These two dynamics are in many cases coming together in a number of high-growth markets, creating a "perfect storm" of change.
Huge ad growth
Against the predicted global advertising increase of 5%, we're witnessing many of the developing markets growing at three to four times that average so far this year. While there's debate over how the key growth markets should be prioritized, we at ZenithOptimedia concur with the focus on Brazil, Russia, India and, of course, China as the four most significant markets to cover.
Over the past three years, ad spending in the BRIC markets has grown four times faster than the world average. Their explosive growth is beginning to moderate but is still impressive. Between 2006 and 2009, we expect their ad spending to grow 53%, or three times the world average, hitting $45.7 billion in '09.
While the growth is consistent, the factors driving this growth, and the sustainability of this growth, vary considerably.
Brazil is enjoying a period of stable, solid economic growth after a long history of high inflation and economic volatility. We expect Brazil to be the slowest-growing of the BRIC markets over the three years from 2006 to 2009, with 16% growth over that period.
China and India are both reaping the long-term benefits of moving away from central planning and are unleashing the forces of competition and enterprise. We forecast 52% growth in Indian ad spending between 2006 and 2009.
In China, ad expenditures are accelerating in the run-up to the Beijing Olympics of 2008. The Olympics are at the center of huge economic and promotional activity by the government. The Games are practically guaranteed to generate enormous interest among Chinese consumers and provide great opportunities for advertisers. Annual growth is likely to slip back a bit in 2009, but we still expect 57% growth between 2006 and 2009.
Like Brazil, Russia is enjoying a strong recovery from previous economic turmoil; and, as in the case of China and India, it's constructing a private sector out of a legacy of central planning.
Russians are spending more on consumption and devoting more time and money to media, generating more demand for advertising and a greater supply of ad opportunities. We forecast ad spending will grow 88% over the three-year period.
The BRIC markets all rank within the 15 largest ad markets in the world: China is sixth; Brazil is 12th; Russia, 13th; and India, 15th. Russia is rising fastest in the rankings, and we expect it to be eighth by 2009. We forecast China and India to climb one place each, to fifth and 14th, respectively. However, we think Brazil will fall back to 13th in 2009.
The growth in the BRIC markets is derived from both offline and digital sources, and is receiving increased attention from global advertisers and agencies alike. We anticipate this migration of resources to continue for the foreseeable future.