Region-Media - Advertising agency for Russia's regions
Region-Media Advertising agency
for Russia's regions

Advertising market volume in Russia in 2003

Experts stated that the continuing growth of Russian advertising market entailed diversification of adver-tising devices and demanded separate consideration of media and other marketing communications from the experts. Growth of media advertising market in 2003 made 31%.
Amount of advertising costs in mass media in 2003 made 2 billion 630 million US dollars.

Advertising market volume in Russia in 2003.
Volume, mln.USD, 2002 | Volume, mln.USD, 2003 | Growth, %

  Volume, mln.USD, 2002 Volume, mln.USD, 2003 Growth, %
Television 900 1210 34
Radio 90 115 28
Press 600 745 24
including newspapers* 380 455 17
including magazines 400 530 33
Outdoor advertising 400 530 33
Movie house advertising 9 12 33
Including Internet 11 18 64
TOTAL 2010 2630 31

* - including special-purpose advertising periodicals

Under estimate made by ACAR experts, share of Russia advertisers’ budget reached 62%, that made 1,620 mln. US dollars. Advertising in regions made about 28% of media advertising budgets as compared with 26% in 2002. At the same time, regional advertising budgets at television made 260 mln.USD, at radio - 35, in press - 190, in outdoor advertising – 240 mln.USD.

By experts’ estimate, the largest advertisers spend for direct marketing and other communications not related to traditional advertising in mass media more than 24% of advertising budgets. Expenses of twenty-five per cent of the largest advertisers made 50 per cent of such communications market.

Particular indexes of growth were shown by Russian market of BTL services, which made USD 840 mln. in 2003.

Volumes of BTL services advertising market

Volume in USD mln., 2003:

Consumer Promotion sales stimulation and goods promotion designed for the end consumer, including:
creative designs and advertising materials production (creative production), cost of promotion actions and third parties services (supplier costs), cost of sampling (sampling), of prizes (incentives), etc., fee (commission) of BTL agencies (agency fees)
USD 220 mln.

Trade Promotionstimulation of sales network for development of distribution, turnover acceleration and increasing of sales volume, including: creative designs and advertising materials production, cost of joint projects and third parties services (supplier costs), cost of prizes and souvenirs, fee (commission) of BTL agencies (agency fees)
USD 200 mln.

Direct Marketing, including
a) direct postal and е-mail advertising (direct mail/email),
b) catalogues,
c) telemarketing,
d) internet (online interactive),
e) TV shops,
f) SMS and other communication devices designed for reaction or direct sales,
g) cost of creative production of DM,
h) printing/production of advertising materials (print/production),
i) cost of databases (list/database services),
j) postal and production expenses (lettershop/mailing),
k) fee (commission) of DM agencies (agency fees)
USD 250 mln.

POSM and In-Store Visual Communications designing and production of advertising materials for use in sales points, including local production and import (local production and imports), rent of advertising constructions and other equipment (direct response displays and other equipment/signage rental).
USD 120 mln.

Event marketing special promotion actions, including sponsorship, branding and PR-support (sponsorships with PR coverage).
USD 50 mln.

TOTAL:
USD 840 mln.

In 2004, direct marketing communications remained the most dynamic developing part of advertising market of Russia. The total volume of BTL services market in 2004 may reach USD 900 mln., and by 2010, as forecasted it will increase at least 5 times.

First of all, it is caused by:

a) forming of large extent of competition in all goods groups and prices categories at the Russian market by this time
b) development of new information technologies that enable feedback and dialogue with the consumer
c) global trends resulting in shift of emphasis and budgets redistribution for the communications not connected to the traditional advertising in mass media, but designed for feedback, development of relations and measuring of consumers’ reaction.

At estimation of advertising market volume, the Advisory council of RAAA used data of company TNS Gallup AdFact on advertisement monitoring by various carriers (not considering discounts and taxes). At the calculation, method of independent expert estimation on calculation of actual advertising expenses approved by the Advisory council of RAAA was used. It is necessary to note that up to date the estimation results are preliminary.

Notwithstanding reduction of total percentage of the advertising market growth as compared with the similar showing of the previous year, the domestic advertising market continues to display active growth showings. This fact is especially evident on the background of global showings.

The economic recession that started at the end of 2000 and intensified after the 11th of September in the USA – the country with the most developed advertising market, had the most negative influence on development of the world advertising market. However, by the recent forecast of CMR/TNS, the leading company in the area of advertisement monitoring and supplier of strategic marketing information, in 2003 all over the world advertising expenses of goods and services producers will grow by 3.3% and reach the level of $117.5 billion. The gradual increasing of advertisement amount observed at the end of 2002, became obvious illustration of progressive revival of the advertisement market.

On the basis of analysis of forecasted quarterly data of CMR/TNS for 2004, we may conclude that the largest growth (4.5%) will be displayed by the advertisement market in the first half of the year as compared with the similar showing of the previous year. Depreciation of advertising expenses growth rate is expected in the 3 and 4 quarters of 2004 (2.7% and 1.6% respectively), as compared with the higher showings of the end of the previous year, when the advertising market started displaying gradual growth.

According to CMR/TNS data, the most active growth of advertisement will be in the Internet (7.4%) and on cable television (4.8%). However, it is necessary to note than nowadays television for Spanish-speaking part of the USA population is being actively developed. As a result, increasing of advertising expenses is observed in this sector (forecast for 2004 – 9.2%), that reflects the existing demographic situation and increase of advertisers’ interest to this segment.

Under RAAA forecast, the volume of Russian advertising market by 2005 will grow by 1 bln. USD and reach 4 bln. USD. At the same time, structure of the market will change insignificantly.

To experts’ opinion, share of allocation of advertising resourced in the press for the specified period will decrease from 29% to 25% and make 930 mln. USD, including decreasing of the share of advertisement in newspapers by 4% - that is to 13% and will make 480 mln. USD, in magazines – will remain at the level of 12% (450 mln. USD). Share of the outdoor advertisement segment will decrease by 2% - to 17%, its volume will make 650 mln. USD.

Thus, we may conclude that advertisers estimate efficiency of advertisement in printed mass media as lower than that on TV. It is also interesting that the largest growth of advertisement amount on total of 2003 is observed in the Internet - 75%. At the same time, in the total amount of advertising media market of Russia on total of the I half of 2003, the share of the Internet made 8 mln. USD, while share of television made 530 to 540 mln. USD (growth by 38%).

As for forecasts, experts agree on that advertising market in 2004 is likely to develop without considerable leaps. Advertisement volume on television will grow approximately by 24%, in magazines - by 29%. Peculiarity of Russia is small share of radio at the advertising market (4-5%) and, to the contrary, large share of the outdoor advertising (growth by 18% in 2003). In general, to the experts’ opinion, market growth is by 80% provided due to inflation and only by 20% due to appearing of new advertisers.

And again, in 2003 growth of Russian brands was accelerated considerably – in such an extent that we may speak of beginning of competition of domestic marks for advertising market. By the present moment,  60% of the brands advertised in mass media belong to Russian producers. In 2004, further significant growth of regional advertising market is forecasted. Each year this showing makes 25 to 30%. First of all, it is related to the cities with population of one million and more, where purchasing capacity of citizens is high – St.Petersburg, Rostov-on-Don, Ekaterinburg, etc.