Digital ad spending in China will reach $40.42 billion this year
Marketers around the world are funneling an increasing amount of their ad budgets into digital channels. But that’s just the beginning of the story. eMarketer predicts digital ad spending’s share of total media ad spending will increase worldwide in 2016 and 2017. The Asia-Pacific region will see the most rapid growth, as explored in a new eMarketer report, “Global Digital Ad Spending 2016: A Country-by-Country Look by Industry” (eMarketer PRO customers only).
China will rank 20th globally in total media ad spending per person and 14th in digital ad spending per internet user in 2016, eMarketer forecasts. By far the largest market in Asia-Pacific, China’s digital ad spending will reach $40.42 billion (RMB251.77 billion) this year. The industries spending the most on digital advertising in China, based on available data, are automotive, consumer goods, real estate and telecom.
China’s economic growth rate is projected to be between 6.5% and 7% in 2016, slower than in years past. But the rate is still enviable, and consumer spending in most sectors also continues to climb.
In March 2016, Kantar CTR Market Research polled 91 marketing executives in China to get a sense of how they planned to spend their budgets this year. According to the report, 41% of respondents said they expected to increase their marketing budgets in 2016, the same percentage as the previous year. One-quarter of those polled said they planned to decrease their budgets, vs. 29% who said the same last year. In one indication of how uncertain the economy remains in China, nearly one in five of those polled in 2016 said they did not know, or declined to answer.
In Western Europe, on the other hand, the refugee crisis and the fallout from the Brexit vote in June 2016 have put stressors on government and consumer spending, leading brands to spend cautiously as they head into the second half of the year.
There are some who believe the challenges presented by the Brexit decision could propel advertisers to move even more money into digital channels. Jon Davie, chief executive of digital marketing firm Zone, told UK ad trade publication The Drum in June 2016 that Brexit could “accelerate the move toward digital in the medium term toward more accountable marketing expenditure. ... The digital sector didn’t really suffer the same dramatic impact as traditional media did after the financial crisis. I suspect the same will be true for us this time around.”
Looking at Argentina, its economy, beset with high inflation and high prices for basic utilities, is creating challenges for marketers. That, along with the country’s fluctuating exchange rates, makes it difficult to accurately assess ad spending. Still, the prospects for an improved economy in Argentina are more likely than in the past few years, and better economic conditions in 2017 could spur investment by brands, and spending by consumers.
The travel, consumer goods and automotive sector were the largest spenders in traditional media. However, it’s important to note that the rate of inflation in Argentina remains very high—near 40%—and that the large increases in spending in those sectors are in large part a function of inflation rather than increases in investment.
eMarketer PRO customers can view the full report here.