With a wide array of TV stations, newspapers, magazines, billboards and, more recently, mobile- and computer-accessible platforms, the media sector in the Philippines is experiencing steady growth, with a range of opportunities on offer for those willing to get involved in this dynamic and developing market. Television looks set to remain dominant in the near term, while print is likely to continue to decline slowly, and the period ahead should see some major developments in the use of new media for advertising purposes (see analysis).
The industry’s growth trajectory is set to continue going forward, provided the economy stays on its current expansionary path, with both the IMF and the World Bank forecasting growth of just under 5% for 2012. External factors, including the lingering aftereffects of the global financial crisis, slower-than-expected growth in the US and the crisis in the eurozone, among others, may have a negative impact ahead, potentially reducing remittances from Filipinos working abroad and corporate spending on advertising.
OPEN TO CHANGE: Despite the potential external risk factors, the country’s demographics are favourable, and the youthful population remains open to new concepts and ways of delivering a message. As a result, the domestic market is branching out into new areas, with the recent success of viral campaigns showing many the way forward. According to Felipe Gozon, chairman and CEO of GMA Network, the rise of new technologies will put an increasing premium on the quality of content. “With an expanding middle class as well as a rising population, growth of the industry should continue. The challenge for us in the media business, with technology spawning new ways of engaging the audience, is to keep up with the consumer’s increasingly speedy access to information and content. The battle among media companies is slowly shifting to providing the best content across all media platforms, as digitisation sets in,” Gozon told OBG.
TELEVISION: Television has long been the dominant media form in the Philippines and still takes the lion’s share of ad revenues. It is also the main source for news and entertainment for the majority of Filipinos. Figures from global market research firm Synovate show that in 2011 free-to-air TV penetration was around 98% – up one point from 2007. Cable television came in significantly behind this and has been slipping: it had 55% penetration in 2008-09, down to 46% in 2010-11.
According to a recent report from global market research firm AC Nielsen, between January and September 2011 television’s share of advertising spend averaged 77% of the national total, up from 74% in the same period the previous year. This came on the back of 4% growth in the TV penetration rate between 2008 and 2011. Around P146bn ($3.31bn) was spent on television ads in the first nine months of 2011, out of a total P190bn ($4.31bn) for tri-media – print, radio and television. Spending on TV spots was thus up some 19% year-on-year for the first three quarters of the year.
NETWORKS: The number of networks has been steadily increasing in recent years, with the Associated Broadcasting Company-5 network relaunching as TV-5 in 2008, joining the Metro Manila market and pursuing an aggressive strategy to gain advertising spend.
The largest share of the TV market has historically belonged to the ABS-CBN Corporation network. A pioneer in Asia, having launched the region’s first-ever commercial TV station, it now owns a film studio (Star Cinema), a recording studio (Star Records), publishing firms, radio stations, websites and direct-to-home cable networks. The firm’s Regional Network Group contains channels broadcasting in TV and radio around the archipelago. ABS-CBN also broadcasts via cable internationally. The network comprises 40 VHF television stations, 16 UHF TV stations and 28 stations under the Studio23 name. In addition, it has 11 cable and satellite channels and seven international subsidiaries. On AM radio, it owns and operates three stations and five affiliates, while on FM, it has 15 stations and 10 affiliates.
Number two in terms of viewership is the GMA Network, with some 47 VHF-based TV stations – one of which is an affiliate – 13 UHF TV stations and 23 radio stations under its wing, across the country. Three of its TV channels are also on cable elsewhere, targeting a significant market – overseas Filipino workers (OFWs).
TV-5 is now third in the Philippines in terms of viewership and has a new media centre in Mandaluyong, due to open in 2012. TV-5’s main stations are DWETTV and DWNB-TV (Aksyon TV), while it also runs the Radyo5 92.3 News FM radio station.
According to Gozon, industry players will need to be prepared to adapt to a changing market, given developments such as the rise of new media. “Change is on the horizon for Philippine media and television. As such, media companies need to be able to adapt quickly and often. This is true not only because of technological advancement, but also due to the fickle nature of the Philippine TV-viewing public,” he told OBG.
RADIO: Radio has long received the second-largest amount of spending on advertising in the Philippines. Figures from the World Association of Newspapers (WAN) for 2010 show P53.24bn ($1.2bn) spent that year on radio spots, up from P22.12bn ($502m) in 2005. AC Nielsen figures suggest that radio ad spend reached P22.31bn ($506.4m) in the first half of 2011.
According to the November 2011 AC Nielsen “Media Radio Audience Measurement” survey, the top local FM radio station is DZMB, also known as 90.7 Love Radio. Love Radio has been the country’s leading radio station for the past decade, attracting listeners across a range of demographics in Metro Manila and a number of other cities nationwide. In mid-September 2011, another measure of the market, “The Personal Radio Listening Survey” carried out by Applied Marketing Research, found that the Manila Broadcasting Corporation, owner of Love Radio, had the two other most popular FM stations as well, 101.1 Yes FM and 96.3 Easy Rock. In terms of audience share, Love Radio took 18.2%, followed by Yes FM (9.9%) and Easy Rock (6.5%).
PRINT: Print receives the third-largest amount of ad spend, which the WAN figures put at P11.63bn ($264m) in 2010, down on P12.01bn ($273m) in 2005, while AC Nielsen recorded P5.83bn ($132.3m) for first-half 2011.
Indeed, the print segment has been in decline for a number of years in the Philippines, as has been the case in a number of other markets around the world. Yet figures from the first half of 2011 do seem to have bucked that trend, according to AC Nielsen, with the P5.83bn ($132.3m) total registered representing an increase of some P366m ($8.3m) year-on-year.
The print media segment has a long and lively tradition in the Philippines. It is also an effective way of reaching the better-off sections of society, according to recent research, with the majority of broadsheets in English – indicating an educated and likely higher-class readership. Results released in September 2011 from a survey by Synovate showed that more than 50% of those in the upper socioeconomic classes read newspapers and magazines, along with 42% of the upper-middle-class group. For lower- and middle-income households, the figure averaged 39%.
Overall, the survey showed the total readership of newspapers steadily falling, from 36% of those polled in 2007-08 to 29% in 2010-11. According to the Synovate poll, the front page, followed by the entertainment section, were the two most-read parts of the paper. National news was ranked as seventh-most-read and business news was only important to about 10% of those surveyed. For magazines, there was a similar decline during the period surveyed, with readership dropping from 32% to 22% of the total population.
OUTDOOR: An area that is doing particularly well in terms of ad revenues is outdoor advertising, or out-of-home (OOH) media. The top two spenders in the OOH segment in first-half 2011 were Smart Communications, with P79.61m ($1.81m), and Suyen Corporation, with P71.235m ($1.62m). In first-half 2011, spending on this segment went up 2% year-on-year, to P2.2bn ($49.9m), according to the AC Nielsen figures.
Billboards in particular are a cheap alternative to trimedia advertising and have become increasingly popular in the Metro Manila area. This is partly due to the higher road density in the city, but it is also due to worsening traffic congestion, which gives them high viewership from motorists and commuters trapped on the road. Indeed, it is no coincidence that a July 2011 AC Nielsen survey showed that around half the billboards in Manila were positioned along the famous Epifanio de los Santos Avenue (EDSA), while 29% were located along the Southern Luzon Expressway.
Billboards have been the cause of some debate, however. Concerns have centred around the technical and engineering side of things, with the recent typhoons, for example, bringing down several such displays in fatal accidents. Another issue is that of licensing, with some unauthorised billboards eventually being dismantled. The issue of content has been raised as well, with rules now in force pertaining to what can be displayed, particularly regarding the presentation of women.
SPEND TRENDS: Among advertisers, firms in the consumer goods market spend the most, with personal care products and fast-moving consumer goods coming in on top. Telecoms providers have been increasing their ad spend, while real estate firms have also been boosting their advertising budgets, in particular. The latter group has been riding a wave of new condominium development in and around the capital, with this targeting the middle classes, rather than the high end, as has traditionally been the case with real estate ad campaigns. Spend has promoted the financing of real estate purchases as well, as developers have tried to entice the middle classes into buying new properties. According to AC Nielsen, more real estate advertising money has been spent in OOH than in traditional tri-media.
Telecoms companies, meanwhile, have been spending across the board, on TV, radio, print and OOH segments. Competition in this market is fierce, not least because telecoms firms are increasingly becoming media and advertising outfits themselves, providing an emerging platform for advertising via, for example, text-based campaigns (see analysis).
The largest advertisers are undoubtedly big consumer goods companies such as Unilever, Procter & Gamble and Nestlé, the top three firms in terms of ad spend in the first half of 2011. Unilever Philippines spent the most, at P18.81bn ($427m), followed by Procter & Gamble, with P14.36bn ($326m), and Nestlé, with P10.18bn ($231m) – an 82% year-on-year increase.
“The advertising spend increase is driven by consumer products,” Vlad Bunoan, the deputy-editor of the News Digital Media Group at ABS-CBN, told OBG. “This has been pretty steadily the case for a while now.” Indeed, according to AC Nielsen, personal care products grabbed the largest share of the ad spend in first-half 2011, at P30.72bn ($697.3m), some 31% higher than the same period of 2010. Breaking down advertising spend by product category, shampoo accounted for some P13.9bn ($315.5m), or roughly a third of the personal care product total.
AGENCIES: The landscape for advertising and media agencies has changed over the past year. The first development in the market has been the virtual elimination of wholly Filipino agencies from the higher levels of the sector. Nowadays, nearly all the top agencies are affiliated with an international outfit, with firms such as Saatchi & Saatchi, Leo Burnett, JWT, Ogilvy Worldwide and McCann Worldgroup all having a presence. Two other major players are TBWA/Santiago-Mangada-Puno and BBDO Guerrero/Proximity Philippines.
The second recent trend has been the creation of a number of more specialised media agencies, mostly operating under the roof of one of the big outfits, but handling a specific type of work, such as media placements, creatives, or below-the-line activities. These media agencies are able to command better rates with media outlets as they can provide bulk discounts. Their establishment also show a maturing of the local market into a range of more specialised units.
The sector’s insider bible when it comes to business-to-business news and ratings is the magazine Adobo, which in 2011 won the prestigious business communication prize, the Quill Award, for the second year running. The industry has many other awards and ranking systems, including the Araw Awards of the Advertising Congress and the Kidlat Awards of the Association of Accredited Advertising Agencies of the Philippines.
OUTLOOK: Print will likely continue its slow decline, although many titles – currently led by magazines – are already switching to electronic versions. Print outfits hope to exploit new platforms that are cheaper than laptops and desktops, such as tablets and smartphones, which are becoming more widely used among middle-class Filipinos in the crucial Metro Manila market.
Many in the sector are upbeat about the prospects for 2012 and beyond, although much will naturally depend on external factors. A global downturn would likely hit remittances from OFWs and foreign investment, having a knock-on effect on domestic consumption and ad spend, and likely prompting a focus on cheap delivery systems such as OOH. Although external risks may result in some choppiness in the short term, with positive fundamentals in place and new platforms playing a growing role, the media and advertising sector looks set for continued expansion in the longer term.
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