community. The number of online homes is growing by nearly 88 million every 12 months, the equivalent of a country the size of Germany or Vietnam.
The rising online population, the continual effectiveness of traditional television and consumer diversity mean the China media market will continue to be among the most exciting and challenging in the world. Due to its size and diversity, China is no longer seen by marketers as a single entity, but a collection of evolving, complex and fragmented markets.
“In 2009, advertisers’ options have multiplied correspondingly, especially in digital, events, video, sponsorship and other branded content opportunities, all offering new ways to reach and interact with consumers. How agencies and advertisers capitalise now on this change and manage the balance of traditional and contemporary media will be key to moving forward,” Zhang added.
This Year, Next Year is GroupM’s media forecasting series drawn from WPP’s worldwide resources in advertising, public relations, market research and specialist communications.