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Russian advertising market volumes in 1H 2013

The Russian Association of Communication Agencies (RACA) reported that advertising market volumes in Russia increased by 12% year-on-year to RUB 155 bn (excluding VAT) in the 1H 2013. Print media segment was the only medium that showed decrease in volume compared to January-June 2012.

Advertising volumes by media type in January-June 2013

Segments January-June 2013, RUB bn Growth rate y-o-y, %
Television 75.0-75.5 12
including free-to-air 73.2-73.7 12
cable-satellite 1.78 24
Radio 7.1-7.3 14
Print media 18.7-18.9 -6
including newspapers 4.5-4.7 -5
magazines 9.2-9.4 -2
advertising publications 4.8-5.0 -14
Outdoor advertising 20.9-21.1 9
Internet 31.2 30
including display advertising 7.8 13
contextual advertising 23.4 37
Other 2.2 11
including indoor advertising 1.7 7
advertising in movie theaters 0.5 26
TOTAL 155.0-156.0 12

Source: RACA
http://www.akarussia.ru/knowledge/market_size/id3526
(in Russian)

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Online advertising decelerates in FY12

Translation of an article published in RBC daily newspaper on February 7, 2013

The online advertising market seems to be reaching maturity as its growth rates slowed down from 56% in 2011 to 35% in 2012. While producers of consumer goods are increasingly focusing on online outlets turning away from television, producers of alcoholic beverages and carmakers saw a decline in their online advertising budgets last year.

The Russian advertising industry expanded 13% year-on-year in 2012 to RUB 300bn (approx. USD 10.01bn), according to a report released by the Russian Association of Communication Agencies. Display and contextual advertising rose 35%, down from 56% in 2011, as companies spent a total of RUB 56.3bn (approx. USD 1.88bn) to promote their products and services online. The deceleration trend was mostly apparent in the display advertising segment, which slowed down from a 45% growth rate in 2011 to just 17% in 2012. Contextual advertising also fell short of 2011 growth rates, having expanded by 45% instead of 63%. Overall, online advertising ranked second in the advertising industry trailing only television.

“Maintaining the growth rate at 50% is unrealistic given the high base effect,” RBC’s Corporate Sales Director Stanislav Povolotsky pointed out. “In the first six months of 2012, RBC’s online advertising rose 40%, but in the second half of the year advertising budgets shrank, especially in the car segment, which dragged down digital advertising,” he said, adding that the recent ban on online alcohol advertising also had an adverse impact on the industry.

Povolotsky went on to say that products that used to focus on TV advertising are scaling up their online footprint, especially in everyday goods, and also such premium products as watches and perfumery.

TV advertising is also losing momentum. In 2012, advertising spending rose by just 9% to RUB 142.3bn (approx. USD 4.74bn), down from 18% in 2011. Nevertheless, television remains the most efficient advertising outlet. “TV is still showing robust growth rates and is viewed by many advertisers as the most efficient means of communication for engaging with consumers,” Andrey Brainovich, managing director at BBDO Group said, adding that the upsurge reported in the last several years was due to the post-crisis recovery. In fact, advertisers have finally recovered to pre-crisis levels, according to Alexey Belyaev, head of the research department at Video International Analytic Center.

Meanwhile, radio advertising rose 23% in 2012 to RUB 14.6bn (approx. USD 487.32m), up from 15% in 2011 on the back of lower spending in the TV and online segments. Nevertheless, radio advertising budgets still lag far behind other media, Dmitry Orchenko from Aegis Media communications group pointed out. Restrictions on outdoor advertising could also have benefited radio advertising, along with a recovery in the auto industry, as Toyota, Ford, Volkswagen, Mitsubishi Motors stepped up advertising, Mariya Smirnova from Zefir Media noted.

Advertising in print media showed a marginal growth rate of 2% reaching RUB 41.2bn (approx. USD 1.38bn), but still ranks third after TV and online advertising.

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Russian Internet advertising loses ground

Translation of an article published in RBC daily newspaper on November 7, 2012.

The value of Russian advertising market rose to RUB 205bn (approx. USD 6.65bn) during the first nine months of 2012, up 14% year-on-year, the Russian Association of Communication Agencies (RACA) estimated. Growth in above the line (ATL) advertising slowed to 25% from 31% in H1. Market participants commented that advertisers have been cutting their budgets, while focusing on television advertising.

Russia’s television advertising market grew 9% year-on-year to RUB 96.6bn – 97.1bn (approx. USD 3.13bn – 3.15bn) in 9M 2012, according to RACA’s analysts. Experts of advertising holding Video International predict that television advertising will expand by 8% as of the year-end. “In all likelihood, advertisers cut back on spending in the first half of the year due to concerns about a possible double dip recession. Their concerns did not pan out, which is why customers have decided to spend these funds now,” Roman Kuznetsov, deputy director for marketing research at Video International’s Research Center, opined.

The value of the Internet advertising market reached RUB 37.9bn (approx. USD 1.23bn) during the reporting period, rising by mere 40%, down from 45% during the first six months of 2012. ATL advertising demonstrated the slowest growth of 25% in 9M 2012 compared to 31% in H1 2012.

“The growth is substantial, although its pace has somewhat declined. Moreover, amid overall budget cuts, advertisers while assessing the efficiency of various media, prefer television as the main media currently. Spending cuts have impacted other media, including the Internet,” ADV digital media Executive Director Tatyana Kokanovich said.

Radio advertising advanced 20% in 9M 2012, slightly down from 21% in H1 2012. The lower growth is attributable to seasonality: July and August traditionally see low activity in the radio segment, said Mariya Smirnova, CEO of advertising sales house Zefir Media. Many national companies scale down their advertising campaigns during that period, but the low activity of advertisers in the third quarter is offset by an upsurge in the fourth quarter, she added. Smirnova projects growth of over 20% in radio advertising as of the year-end.

ADVERTISING VOLUMES BY MEDIA TYPE IN JANUARY-MARCH 2012

Segments Jan-Sep 2012, RUB bn Growth rate y-o-y, %
Television * 96.6-97.1 9
including free-to-air 94.8-95.3 9
cable-satellite 1.78 38
Radio 9.4-9.6 20
Print media 28.8-29.0 3
including newspapers 6.3-6.4 13
magazines 13.5-13.7 1
advertising publications 8.8-8.9 -2
Outdoor advertising 29.4-29.6 10
Internet 37.9 40
including display advertising 11.6 25
contextual advertising 26.3 48
Other 2.6 20
TOTAL 205.0-206.0 14

Source: RACA

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TV lures clients away from print media

Translation of an article published in RBC daily newspaper on May 11, 2012.

The Russian advertising market climbed 14% in January-March 2012 to RUB 61bn-62bn, as its growth rate halved year-on-year, according to data released by the Russian Association of Communications Agencies (RACA). Print titles trailed behind other media, having gained only 1%.

The print media turned in the worst showing compared to other media in terms of advertising sales in the first three months of the year, with sales were up only 1% to RUB 8.4bn-8.7bn. The bulk of this growth was generated by newspapers, with advertising up 13% to RUB 1.9bn-2bn, while magazines remained flat at RUB 4bn-4.1bn, and advertising titles reported a 4% decline to RUB 2.5bn-2.6bn.

“Advertising publications have been losing income for several years now, and this process got under way long before the crisis, as advertisers, which used to focus on this type of publications, are turning to other media, primarily the Internet, but also free titles covering specific topics and distributed on the regional level, as well as mobile advertising, etc. The Internet provides greater flexibility and efficiency compared to print advertising publications, which also face distribution issues and have limited outreach, and thus lower efficiency,” Alexander Yefremov, expert from Video International analytic center pointed out.

The expert went on to say that profit dynamics differed for magazines depending on their segment. “If you look at monthly glossy magazines and business weeklies, the two major magazine types which determine the landscape in the magazine segment, monthly glossy magazines (for women, men, on cinema and celebrities) have been losing revenue or stagnating due to a downturn in advertising budgets for perfumery products and cosmetics, while business weekly titles have suffered from lower demand for car-related ads. The downturn in revenue of business weekly titles wasn’t even offset by TV guides, which reported an 8% growth rate,” Yefremov noted. Print titles were thus unable to compete with the television advertising industry, which turned out to be stronger in three key product categories: perfumery and cosmetics, medicines and dietary supplements, and cars, the expert pointed out. When advertisers start cutting back on their advertising budgets, they prefer to focus on TV ads at the expense of print advertising.

ADVERTISING VOLUMES BY MEDIA TYPE IN JANUARY-MARCH 2012

Segments Jan-Mar 2012, RUB bn Growth rate y-o-y, %
Television 31.1-31.6 10
including free-to-air 30.7-31.2 10
Cable and satellite 0.43 55
Radio 2.4-2.6 19
Print media 8.4-8.7 1
including newspapers 1.9-2 13
magazines 4-4.1 0
advertising publications 2.5-2.6 -4
Outdoor advertising 8-8.3 12
Internet 10.1 43
including display advertising 2.6 25
contextual advertising 7.5 50
Other 0.8 18
TOTAL 61-62 14

Source: RACA

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Advertising market back to pre-crisis levels

Translation of an article published in RBC daily newspaper on February 22, 2012.

Russia’s advertising market amounted to RUB 263.4bn less value-added tax in 2011, rising nearly 21% from the previous year’s levels and 4% from those seen in the pre-crisis year of 2008, the Russian Association of Communication Agencies (RACA) estimated.

Advertising holding Video International’s Marketing Research Director Sergey Veselov said that 2011 was a landmark year for the advertising market as it managed to outperform the pre-crisis levels. The figures are not adjusted to inflation, he added. If inflation is taken into account, the growth rates are not so impressive, and the Russian advertising market no longer ranks among the world’s top 10 as was the case four years ago. “This fact reflects the general economic environment in the country,” he said. Nevertheless, spending on television advertising rose 18% to RUB 131bn. If political advertising is factored in, which reached USD 1bn in the election season of November-December 2011, this growth amounted to 19%.

Despite the current uptrend in television advertising, the share of advertising placement on TV is expected to fall by 1%-2%, due to rapid expansion of Internet advertising, Aegis Media Managing Director Mikhail Voshchinsky predicted. This year’s performance is predicated on the market environment and sales in the first quarter, although most advertising buyers concluded contracts on TV placements in late 2011, he went on to say.

Advertising in printed publications expanded 6% to RUB 40.4bn in 2011, which is the lowest growth among all advertising media. By contrast, Internet advertising demonstrated the highest growth of 56%, reaching RUB 41.8bn. Experts pointed out that advertising buyers are becoming more interested in video advertising. Russian video portal RuTube estimated that video advertising sales exceeded RUB 830m in 2011, Gazprom Media Digital (GPMD) CEO Natalya Dmitriyeva said. The company expects video advertising to grow to RUB 1.5bn - 2bn this year. The market is expanding on the back of strong activity by FMCG companies, including Procter & Gamble, Unilever, Mars, and Reckitt Benckiser. These companies were active in using Internet video last year, although opportunities for placing commercials on video portals were limited. GPMD expects brewing companies to commence Internet advertising this year.

Outdoor advertising rose 15% to RUB 34.4bn, according to RACA, slightly below News Outdoor’s 22% forecast. Espar Analyst director Andrey Beryozkin attributed this result to changes on the Moscow market caused by a reduction in the number of advertising surfaces and prohibition by the Moscow authorities of a number of advertising formats. The shortfall in revenue from the dismantling of street banners alone amounted to RUB 1bn.

BY-SEGMENT BREAKDOWN OF ADVERTISING SALES IN 2011

Segment 2010 2011 Growth on 2011
Billion rubles %
Television * 110.8 131 18
including free-to-air 109.2 128.9 18
cable-satellite 1.58 2.16 36
Radio 10.3 11.8 15
Printed publications 38 40.4 6
including newspapers 8.2 8.8 7
magazines 18.3 19.8 8
advertising publications 11.4 11.8 3
Outdoor advertising 29.7 34.3 15
Internet ** 26.8 41.8 56
including ATL advertising 10.5 15.3 45
contextual advertising 16.3 26.5 63
Other media 3.1 4.1 32
including indoor advertising 2.4 3.2 35
cinema advertising 0.75 0.93 25
Total for ATL segment 218.6 263.4 21
Marketing services 55.1 68 23

Source: RACA

* - not including political advertising, which amounted to RUB 1bn in November-December 2011 net of VAT.

** - revised Internet advertising data in 2009-2010.

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