A world of advertising: the way we do things in the United States may dominate world media markets, but it's not the only way - advertising in other countries

American Demographics, Nov, 1997 by Kip D. Cassino

The old concept of "international" as a good resting place for passed-over sales execs no longer applies. The need to understand the world's markets grows in importance every year. Media measurement is an important part of the understanding, especially for U.S. firms used to working with the relatively precise information available for North American markets. Until recently, media estimates for much of the rest of the world have been difficult or impossible to come by.

Less-developed nations lack good information for a good reason: they don't collect it with any regularity-if at all. But even some of the world's larger economies are less obsessed with data than Americans are. Most of the world's nations, for instance, don't pay the same attention to "sales" statistics as U.S. researchers would like. Employee counts and other sparse business information-much of it available only in hard-to-decipher local units-are all that's available.

That being said, sources do exist. The Central Intelligence Agency provides good data on telephones, radios, televisions, and communication-satellite use for literally every country in the world, and it updates its information annually. Circulation figures for the world's newspapers are published every year. The World Bank (among other sources) keeps reasonably good records of many national statistics-including per-capita incomes, literacy rates, imports, exports, and a variety of other information. Finally, many large industrial firms provide worldwide sales estimates. This assortment yields enough raw material to construct a useful picture of world media spending.

AdWorld is a model that estimates advertising spending for specific media in 130 countries, encompassing virtually all of the world's population. It offers usable estimates of global media spending that are "approximately right" rather than exactly wrong. On the consumer side, it contains estimates for television, radio, print, outdoor, cinema, point-of-purchase, promotions, direct marketing, catalogs, ad production, and other (includes public relations, sales-force training and support, marketing research, and online marketing). For business-to-business, it covers print, direct marketing, promotions, catalogs, trade show and exhibitions, distributor materials, and ad production.

Panoramic View

In a world where more than $1.4 trillion will be spent to market goods and services this year, more than 90 percent of the total is concentrated in 28 nations-most of them in Europe, the Pacific Rim, and North America. This set of countries accounts for about 17 percent of the world's population. Advertising spending per person ranges from a low of less than $1 in Laos to more than $2,100 for every man, woman, and child in Japan, the most intensely advertised-to population. These two Asian countries are geographic near-neighbors, but economically, they are light years apart.

About two-thirds of all media dollars spent around the world this year ($956 billion) will be spent to market consumer products and services. The rest ($478 billion) will be spent by businesses pitching their wares to other businesses. In developing economies, the ratios divert from this norm. Countries in the Middle East see nearly a 50/50 split between consumer and business-to-business marketing expenditures.

By itself, the United States accounts for over one-third of the planet's media spending-more than $479 billion, all told. But on a per-capita basis, the Japanese spend more to advertise consumer goods and services. "I'm not surprised," says Michelle Foster, head of marketing for Gannett Newspapers. "In Japan, everything's an ad."

AdWorld estimates that more than one-third of the world's total marketing expenditures ($508 billion) go for promotions rather than straightforward advertising. Efforts ranging from cents-off couponing, stocking fees, sweepstakes, and discounts to distributor rebates, finders' fees, and other costs of doing business in various national markets are the biggest single part of the world's marketing costs. This single category accounts for two in five global consumer-related marketing dollars, and three in ten business-related marketing dollars.

Five Snapshot Segments

By dividing the world's nations into five reasonably equal-sized groups by population (quintiles), it is possible to get a sense of the level of international variation in media spending. The first quintile includes China and neighboring Vietnam and Laos, as well as Nigeria. These four nations are home to one in four human beings, but they receive less than 0.25 percent of world media spending. The average Quintile 1 resident is exposed to less than $3 worth of marketing expenditures during the course of a year.

A total of 43 nations make up Quintile 2, including most of Africa and central Asia. They collectively house 19 percent of the world's population and receive a little less than 1 percent of total advertising spending. India and Egypt dominate the 11 nations of Quintile 3, which comprise 20 percent of world population and a little less than 2 percent of media spending. Brazil, Mexico, South Africa, and the Russian Federation join 40 other nations in Quintile 4, which total 18 percent of the world's people and 6 percent of global media spending.