Print advertising drives global newspaper publishing

Revenues to grow more than $200 billion by 2010

Substantial expansion of category advertising will fuel worldwide spending on newspaper publishing, rising to $208.1 billion in 2010 at a compound annual growth rate (CAGR) of 3.1%, according to PricewaterhouseCoopers' Global Entertainment and Media Outlook: 2006?2010.

The Outlook defines the newspaper publishing market as daily print newspaper spending by advertisers and readers. Readers' spending includes newsstand and subscription purchases, excluding revenues from weekly papers and online subscriptions. In the U.S. only, newspaper totals also include ad spending in online editions and classifieds. (These revenues are still not widely tracked in other regions, and therefore not included in other regions' ad revenue totals.)

Europe, the Middle East, and Africa (EMEA) will continue to boast the largest newspaper publishing revenues during the forecast period, rising to $72 billion in 2010 at a 2.5% CAGR. Despite modest market revenues, Latin America will grow the fastest--at 5.4% compounded annually--reaching $7 billion in 2010. Expanding to $69.7 billion in 2010 at a 2.9% CAGR, the U.S. will represent the second-largest market. Having the second-fastest growth, Asia Pacific will increase at a 3.8% CAGR to $56.2 billion in 2010. Meanwhile, Canada will represent the smallest market at $3.2 billion in 2010, climbing at a reserved 2.4% CAGR.

In the U.S., large and growing online audiences commanding premium ad rates will drive online newspaper ad spending. With increasing broadband penetration and new ad delivery technologies providing a further boost, the category will multiply to $6.2 billion in 2010 at a 25.1% CAGR. Moreover, print classifieds will continue to grow despite online competition, offsetting reserved increases in retail and national advertising. Print advertising will thus rise to $52.5 billion in 2010 at a 2.1% CAGR, and overall newspaper advertising, to $58.7 billion in 2010 at a 3.5% CAGR.

Regarding circulation, rising newsprint costs could lead to cutbacks in print editions and accelerated price growth. Although competition from online editions could similarly hamper paid circulation revenues, increased penetration of relatively older demographics in the U.S. population will likely augment readership. As the industry adjusts to the impact of new delivery mechanisms and media, total circulation spending will therefore remain relatively flat, expanding at a 0.2% CAGR to $11 billion in 2010.

In EMEA, investment in new publishing formats and equipment will stimulate overall advertising and circulation spending, with an expanding economy providing additional ballast. Although unit circulation will continue to decline, increased prices will further aid circulation spending, with the category growing to $27.7 billion in 2010 at 1.3% compounded annually. Meanwhile, free dailies are positively impacting overall newspaper advertising, driving the category to $44.4 billion in 2010 at a 3.3% CAGR.

In 2010, Western Europe will claim the largest overall spending, increasing to $63 billion at a 1.9% CAGR. Expanding the fastest, Central and Eastern Europe will reach $5.9 billion in 2010 at a 7.7% CAGR. By country, the U.K. will maintain the largest market with $14.6 billion in 2010, despite a relatively flat 0.4% CAGR. Germany ($12.2 billion) and Italy ($6.9 billion) will follow in size, showing respective growth of 1.6% and 2.7% compounded annually. Meanwhile, Turkey will expand the fastest at an 11.5% CAGR, reaching $1.1 billion in 2010.

In Asia Pacific, circulation has not suffered the same declines as in other regions, and will continue to increase at a 2.2% CAGR to 325.3 million in 2010. Although low unit prices will dampen overall circulation spending, price reductions of paid dailies will draw readers from free titles, driving the category to $26.5 billion in 2010 at a 1.8% CAGR. Rising unit circulation will also fuel newspaper advertising. Combined with strong economic growth, appeal of free titles, and relaxing government restrictions in various countries, newspaper ad revenues will increase to $29.6 billion in 2010 at a 5.8% CAGR.

By country, Japan will remain the largest market, reaching $22 billion in 2010 at a 0.9% CAGR. During the next five years, however, the People's Republic of China and India will represent 53% of Asia Pacific's growth, respectively reaching $10.6 billion at an 8.1% CAGR and $3.9 billion at a 12.1% CAGR in 2010. With the fastest expansion at 15.5% compounded annually, Indonesia will meanwhile increase to $2.8 billion in 2010.

In Latin America, healthy circulation increases in Brazil and Argentina will bolster flat gains in other countries, with overall unit circulation increasing to 15.1 million in 2010 at a 1.3% CAGR. Similarly, the two countries will buoy overall circulation spending, representing 91% of regional growth during the next five years and boosting the category to $2.1 billion in 2010 at a 2.6% CAGR. Meanwhile, sustained economic growth will encourage expansion of newspaper advertising to $4.9 billion in 2010 at a 6.8% CAGR.

By country, Brazil will continue its domination, escalating to $4 billion in 2010 at a 6% CAGR. With the second-largest market, Mexico will expand to $830 million in 2010 at a 3.9% CAGR. Aided by the positive impact of oil-related revenues on advertising, Venezuela will rise the fastest at an 8.8% CAGR to $157 million in 2010.

In Canada, publishers will raise prices with less aggression than they have in the past, increasing average annual circulation spending and offsetting unit decreases. Although competition from free papers and cutbacks in household delivery will inhibit paid circulation, community papers' strength in relatively smaller markets will provide an added boost. Aggregate circulation spending will therefore rise at a 2.1% CAGR to $710 million in 2010. Despite print ad spending suffering from readers' migration to online editions, retail ad growth, reach of free titles, and sustained readership of community papers will buoy the category. Overall ad spending will therefore increase at a 2.5% CAGR to $2.5 billion in 2010.

The PricewaterhouseCoopers Global Entertainment and Media Outlook: 2006-2010 is the leading global entertainment and media industry forecast, including in-depth global analyses and five-year growth projections for 14 industry segments covering every major global region. The complete 632-page book, which includes a "Global Overview" can be purchased for US$995. The 50-page "Global Overview" can be purchased separately for US$95; individual chapters can also be purchased separately in electronic format for US$95.

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