Did you know? Understanding your market's media preferences and research habits is essential for reaching your audience.
Construction has always been a bellwether industry in the U.S. and globally. And for good reason: healthy growth in the building industry not only increases direct industry revenue, but also drives growth in areas as divergent as construction equipment, building materials, household appliances and even consumer electronics.
The industry, in fact, closely mirrored 2012’s on-again, off-again growth in the economy at large, with promising results in the beginning of the year, followed by lackluster performances in the third and fourth quarters. Among the three sectors, residential construction was up significantly, non-residential construction grew modestly and public spending was down.
Nevertheless, U.S. construction spending rose by at least 5%, according to various estimates, and is expected to match that level of growth in 2013. At least one analyst predicts double-digit growth in construction, touching all three sectors, between 2014 and 2017.
Globally, residential construction revenue has been flat and is not predicted to return to the industry's 2006 peak of $2.5 trillion in revenue until about 2015.
Let’s take a look at the landscape of some of the major worldwide regions. We’ll also review what advertising channels have been effective and see what is potentially in store for 2013.
Brazil: Competition in the Brazilian market is fierce. Seven years ago, 11 construction equipment manufacturers were operating in Brazil and today there are 30. Growing populations in emerging markets are creating demand for new housing, which is contributing to the construction boom.1 Online ad spend in Brazil broke records in 2011. It reached a record amount of $141 million reais (U.S. $79 million), growing more than any other medium during that time.
Europe: Construction accounts for well over 10% of European GDP and employs over 15 million people. Europe spends 5% of GDP on infrastructure construction vs. the U.S., which spends 2% of GDP.2 Online advertising reaches over 97% of users in the UK, France and Germany. In Europe, online advertising has proven to be more effective than in the U.S. with users being 72% more likely to visit an advertiser’s site after being exposed to display advertising vs. 49% in the U.S. Users are 94% more likely to conduct a search query after seeing an advertisement vs. 40% in the U.S. Additionally, display advertising on social networks continues to grow: 47% growth in the U.K and 68% growth in France.3
India: Compared with the global economy, India is still growing at a much faster rate. Infrastructure as a percentage of the GDP has been steadily rising over the years, from 4.9% in 2004 to about 7.9% in 2011.4
China: China’s construction industry accounts for 6.7% of its GDP, making it the 4th largest industry in China for the past 5 years. Total revenues for the top 200 contractors is $1.48 trillion – a 13% increase from 2010. Profitability, as measured by the average operating margin of this group of companies, decreased from the previous year by 0.1% totaling 4.60%. Construction in the oil, gas and petro-chemical industries are among the fastest growing. Residential construction is currently facing a decline.5
Overall, Asia and Latin America are projected to have the strongest growth in the construction industry. From a marketing communications standpoint, the key takeaway is that trends vary greatly by country -- making it essential for you to go local when you go global.
1. First Research; International Monetary Fund
2. Eurostat, Construction sector statistics, December 2009; Huffingtonpost.com/2010/12/20/us-infrastructure-spendin_n_798979.html
3. Europe Digital Year in Review--2010, February 2011; ClickZ: Display Ads More Effective in Europe than U.S., March 2010
4. Imageads – WWP India
5. McKinsey, March 2012 and China Statistical Yearbook & July/August 2012 International Construction Magazine
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