WORLDWIDE ADVERTISING: 2001 - World bull markets. Western agencies may be tempted by the advertising growth of poorer countries, but they should prepare for government resistance and a lack of staff and profits, writes Adam Smith

We track advertising spend in about 60 countries. Every year, we

send Campaign a list of the 20 or so we think have the fastest-growing

advertising sectors. The obvious things which stimulate above-average

growth are rapid economic progress, a popular embrace of consumerism,

and the natural tendency for western advertisers and agencies to

expand.



These things explain why the list comprises a majority of poorer

countries.



Less obvious reasons, and the ones which usually explain why developed

western economies make it into the list, are the sudden deregulation of

media - TV, classically, because it is the medium most apt to be

monopolised or state-controlled - and the way advertising space is

traded.



Figures for 2000 are not final yet, but we estimate worldwide

major-media advertising spend in 2000 was dollars 339 billion, and that

this will rise to dollars 355 billion this year. Our 20 growers

accounted for 11 per cent of world spend in 2000. We predict this will

rise to 12 per cent in 2001. We expect the world to spend dollars 16

billion more on advertising this year than last, and our 20 to chip in

dollars 6 billion, or about 38 per cent. They are big contributors

relative to their wealth.



The most important variable is population. The combined peoples of the

20 countries come to 3.3 billion, or about two-thirds of the global

total.



Last year advertisers spent about dollars 11 per head reaching them.

This year it will be dollars 13. Advertising as a share of the combined

economic output was 0.72 per cent last year but will be 0.76 per cent

this. This is a vast leap by the standards of the saturated west, where

the GDP ratio edges forward in hundredths, if at all.



Western companies and agencies are of course tempted by the gearing

implied by vast populations growing at vast rates. But many can tell of

disappointments from places like India and Russia. Governments can be

capricious, and many actively resist western culture, especially in

matters to do with domestic media. There may be corruption or unsound

banks to contend with. Spending power is usually sharply polarised into

the hands of a relatively few wealthy, and to make customers of the rest

presents new marketing and product development challenges, not to

mention media planning to audiences with sometimes little exposure to

media of any kind.



There are Zenith offices in 45 countries, many of them emerging

economies.



It could take another generation for these to approximate to the ways of

the west.



Some advertisers give up because the payback is taking too long. It is

often difficult to find local managers: the gifted, multilingual young

are inevitably mobile when work is readily available in developed

countries for many times the pay. And to the advertiser (and agency),

rapid economic growth is no guarantee of profits. You are likely to lose

a lot of money, to earn which privilege you will need to demonstrate

extraordinary resilience and resourcefulness. These places are not

miniature Americas. It is hard even when things are going well. But good

times will always end with meltdowns, crises, military rule, and

hyperinflation.



Like it or not, globalisation is a fact, so the old adage "get big, get

specialised, or get out" holds true. Global clients want global

agencies, however decentralised their actual media and marketing

decision-making happens to be. Big agencies have to run international

networks, so you might as well give it your best shot.



This means you have to be in the US first and foremost. This is where 40

per cent of all advertising dollars are spent. It may not be having such

a great year in 2001, but anyone outside the US for the last ten years

just missed out on a market which provided 43 per cent of all ad dollars

added to the world economy since 1991. A network without substantial

exposure to the US is not really a network at all, just prey. If

unbundled media is your business, you've probably come from Europe, or

at least have a European culture and heritage to call on. The big five

European countries are 20 per cent of the global ad business. They are

slow growers, contributing only 16 per cent of additional dollars since

1991, but are full of big advertisers with global budgets.



The point is to illustrate that you cannot develop international

corporate strategy from pins in maps. It is an interesting exercise to

see where advertising is growing fastest, but almost by definition, most

will be volatile places hugely dependent on western tradewinds, and best

suited to the pioneer temperament. The other point is that hardly

anywhere is optional any more, so dig out that pith helmet.



TOP 20 COUNTRIES BY ADVERTISING EXPENDITURE GROWTH 2001/2000

Country Adspend Population GDP 2000 GDP 2001

year-on-year (millions) (dollars US (est)

% change billion) (USdollars

2001 vs 2000 billion)

1 Romania 50.4 22.5 34.1 34.9

2 Myanmar 42.8 45.1 505.5 674.9

3 Mexico 35.4 97.4 514.0 529.9

4 Russia 33.0 146.0 195.7 206.5

5 Turkey 30.2 64.4 208.9 216.2

6 Venezuela 28.5 23.7 100.5 103.5

7 Indonesia 24.1 209.3 147.8 162.9

8 Hungary 20.1 10.1 56.9 63.3

9 South Korea 17.9 46.9 449.1 491.3

10 China 17.4 1,266.80 1,074.20 1,181.60

11 Thailand 16.2 61.1 136.6 148.7

12 Bulgaria 16.0 8.2 13.7 15.4

13 Portugal 16.0 10.0 114.3 121.1

14 India 13.2 986.6 514.3 578.4

15 Philippines 12.4 75.8 82.5 88.8

16 Lithuania 11.9 3.7 11.2 12.3

17 Estonia 11.0 1.4 5.9 6.5

18 Singapore 10.9 3.9 99.3 105.5

19 Belgium 10.8 10.2 262.8 274.8

20 Brazil 10.4 164.0 580.9 604.1

Country Adspend as Adspend as TV Newspapers

% age of % age of adspend adspend

GDP 2000 GDP 2001 2001 2001

(est) (est US (est US

dollars m) dollars m)

1 Romania 0.504 0.569 157 24

2 Myanmar 0.004 0.004 19 7

3 Mexico 0.965 1.147 3,397 850

4 Russia 0.57 0.718 1,195 160

5 Turkey 0.516 0.519 475 389

6 Venezuela 1.493 1.432 1,029 309

7 Indonesia 0.723 0.813 830 329

8 Hungary 1.747 1.885 698 165

9 South Korea 1.418 1.528 1,981 3,586

10 China 0.442 0.472 2,578 1,813

11 Thailand 1.098 1.172 879 569

12 Bulgaria 0.589 0.605 65 23

13 Portugal 1.572 1.722 1,199 241

14 India 0.319 0.321 732 912

15 Philippines 0.665 0.695 373 100

16 Lithuania 0.411 0.419 21 20

17 Estonia 0.863 0.856 14 26

18 Singapore 0.923 0.964 358 501

19 Belgium 0.752 0.797 920 509

20 Brazil 1.073 1.14 3,902 1,618

Country Magazines Total Total

adspend adspend adspend

2001 2001 2000

(est.US (est.US (est.US

dollars m) dollars m) dollars m)

1 Romania 0 199 172

2 Myanmar 1 29 21

3 Mexico 292 6,076 4,959

4 Russia 0 1,483 1,115

5 Turkey 72 1,122 1,078

6 Venezuela 24 1,482 1,500

7 Indonesia 80 1,325 1,068

8 Hungary 173 1,194 994

9 South Korea 255 7,505 6,366

10 China 160 5,578 4,753

11 Thailand 82 1,742 1,499

12 Bulgaria 5 93 80

13 Portugal 313 2,084 1,797

14 India 0 1,857 1,640

15 Philippines 0 617 549

16 Lithuania 4 52 46

17 Estonia 7 56 51

18 Singapore 49 1,016 916

19 Belgium 307 2,190 1,976

20 Brazil 647 6,885 6,235





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