China and Asia’s middle class to power region’s rise as the world’s top advertising market

August 19, 2018
Industry News
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Louise Moon
lousie.moon@scmp.com

Ad-tech companies like The Trade Desk are helping foreign brands keen to expand their reach in China by selling advertising space on web platforms run by Alibaba, Baidu and Tencent

A rapid surge in middle class and digitalisation of ads will help Asia-Pacific, led by China, to overtake the US as the top advertising market, fuelling ad-tech companies like US-listed The Trade Desk’s expansion into the region.

APAC is currently the second largest region for global spending in advertising, expected to grow 7 per cent this year to reach US$165 billion, behind North America’s US$218 billion, according to research firm Magna Global’s advertising forecast spring 2018 update.

Already the biggest contributor to global growth in spending on advertising, between 2017 and 2020 the region will add 43 per cent of all new money to the market – US$32 billion of US$75 billion – led by a 22 per cent contribution by China, according to Zenith Media’s advertising expenditure forecasts in June.

Vincent Letang, director of global forecasting at Magna Global, said Asia is bound to overtake given the difference in average growth rates in advertising spending. “In APAC it is basically 8 per cent and in the US more like 3 per cent. It is just a matter of time before APAC becomes the biggest region, whether it is in the next five years or more,” said Letang.

The focus is on digital, with Asian money to this field predicted to increase almost 17 per cent this year to US$70 billion, according to Magna.

“Digital is obviously the growth engine for APAC, because of economic growth and a broader middle class, which is making Asian audiences more attractive to local and international brands. Those are the key drivers,” said Letang. Already, the number one media form in China is digital, and it is growing rapidly in India, he said.

“Western ad-tech firms are clearly trying to take positions in Asia but they have competition from local firms, so it is a challenge.”

The Trade Desk, which first entered Asia through Singapore in 2013, is one such firm. The company now has seven locations across APAC, and plan to expand into India in the next one-to-two years.

“We are living through a change in advertising: from traditional to digital, from the random guessing and tapping into the intuition of people, to the data-driven approach to advertising,” said Jeff Green, founder and CEO of The Trade Desk. Continue Reading
 

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