Global net advertising revenues on television will reach US$123 billion in 2008, up 5.8 percent over 2007, according to a new report from Informa Telecoms & Media. This growth comes despite widespread fears of a global economic recession.
The report, "Global Net TV Advertising Forecasts," says this rate is an improvement on the 3.5 percent global increase in 2007 and bases its optimistic outlook partly on the positive impact of the Olympics.
From this 2008 total, net pay TV advertising will bring in US$18 billion, a figure which has doubled over the last five years. Pay TV will represent 15 percent of total TV advertising in 2008.
By 2012, Informa Telecoms & Media forecasts that global net TV advertising will equate to US$148 billion, up 21 percent on the 2008 figure. However, Simon Murray, author of the report, said: "Net pay TV advertising will grow at a much faster rate — up 39 percent over the same period — to reach US$25 billion by 2012, or 17 percent of total TV advertising.
Murray emphasizes that such figures are for net advertising. "Informa believes that this is the first time that TV advertising forecasts for this many countries [44 in the report] have been homogenized and reflect only the revenues received by the channels and networks," he said. "We have extracted agency commissions, production costs and, most importantly, we have removed discounts. Traditionally, advertising expenditure figures have been reported at rate card prices, that is, before discounts have been taken out."
The US still has considerable influence over the global market, bringing in US$43.2 billion in 2007 — or 35 percent of the world's total, according to the report. Japan, the world's second largest market but home to a sluggish economy, is more or less stagnant, with net TV advertising growing only 12 percent between 2007 and 2012.
The fastest growing territories are Russia and Romania, which are forecast to double their totals. More rapid growth is expected in India and Indonesia, which will both rise by about 70 percent. The global average for net television advertising per TV household is running at more than US$100. The US will be highest at US$380 in 2008 and the lowest China, only US$10, and India, US$11.
North America's influence over pay TV advertising is even greater than for the total TV market. It took 62 percent of the total in 2007. However, this proportion will decline to — a still high — 53 percent by 2012 as other regions gain market share. Eastern Europe & the Middle East will be the fastest growth region, increasing 159 percent between 2007 and 2012.
The UK is the second largest pay TV advertising market, contributing US$2,234 million in 2007. The UK is atypical, says Informa — there is only one ad-supported channel taking an audience share of more than 10 percent, though non-ad-supported BBC1 also passes this level. This provides for a healthy pay TV advertising sector as ITV is the dominant TV ad vehicle, Channel Four and Five are minority interest FTA ad-supported channels (each with an audience share of 4-7 percent) and no other ad-supported channel achieves an audience share above 2 percent, spreading ad revenues among many channels.
Murray concludes: "It is sometimes easy to forget just how large a market total TV advertising is. Pay TV, albeit a new sector in many countries, only accounts for 15 percent of the total. It is only expected to grow to 17 percent of the 2012 total, even though pay TV advertising will increase by US$7 billion."
The UK will boast the highest proportion of pay TV advertising as a proportion of total TV advertising, at about a third in 2008, according to the report.
Korea and Canada will follow at 30 percent. Korean pay TV advertising will grow quickly, given the weak FTA sector, to half the total by 2012. The proportions in China (heavy government control) and Japan (competitive FTA environment) will be low.
