HONG KONG: A new report is predicting Hong Kong’s digital advertising revenue will exceed that of television for the first time next year, driven by online video streaming as retail sales tail off.
PwC’s global entertainment and media outlook 2016-2020 claims the city’s Internet advertising market will be worth US$1.07 billion by 2020, up from US$650 million in 2015, or a compound annual growth rate of 10.6 per cent, as advertisers target customers watching videos on their mobile phones.
The milestone shift in spending comes as traditionally strong television advertising in Hong Kong has been hit by growing competition from digital media and falling retail spending by mainland Chinese tourists, said Cecilia Yau, PwC Hong Kong’s entertainment and media partner.
“Hong Kong has been enjoying the benefits of an increasing advertising dollar for so many, many years,” she said.
“The decrease in the number of [mainland Chinese] tourists means total dollars on the retail market has dropped, which has reduced the advertising dollars going into mass media, like TV.”
April’s retail sales fell 7.5 per cent on last year, led by a 16.6 per cent drop in sales of watches and other valuable gifts, a segment traditionally popular with mainland tourists.
Television advertising revenues fell 9.2 per cent to US$732 million last year, the study showed, but are expected to rise at a 2.4 per cent compound annual growth rate to US$825 million, by 2020.
Yau said there was still ample opportunities for broadcasters, but only if they create new partnerships, put a premium on live television, and use technology and data to improve viewer engagement.
Internet advertising is expected to overtake broadcast television revenues globally this year, and hit US$260 billion by 2020, fuelled by the growth of paid search, such as Google AdWords, the business consultancy claimed.
Wilson Chow, TMT leader for PwC China and Hong Kong, said the city has been slower to reach that milestone because of limited applications supporting mobile payments.
Hong Kong ‘s Internet advertising market can expect compound annual growth of 10.6% until 2020. Photo: Dickson Lee
Revenue from Hong Kong’s mobile video internet advertising market is expected to account for 35.7 per cent of total mobile display internet advertising revenue by 2020, as advertisers tap into a more captive audience, Chow said.
Newspaper publishers will see their share of advertising revenue fall to 3.3 per cent in 2020, down from 9.4 per cent in 2016, the report predicts.
Despite being more resilient than many of its overseas counterparts to the growth of online news, Yau warned Hong Kong’s publishers must develop better ways to counter an expected ongoing fall in circulations, and tighter advertising budgets.
“Our local print media has not been able to embrace digital very well.
“Effort needs to be made to put digital at the heart of their whole business plan,” she said.
The report also predicts the Chinese box office to surpass that of the United States next year, as a growing middle class spends their money on cinema tickets.
Yau called the shift an opportunity for Hong Kong’s film industry to cooperate with film makers in mainland China, as seen with recent Stephen Chow blockbuster Mermaid.
