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What: Globally, media owner advertising revenues are forecast to grow by 6.4% in 2014 to US$516 bn, according to a report by Magna Global.
Why it matters: Following this forecast, Latin America will have  a 15% increase driven by the digital media strategies related to the Soccer World Cup, especially mobile platforms which account for 27% of market share.

Brasil 2014 - mascota -Of the US $31bn of additional advertising expenditures expected in 2014, almost 60% (US $10bn) will come from North America and Emerging Asia (US $8.5bn),according to Magna Global, IPG mediabrands´ global media strategy unit.

In terms of individual markets, US and China markets will provide nearly 50% of the world market’s growth (US $9.5bn and US $5.5bn respectively) followed by Brazil and Indonesia (US $4.5bn combined).

Global advertising growth (2006-2019)

Magna global 1 -

Key findings

  • The combination of a improved economic outlook and record incremental spend generated by several non-recurring events will boost marketing activity ( mid-term elections cycle,  The Winter Olympics, The Soccer World Cup) will be key in generating the strongest annual advertising growth since 2010 (8.4%).
  • Advertising revenues will grow by double digits again (15.4%) in 2014, mostly driven by higher-than-expected economic inflation -especially in Argentina- and by soccer madness as the World Cup returns to Latin America for the first time in 30 years.
  • In the US, media owners advertising revenues are forecast to grow by +6.0% this year, to US $168bn- an increase from December 2013 forecast of +5.5%- thanks to an improved economic outlook and non-recurring events: 2014 mid-term elections,sports events worldwide and the implementation of the Affordable Care Act.
  • Non-recurring 2014 sport events will contribute to global TV growth (+7.2%) compared to 2.7% growth in 2013.

Advertising growth by major geographical regions (2013-2014)

Magna global 2 -

  • Digital media continues to grow by double digits globally, although the growth rate will slow-down slightly due to the maturity achieved in many markets. Still, digital spend will increase by %16 this year to nearly US $140bn and 27% global market share (2013: 25%).
  • Of that US $20bn in additional spend, the bulk will come from social media formats (US $4.5bn), search (US $10bn) and video (US $2bn), while non-social, non-video display formats (e.g. banners) are stagnant globally and experiencing a steep decline in several mature markets.
  • Mobile media (campaigns on smartphones and tablets) is now capturing the bulk of digital media growth. In 2014 it will grow by US $10bn to US $27bn, a growth rate of 61% compared to just 9% for non-mobile formats, and -1% for non-mobile display.
The advertising economy in Latin America continues to grow, and according to our report is the only region that will have a growth rate of double digits, reaching 15% by the end of 2014.

“Although inflation plays an important role, there is no doubt that the eyes of advertisers are set on the Soccer World Cup in Brazil which has just started. This event is the key driver of the advertising industry in Latin America this year,” said Shaffia Sánchez, President, World Markets, Magna Global.

Advertising growth in LatAm and U.S.

Latin America advertising revenues will grow by double digits again (+15.4%) in 2014.

This growth is  mostly driven by higher-than-expected economic inflation (especially in Argentina, following the peso devaluation earlier this year) and by soccer madness as the World Cup returns to Latin America for the first time in 30 years.

This is despite an economic environment that is anything but buoyant: the IMF recently cut its real GDP growth forecast from 2.9% to 2.5%, thus predicting further slow-down compared to the already-sluggish 2012-2013.

Argentina

Argentina -Driven by inflation of media costs, ad spending is expected to grow by 28% to 35.5 billion pesos (US $ 6.3 billion approximately according to the official exchange rate in 2013 of 15.46) this year , even though the economy is in a period of downturn about to enter recession (0.5% of real GDP growth forecast by the IMF).

The advertising market in Argentina has also experienced a big boost because of the World Cup to be played in Brazil, its neighbor and rival country.

TV  is expected to grow advertising revenues by 30%. Spending on digital media will have an increase of 35% taking into account the relatively low market share of 8.5% driven by social and mobile formats.

Brasil
Brasil, uno de los mercados con mayor crecimiento en América LatinaBrazil will be at the center of the media and marketing world in the summer of 2014 when the FIFA World Cup returns to the land of soccer for the first time since 1950. Advertising spending was strong during the first months of this year and TV prices had a sharp increase, which led to raise the annual growth forecast to 15.8%.

This is bound to bring incremental spending from domestic and international advertisers and drive media inflation well above general inflation despite the sluggish economic environment (1.8% real GDP growth) and social discontent, relieving economic hardship.

Although there was a cutback in the long-term growth forecast, the high single-digit growth between 2015-2019 and 2016 Rio Olympic Games should help Brazil to leave the # 6 position as the largest advertising market in 2013 to be located at # 4 position towards 2019.

Chile

Chile efeservicios 188Chile is some kind of economic stability oasis in South America. Reflecting a growing economy, the advertising market will increase 2.6% in 2014 reaching US $ 1.4 bn and reaching 5.1% in 2015, which is a decent growth if taken into account the low inflationary environment.

Television and newspapers are the major media categories in Chile with 49% and 22% market share respectively.

Colombia

Colombia Digital 265Colombia has shown a robust growth in recent years. Advertising spending had a higher growth than GDP growth for five consecutive years.

An optimistic outlook for 2014 forecasts a 7.6% advertising growth reaching almost COP 9,700 million (US $ 5.2 billion), slightly above the nominal GDP growth of 7.0%.

Ad growth will be driven by an expansion in the economy (4.5% growth in real GDP with moderate inflation of approximately 3% per year) and strong consumer confidence.

Television is the leading category in media, accounting for two-thirds of total advertising spending.

México

méxico bandera -The advertising market in Mexico is valued at more than 72 billion pesos (US $5.7 bn).

Despite a slow start this year, the market grew 5.0% in 2013, which was even faster than economic growth (nominal GDP growth of 3.1%). Amid an economic acceleration (+6.2% of nominal GDP) advertising spending will have an additional growth of 8.5% in 2014.

The market is controlled by television with 60% market share.

Television will get the greatest benefits of the World Cup 2014 because TV ad spending will grow by 7.0%. As a result of soccer popularity in Mexico, its’ ad spending is expected to increase by US $ 35 million this year just by the presence of Mexico in the World Cup.

North America
In the US, media owner advertising revenues will grow 6,0% in 2014,reaching US $ 168 bn.This shows an increase compared to December 2013 forecast of +5.5%.

Sochi 2014 - 1 -The main growth drivers are the improved economic outlook and record incremental spend generated by several non-recurring events. The biggest of those events is the mid-term elections cycle followed by the Winter Olympics.

The soccer World Cup will be make a modest boost at the scale of the entire market, but a significant one in the Hispanic television sector. Another one-off spending driver this year is from insurance companies, healthcare institutions and local governments communicating around the implementation of the Affordable Care Act.

As always, US television will benefit the most from the non-recurring drivers of 2014, with advertising revenue growth of +8.3%, following 2013’s stagnation (-0.6%). National TV benefitted from the Olympics in the first quarter. Local TV will gain from political and health-related campaigns throughout the year. Hispanic TV will be boosted by the soccer .

What: Brazil 2014 sponsorships will reap FIFA revenues of $1.4 billion
Why it matter: Because the FIFA World Cup is sponsored by 24 leading brands, most notably Coca-Cola, the sponsor with the highest demand among all South American teams.

Translated by Candice Carmel
Brasil 2014 - mascota -

With only a few months to go before the start of the 2014 soccer world cup in Brazil, there is already a clear winner: the Fédération Internationale de Football Association (FIFA), which will rake in at least $4 billion (3 billion euros) in sponsorships and television rights for the sporting event.

The revenue projections were made by FIFA secretary general Jerome Valcke above, who said that $2.6 billion (1.95 billion euros) of the total will come from worldwide TV rights of the matches, with the other $1.4 billion (1.05 billion euros) raised from sponsorships deals with 20 major companies, most notably Coca Cola, the sponsor in highest demand among the different participating teams.

Cash boost

Sponsorship revenues projected by FIFA Brasil 2014 - patrocinadores -are 10% higher than those obtained in the last World Cup in South Africa, and are divided among three categories of affiliated marketers: partners, national sponsors, and international sponsors.
In the first category, the partners are Adidas, Coca-Cola, Hyundai, Emirates, Sony, and Visa. They are followed by international sponsors: Budweiser (which will finally be able to sell beer, despite the fact that Brazilian law prohibits its consumption in sports facilities), Castrol, McDonalds, Continental, Johnson & Johnson, Oi, Moypark, and Yinglisolar.

The third group is composed of national sponsors: ApexBrasil, Centauro, Garoto, Itaú, Liberty Seguros, WiseUp, Fifa.com, and Football for Hope.

In the 2010 South Africa World Cup, FIFA earned approximately 2.73 billion euros in television and sponsorship rights, and posted expenses of 970 million euros. For Brazil 2014, FIFA expects to post revenues of 3 billion euros, or 10% more than the last World Cup, confirming that even in times of crisis, elite soccer continues to be big business.

Protecting the brand

FIFA also reported that revenues from ticket sales are a minor source of income compared to the previous two categories, since TV rights and sponsors are the main revenue sources of the international soccer body, which is more than willing to protect its business and take action against piracy.

Valcke said that FIFA will intensify its fight against piracy in Brazil, because in the past six months, the soccer body presided over by Joseph Blatter has detected “some 100 cases of brand infringement in Brazil.”

Eighty percent of those brand infringement cases come from small businesses “using the mascot or emblem of the World Cup,” which cause only a small economic impact. “The remaining 20% are caused by large corporations, who are aware of what they are doing, and it is this group that we will pursue through legal action,” said Auke-Jan Bossenbroek, head of brand protection for FIFA.

In addition, FIFA wants to limit the peddling of World Cup-related products in and around the soccer stadiums where the matches will be held. During all games, two or three members of the organization will tour the perimeter of the stadiums and remain in contact with the authorities to avoid any unauthorized commercial activity.

The top banana of sponsorships

fifa-coca cola -Coca-Cola is one of the most solicited brands for sponsorships by the soccer teams participating in the World Cup. In fact, it holds the most sponsorship contracts among the South American teams. The multinational is one of the official sponsors of the Argentina, Chile, Uruguay, and Ecuador soccer teams―four of the six teams selected by CONMEBOL, the South American Soccer Federation, to play in the world championship starting in June.

The six South American teams will receive a total of $180 million from their sponsors, according to a study by Euroamericas Sport Marketing, a marketing agency.

The firm notes that this is the highest sponsorship investment in the history of the World Cup, surpassing that of many European teams that will be participating in the event.

After Coca-Cola, the most prominent sponsors include Adidas, Claro, Gillette, and SanCor. The countries whose soccer teams have snagged the largest sponsorship contracts to date are Argentina, followed by Brazil, Colombia, Ecuador, Chile, and Uruguay.

And the beer?

Beer will enjoy the greatest product sponsorship presence at the World Cup. The Budweiser brand will be visible in Brazil 2014 thanks to its contract with FIFA, while each national team from the region will have its own local beer sponsor: Argentina with Quilmes; Colombia with Águila; Chile with Cristal; Ecuador with Pilsener; and Uruguay with Pilsen.

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