Data from the Association of Communication Agencies of Russia (ACAR) shows that advertising market volumes in Russia increased by 28% year on year to 122 billion roubles in the 1 half 2011, with 1Q volumes also up 28% to 63.5 billion roubles.
The key driver of growth was online advertising, which in 2Q 2011 grew 60% quarter on quarter to 8.9billion roubles. Internet advertising volumes continue to boost the market with 60% year on year growth rate in both context and online media advertising, with TV advertising growing at average rates and a significant breakthrough in cable–satellite advertising volumes.
Advertising market volume by sector, changes in 1Q and 1H 2011 in billion roubles
The figures bring the advertising market almost back to where it was prior to the 2008-2009 economic crisis which hammered Russian advertising.Advertising budgets of major advertising buyers were slashed in order to reduce outlays, with radio advertising taking the biggest hit as internet advertising took off.
1st quarter advertising market volumes, 2008-2011 in billion roubles
Vladimir Efstafiev, Chairman of the Expert Commission at AKAR, says television advertising has been the leading sector throughout the rebound, and opened up cable TV as a growth market.
“Outdoor and radio advertising segments offset during the crisis are gaining momentum after a long period of 20% shortfall of advertising volumes. Yet, TV segment preserved its leading positions among advertisers and paved the way to new young but promising cable TV advertising.”
Efstafiev adds that the relative expense of TV advertising, domestically, is now largely driving growth in other sectors, with the boom in cable TV use in Russia making it a logical next step for advertisers, after the relative international inexpensiveness of Russian TV advertising shielded the sector to some extent during the downturn.
“There are several drivers for that notion which are: growth of prices on central TV channels which have almost reached average European levels with 20% year on year indexation. Another factor for cable TV advertising demand increase is cable channels expansion and increase in volumes of audience. The last but not the least is central channels pre-booked slots. For instance, several channels still allow advertisers to book time slots in advance for years. That happens because Western companies can easily afford prepayments of advertising slots which are much cheaper than on the West. That is the main advantage of Western companies who has 2/3 of the entire Russian advertising market. The effectiveness of their business in Russia is times higher assuming same prices on products globally and incomparably cheap advertising in Russia.
However, since Russian advertising market has almost recovered from the crisis the prices have grown by 20-25% year-on year that made companies look for alternatives such as cable TV. I believe it is a current tendency.Same as the Internet which volumes in terms of advertising market are growing tremendously in parallel with access location expansion and growth of sales of internet devices. Internet gives the access to the main audience and enables precise evaluation of advertising efficiency and effectiveness.”
MindShare Interaction agency data shows that online internet advertising expenditures were up to 5.01 billion roubles as of the 1H 2011 with the leading segment, context advertising, earning 10.5 billion over the same period. Dmitry Ashmanov, General Director in MindShare Interaction says the turnaround in advertising fortunes reflects the wider economic rebound, with specific consumer sectors leading the charge.
We believe the main drivers for advertising sector growth were insurance agencies, developers and real estate agents whose media budget was up 56% to 36 million roubles and 74% to 20 million roubles respectively in the 1 half 2011. Banks who were among the first to reduce media expenses during the crisis were this time unsurpassed with 185% media budget growth to 324 million roubles”
Ashmanov noted that industry leaders were gradually increasing media budgets
“Same as a year before Procter Gamble cemented its leading position in terms of volumes of internet advertising. The dominant positions in the Top 10 of internet advertisers industries were kept by automobile business and telecoms with Megafon outperforming other competitors increasing media budget by 71% to 215 million roubles”
Year on year budget distribution change in advertising segments
The advertising market differs greatly from region to region. The share of regional TV advertising is falling sharply. According to AKAR estimates the share of regional TV advertising has fallen from 25% to 19% over the last three years, with this believed to reflect a preference for Federal channels. The Printed press advertising market in regions remains stable, with regional radio advertising booming.
Regional radio advertising share year on year dynamic
Media advertising market budget year on year dynamic