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Management Digest

The just released APEC Leaders Declaration contains the following –

“We endorse the APEC Action Agenda on Advertising Standards and Practice Development to promote alignment of advertising standards and reduce the cost of doing business across the region”

The APEC Action Agenda on Advertising Standards and Practice Development is an outstanding document that extols the benefits of best practice advertising self-regulation and has a timetable for future action. This will affect all 21 countries/economies in APEC. 2015 will be a busy year for industry if it is to take full advantage of the opportunity granted by the APEC.

This UPDATE examines the Action Agenda.

APEC Meeting

The APEC Leaders meeting has just concluded in Beijing. It was a gathering of the Heads of State of the 21 APEC economies. The main outcome of the meeting is the announcement of a start of the negotiations of a free trade agreement – called the Free Trade Area of the Asia-Pacific (FTAAP).

It is also recognized in the Declaration that there is a need “to accelerate “at the border” trade liberalization and facilitation efforts, improve the business environment “behind the border”, and enhance regional connectivity “across the border” to accumulate more building blocks for the realization of the FTAAP.”

Among the actions that needed to happen is the implementation of the Action Agenda on Advertising Standards and Practice Development.

Action Agenda

The opening paragraph of the Action Agenda recognizes the economic importance of advertising and of best practice advertising regulation –

“As an important driving force in guiding consumption, expanding domestic demand and stimulating economic growth, advertising is a critical way of helping companies and industries across the APEC economies grow. Advertising enhances brand recognition, fosters competition, increases cross-border trade and provides for information and educational exchanges that build modern industrial economies. Regulatory and self-regulatory frameworks for advertising help achieve innovation, productivity and growth in all goods and services sold across and within APEC economies. The APEC Policy Support Unit (PSU) study of 2014 recognised the significant benefits of advertising.”

In the following paragraph is an endorsement of self-regulation –

“Advertising standards refer to codes of practice – set out by the advertising industry on the basis of international experience and adapted to locally and culturally specific realities. As such, these standards provide guidance on how best to protect and inform consumers and prevent anti-competitive practices and complement a sound regulatory system. A self-regulation system that applies advertising standards is an implementation of self-discipline and self-management under industry auspices and is an important complement to government regulation and enforcement”

The Action Agenda recommends to APEC members that advertising regulatory regimes reflect the following principles –

“1. Be legal, decent, honest and truthful.

2. Conform to the principles of fair competition, as generally accepted in business. Advertisers should respect intellectual property rights, and the legitimate rights of brand holders and advertising agencies.

3. Respect the cultural, legal, and economic context of each individual APEC economy.

4. Give special care in advertising practice directed towards or featuring children or young people. Advertisements targeting, or portraying, children shall not contain anything that will lead to physical and mental harm to them and shall not take advantage of their potential vulnerability or credulity.

5. Advertising should not undermine healthy and active lifestyles or healthy balanced diets.

6. Advertising should take particular care to ensure truthfulness and integrity in relation to environmental claims.

7. Respect and protect personal privacy consistent with the APEC Privacy Framework and Cross Border Privacy Rules.

8. Comply closely with regional laws and regulations, industry standards and ethics.

9. Facilitate, rather than impede, trade and investment in the region.”

Recommended Actions

The Action Agenda has a number of recommended specific actions.

– Governments are urged to “increase their support for efforts of advertising self-regulation” and to “actively explore specific ways to realize advertising self-regulation, should enhance communication and cooperation in terms of organizational structure, process design and performance management, and should endeavor to realize the significant industry role in self-regulation and extensive social influence of advertising self-regulatory practice.”

– Industry associations “are expected to actively participate in advertising self-regulatory practice. While raising awareness and capacity of self-regulation, they should play their role in guiding and rectifying their members’ advertising practice.”

– Advertisers are to play a leading role – “As the initiator, investor and drivers of brand advertising campaigns, advertisers should practice corporate social responsibility and actively promote responsible advertising. Brand owners and their representative organisations should, therefore, assume primary responsibility for advertising communications and industry self-regulatory practice.”


2015 will be a busy year with four different very large tasks.

“- Develop principles in 2015 for APEC economies to use in developing their advertising and self-regulatory regimes;

– Develop and deliver mentoring and capacity building programs in 2015 that aim to help economies adopt these principles;

– Develop an advertising regulatory checklist in 2015 that details key elements of a regulatory framework that facilitates trade and investment and protects consumers; and

– Build public awareness programs of available consumer policy tools, including self-regulatory organizations (SROs) for roll out in 2015-2017.”


Such an endorsement for best practice advertising self-regulation is unprecedented. The endorsement is even more remarkable when the nature of some of the political systems of APEC members is taken into account.

The opportunity offered to industry is immense but quick action is needed. This will require planning, programs and funding. It is an opportunity that must be grasped.

Glen Wiggs

Challenge for APAC Ad Regulators

Globally the Internet media captured 20.9% of total adspend in 2013 – second to TV, which had 39.6%. But Internet adspend is growing at an estimated rate of 16% pa according to ZenithOptimedia. In 2016 Internet is predicted to have 28.2% share but TV would still be well ahead at 38.3%.

There is a similar situation in APAC with the Internet share last year being 21.1% and TV 41.0%. Internet share is predicted to increase to 29.3% by 2016.

Australia is leading the trend – TV at 31.6% was only a whisker ahead of Internet at 31.5% in 2013 but in 2016 it is predicted that Internet will be the leader with a market share of 42.5%.

The trend of rapidly growing Internet adspend is a challenge for countries where there is Government regulation of advertising because of the cross-border nature of the Internet. Europe has a cross-border self-regulatory regime where Internet ads are required to comply with self-regulatory codes. This model is a possible solution for APAC.

Note: All data is sourced from ZenithOptimedia

Adspend Continues to Grow in APAC

The robust growth in adspend in the APAC region in the first quarter of this year (See 23rd July post) has continued in the second quarter. The latest Nielsen Global AdView Pulse report records growth of 6.4% for the January-June half-year compared with the same period in 2012. Although less than the sensational growth of 13.1% in Latin America the APAC growth was more than double of the world average of 2.8%. See graph.

As adspend is a driver of  economic growth this is good news for the APAC region.


Asian GDP Growth Slows

A report released by the Asian Development Bank reveals that economic growth in a number of Asian countries failed to reach the Bank’s predictions. As a consequence the bank has lowered its predictions for 2013 and 2014 as shown in the following table.

Note to enlarge click on table.


Vietnam Has Largest Internet Audience in Southeast Asia

New research by Comscore finds that Vietnam has the largest Internet audience in Southeast Asia. Furthermore the audience is grew 14% in the past year and added another two million Internet users. The growth rate in Philippines was greater with 22% in the past year. There was little or no growth in Malaysia and Singapore as shown on the Comscore table (Click on table to enlarge)

Screen Shot 2013-08-05 at 10.56.46 AM

In terms of market share of media adspend on the Internet all six countries are below the Asia-Pacific average of 17.8%.  ZenithOptimedia records that the Internet share of media adspend in 2012  was 7.5% in Singapore, 3.2% in Philippines, 3% in Malaysia,  1.2% in Vietnam, 0.5% in Thailand and 0.03% in Indonesia.

With the increase in the Internet audience it is logical that Internet adspend will follow. As previously mentioned this will be a regulatory challenge as the Internet is cross-border.

The Comscore report can be downloaded from http://www.comscore.com/Insights/Presentations_and_Whitepapers/2013/2013_Southeast_Asia_Digital_Future_in_Focus


Internet Advertising as Share of Adspend

The adspend market share of the Internet medium varies greatly from country to country. In South Korea Internet the adspend share is 30.1% but in Indonesia it is only 0.03%. The top three countries are South Korea with 30.1%, Canada with 26.9% and Australia with 25.8%.

Availability of the Internet to consumers is an important factor. This has been measured by Internet World Stats by determining the penetration of the Internet – the percentage of the population that can access it. These figures vary widely also. The country with the highest penetration in 2012 in the APAC/APEC region is Australia with 88.8% followed by New Zealand with 88%. The countries with the lowest penetration are Papua New Guinea with 2.1% and India with 11.4%. The world penetration total is 34.3% with 2.4 billion users.

There is a general correlation between penetration and adspend market share but there are significant exceptions. For example Singapore has a high penetration rate of 75% but a low rate of Internet adspend – only 7.5% of market share. Also Thailand has 30% penetration but Internet has only 0.5% of market share.

The economies with the highest predicted growth rates are Philippines and Hong Kong. The Philippines is predicted to grow 122%% from 3.2% in 2012 to 7.1% in 2015. Hong Kong is predicted to grow 125% from 2.4% to 5.4% over the same period.

There are two strong trends in virtually all countries:

– The Internet share of adspend is growing rapidly

– The number of Internet users is increasing as Internet penetration grows. In some countries they are nearing saturation.

As mentioned in other posts the challenge for regulators and industry is to establish best practice advertising regulatory regimes to ensure advertising on the Internet is legal, decent, honest, truthful and socially responsible.


The analysis that follows combines adspend Internet market share data taken from ZenithOptimedia and penetration data taken from Internet World Stats. The 2012 adspend share is actual, the 2015 adspend share is projected, the penetration data (% of population with access to Internet) is actual for 2012.

 Country             Adspend  2012         Adspend 2015          Penetration 2012

South Korea             30.1%                      31.9%                           82.5%

Canada                      26.9%                      35.3%                           83.0%

Australia                    25.8%                      35.1%                           88.8%

Japan                          21.1%                      23.5%                           79.5%

Taiwan                       19.9%                      24.4%                           75.4%

Russia                        19.7%                      28.9%                           47.7%

USA                            19.0%                      27.8%                           78.1%

China                         17.8%                      26.6%                           40.1%

New Zealand            17.7%                      23.9%                          88.0%

Singapore                  7.5%                       11.6%                           75.0%

Chile                             7.3%                      11.3%                           58.6%

Peru                              4.4%                        7.2%                           36.5%

India                             3.5%                        6.0%                           11.4%

Philippines                  3.2%                        7.1%                           32.4%

Malaysia                       3.0%                        4.3%                           60.7%

Hong Kong                 2.4%                        5.4%                           74.5%

Vietnam                        1.2%                        1.8%                           33.9%

Pakistan                        0.9%                        1.4%                           15.3%

Thailand                        0.5%                        0.7%                           30.0%

Indonesia                     0.03%                     0.03%                         22.1%

Brunei                              NA                          NA                             78.0%

Mexico                             NA                          NA                             36.5%

Sri Lanka                         NA                          NA                             15.0%

PNG                                  NA                          NA                               2.1%

Adspend Grows in APAC

Advertising expenditure (adspend) in the APAC region grew 5.8% in the first quarter of 2013 compared with the same quarter in 2012. This compared with global growth of only 1.9% but was second to Latin America with an outstanding 11.9% growth. Adspend in Europe declined 4.4% and North America was flat.


The data comes from Nielsen’s quarterly Global AdView Pulse report. Nielsen reports, “The best performers in the region were China, Indonesia and Philippines, which all saw roughly 20 percent growth. Japan was the only country where ad spend decreased (down 1.1%).”

As adpsend is a driver of economic growth the future is positive for the APAC region.

Adspend Both Up and Down

The Global Financial Crisis has had a significant effect on advertising expenditure (adspend) in APAC and APEC countries. In some countries there was a reduction in adspend and in others there was increased growth. Adspend is a driver of economic growth thus those countries with increased adspend should enjoy continued economic growth. However sustained long-term growth does require best practice advertising regulation.

 The table below uses ZenithOptimedia data to show the adspend growth on an inflation-adjusted basis from 2011 to 2012.

Indonesia                     +16.9%

Vietnam                       +11.8%

Hong Kong                  +10.5%

Peru                             +9.6%

China                           +8.8%

Russia                         +8.1%

Thailand                      +5.8%

Philippines                   +4.7%

South Korea                +4.2%

Japan                          +3.6%

USA                             +2.8%

Canada                        +1.5%

Chile                            +1.0%

Malaysia                      +0.4%

India                            -2.0%

New Zealand               -2.6%

Australia                      -3.0%

Mexico                        -7.1%

Taiwan                        -7.2%

Singapore                   -7.5%

Pakistan                      -8.8%

Advertising is a Driver of Economic Growth

Advertising is a driver of the economy. In March 2012 McKinsey & Company released a report “Advertising as an Economic Growth Engine” that found that advertising expenditure (adspend) could increase the rate of economic growth of a country by 15%. On the basis of the McKinsey research the greater the adspend as a proportion of GDP the greater the rate of growth. This has been confirmed by other research. It is a well-known truism that companies that spend a significant proportion of their total income on advertising will grow faster than those who don’t. The same is true for individual countries – hence the need for Governments to encourage rather than restrict advertising.

Significantly the report also found that adspend has a multiplier effect –“advertising contributes significantly more to economic growth than its share of spending.”