The Global Ad Market

Today we see positive signs for advertising across the planet. Global market of advertisement rise like anything. Advertiser spend more and more due to various reasons like new product, competition, brand building etc. Ad spending finally is on track to increase in all regions Global ad spending is gaining momentum. Worldwide spending will rise a robust 5.3% in 2014 and 5.8% in 2015 and 2016, up from 3.6% in 2013. Put another way, the ad market next year will essentially match its pre-recession growth rate (5.4% in 2007). Global spending is at an all-time high. Ad spending in 2013 will top $500 billion for the first time. That's $90 for each person living in the markets. U.S. spending remains below pre-recession levels. The U.S. won't pass its 2007 adspending peak (about $178 billion) until 2015. But U.S. ad growth is accelerating; ZenithOptimedia predicts a 4.7% increase in 2014, the fastest growth since 2004. It expects a 4.6% increase in 2015 and 4.1% in 2016.
Worldwide Ad Spending by Medium

The internet in 2013 passed newspapers to become the world's second-largest ad medium, behind TV. The internet now captures one in five ad dollars.

GRAPHICS SHOW PORTION OF WORLDWIDE MAJOR-MEDIA SPENDING THAT WENT INTO EACH MEDIUM IN 2005 AND 2013. SOURCE: ZENITHOPTIMEDIA (ADVERTISING EXPENDITURE FORECASTS, DECEMBER 2013). MORE INFO: ZENITHOPTIMEDIA.COM.

All regions are rising. Latin America has been the fastest-growing region in ad spending since 2010 and will keep that lead position through 2016. Latin America growth will accelerate each year from 2013 (8.1%) through 2016 (12.7%). Spending in Asia Pacific will score solid single-digit gains in the range of 6% to 7% through 2016. Western Europe will

see modest growth of 1.9% in 2014 and 2.3% in both 2015 and 2016 following declines in 2012 and 2013. The internet is now the world's second-largest ad medium. It rocketed past newspapers in 2013 into the No. 2 spot, behind TV. As recently as 2005, the internet ranked sixth in global ad media, behind TV, newspapers, magazines, radio and outdoor. The internet in 2013 captured 20.6% of 2013 global ad spending (21.7% in the U.S.). In 2016, ZenithOptimedia expects the internet to account for 26.6% of global spending (30.7% in the U.S.). China remains a hot spot. Ad spending grew and will keep growing in the range of 10% each year from 2012 through 2016. China is the No. 3 ad market (behind the U.S. and Japan) and in 2013 had the fastest growth among the world's 10 largest ad markets. The most Chinacentric advertisers among Ad Age's 100 Largest Global Marketers: fast-food seller Yum Brands (KFC), which placed 32.8% of its 2012 measured-media spending in China; energydrink marketer Red Bull (27.5%); and watchmaker Swatch Group (24.1%). BRIC bloc is ascending. Russia in 2015 will become one of the 10 largest ad markets, joining China and Brazil. In India, currently the No. 14 market, ad spending will grow 39% in 2016 vs. 2013, making India one of the 10 fastest-growing countries for advertising.

View the Global 100, a ranking of the 100 Largest Global Marketers by measured-media spending.

Facts from Ad Age's Global Marketers report: U.S. is home to 41 of the 100 Largest Global Marketers. Europe is headquarters for 36; Asia, 23. Among the 100 marketers, 94 advertised in the U.S. Six firms had no 2012 measured-media spending in the U.S.: two telecoms (France's Orange and the U.K.'s Vodafone, which is selling its 45% stake in Verizon Wireless to Verizon Communications); two French automakers (PSA Peugeot Citron and Renault); France's Carrefour, one of the world's biggest retailers; and Hong Kong's Hutchison Whampoa, which owns telecom ventures, ports and other holdings. Tech spending is soaring. Consumer electronics and technology is the fastest-growing ad category among the Global 100, with a 9.6% increase in 2012 measured-media spending. Leading the charge: Samsung Electronics, whose measured spending surged 55.1%, the highest growth among the Global 100. Personal care cleans up. It's the world's biggest ad category among the 100 Largest Global Marketers. Personal-care marketers make up about a fourth of 2012's Global 100 spending. The three biggest global advertisers have the world in a lather: Procter & Gamble Co., Unilever and L'Oral.

Indian scenario
Indian media industry is expected to grow at an annual average growth rate of 15% to touch Rs 1457 bn by 2016. The industry comprises of print, electronic, radio, internet and outdoor segments. With the government aggressively pushing in for digitisation of TV, Multi System Cable Operators (MSOs) are expected to lose 15-20 per cent of their subscribers to DTH during the phase one that requires the digitisation of Mumbai, Delhi, Chennai and Kolkata by the end of calendar year 2012. There are nearly 148 m television households in India. DTH segment comprises of 45 m homes. Around 60% of the money in television segment comes from the subscriptions of DTH or cable services. The digital subscribers are expected to outdo the analog subscribers by 2013. The players in the electronic media can be classified into a three-link chain. First are the studios (including the animation studios), which comprise the hardware part of the industry, the second are the content providers and the third link comprises the distribution trolleys, which include the cable and satellite channels, multiplex theatres, MSOs and the DTH players. In India, the ratio of advertising expenditure to GDP is about 0.4%. This is substantially lower in comparison to the developed economies as well as developing economies. As the Indian economy continues to develop and the media reach increases, the advertising expenditure to GDP ratio is expected to increase over the next 5 years.

Financial year 2012 was a tough year for the media industry. The slowdown in the economy
resulted in companies spending less on advertisements. With dwindling ad budgets, the revenues of media companies declined substantially as they get a huge chunk of their revenues from this segment.

In the print space, efforts are being seen towards consolidation of business rather than aggressive
expansions. The fall of rupee during the year hurt the bottomline of the print media companies as the cost of imported newsprint went up.

Digitisation deadline was further postponed on low availability of set top boxes. It is now expected
that the 4 metro cities of the country will be fully digitized before the end of the calendar year.

Prospects

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The fortunes of the media industry are linked to the growth in the economy. India is set to grow at a rate of at least 8% in years to come. Rising incomes in the hands of people encourage them to spend more on discretionary items like media and entertainment. However, the trend is shifting more towards the online medium. The demographic profile of India also favours higher spend on entertainment, with the consuming class forming a sizeable chunk of the country's total households. Thus, this could lead to the emergence of a huge consumer base for the various products and services (including entertainment). New distribution technologies like DTH, Conditional Access System (CAS) and IPTV, hold the future of the media industry as increasing digitization will radically alter the ways in which consumers

receive channels. The manadatory digitization in the four metros and the entire country will bring in more subscription revenues for the broadcasters as opposed to under reporting of numbers by cable operators at present. With metros already being saturated, regional markets provide ample scope for growth in the media sector. In print media, newspapers are being published in vernacular language, In television, newer channels are introduced in local languages. Tier II and Tier III cities and towns are set to drive the Indian consumption story in the next few years.

Advertising business is undergoing a paradigm shift in recent times as most companies rely on female models for their products. MARKETING THROUGH advertising is considered an important variable in the global business. Advertising is second only to films as far as its influence on the society is concerned. History bears testimony to the fact that the great Romans practiced advertising. Their surnames indicated their occupation. The potentialities of advertising multiplied when manual press was invented in the 15th century. After that the demand has been increasing. Advertising is, in fact, the most influential and powerful medium in the present commercial society. It creates an entire worldview, shaping our attitude and beliefs. Advertisements pervade every aspect of our life and most of us are hardly aware of it. In the movement for equal status and fair treatment to women, an important part is attributed to the mass media, particularly to electronic media. The central position of media in daily life ensures its role in advertising business. The meanings that are created by media are not fixed, but they vary according to cultural, historical and social context of the people concerned. The common man judges the products on the basis of the understanding his society and culture has inculcated into them. Symbolism is one of the major aspects of advertisement and it is to be noted that a change has occurred in this context. Use of women to promote a concept or product is increasing day by day. In the advertisement world, advertisers have picked up women for advertising of consumer commodities. Women are used in TV commercials as weapon of persuasion. Women in many cultures make the majority of consumption decisions; hence they are important target of these advertisers. So the advertisers find it easier to sell the product by using the same gender. But most of these ads hardly need women as models. For example, there is no need to ask females to do an ad for a mens shaving cream. The list is uncountable. Most of the companies want to attract the consumers by using the physical look of the models. They have created a world of fantasy. And we are drawn towards that world without realizing much about the realities of life. We try to imitate whatever is shown on the Television. The media must play the role of a watchdog in such a situation. - See more at: http://www.merinews.com/article/the-changing-scenario-ofadvertising/126596.shtml#sthash.rguP7ep8.dpuf

Supply

Of the more than 70,000 newspapers printed in India, around 90% are published in Hindi and other vernacular languages. There are a total of 825 private satellite TV channels as at the end of December 2011, permitted by the Information and Broadcasting Ministry, out of which 163 channels are pay. The demand for regional print media is growing at a faster pace than that of English language print media. In the electronic media, the highly fragmented viewership has led to an increasing preference for niche channels. In the electronic media, it is high for broadcasting since it is very capital-intensive. It involves the cost of leasing the transponder, setting up up-linking facilities, setting up pre and post-production facilities. The barriers to entry are far lower for content providers. Besides, broadcasters themselves commission programmes and finance their production. Hence margins are lower. The broadcasters are finding it increasingly difficult to retain their key personnel. In spite of the high barriers to entry a slew of channels across languages and genres have been launched in the recent past. In the print media, high for newsprint suppliers. It is medium to low for content providers in the electronic media. Terrestrial broadcasters such as Doordarshan and regional broadcasters such as Sun TV actually commission time slots to content providers. Relatively high in both print and electronic media. The consumer finds a surfeit of players to choose from. The rollout of CAS and DTH services will enable the consumer to choose the channels that he wishes to view increasing his bargaining power. High in print media, especially in Hindi dailies. The print sector includes listed entities like Jagran Prakashan, HT Media and Deccan Chronicle. Regional print media too is seeing increasing competition. Competition is high amongst broadcasters especially for general entertainment channels. The space includes listed entities like Zee TV, TV 18, UTV, NDTV and Sun TV.

Demand

Barriers to entry

Bargaining power of suppliers

Bargaining power of customers

Competition