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

Advertising market in 2005: markets of individual media carriers

In 2005, advertising market of Russia showed significant growth having increased its volume by entire billion US dollars up to $5.01 bln. The market is expected to add one more billion in 2006 and reach 6 billion dollars. It is expected that the nearest five years Russian advertisement will continue its progressive development.

According to ACAR data, advertising market of Russia in 2005 grew by 28% and made $5.01 bln., at that TV market reached $2.33 bln. (growth by 37%), press market made $1.39 bln. (growth by 16%), outdoor advertisement made $910 mln. (growth by 28%) and radio market made $300 mln. (growth by 20%).

Diagram 1. Dynamics of various media budgets in total budget of Russian advertising market in 2000 – 2005, and forecast till 2010.

Dynamics of  various media budgets in total budget of Russian advertising market

According to all-Russian research of holding company Romir Monitoring held in August of 2005, respondents mostly trust the central television – 44% of the interrogated (Diagram 2).

Thus, we may speak of domination of television in Russia, since the television advertisement is the most popular with advertisers (the share is 46.5% in the advertising market in 2005), at that growth of TV–advertisement surpass the general growth of the advertising market (in 2005 growth of all the advertisement market made 28%, and that of television advertisement – 37%), demand for television advertisement exceeds the offer. At that, television enjoys the most confidence of citizens (44%). Besides, Russians spend watching TV 46.6% of all the time devoted to media.

Diagram 2. The question was asked to respondents: Which source of information you trust most? Dynamics (2003-2005) of citizens’ trust to various media carriers. Poll by Romir Monitoring

The  question was asked to respondents: Which source of information you trust most?

Obviously, trust to the central television has been growing recent years. 79% of respondents called the central television their usual channel of receiving information. At that, Romir Monitoring noted that the less a residential settlement of respondents is, the more often they called TV their main source of information and expressed the most trust to it. For instance, in the cities with population of million and more, 28% expressed trust to TV, and 53 % among village inhabitants.

Trust to central radio was shown by 8% of the interrogated, at that more trust, 10%, was observed among village inhabitants and pensioners, which is explained by inaccessibility of other communication means for them. Thus, radio is the second media carrier by trust level. At that, the radio market is quite small (its share in 2005 made 6% of advertising market of Russia, and is unlikely to grow the nearest years), however, the tendency of reduction of the radio market share is global.

As it is shown on Diagram 2, during the recent years trust to the central press also fell (from 8% in 2003 to 2% in 2005). In the recent years the share of press market decreases evenly (in 2004 the market share of advertisement in the press made 30.7% of the entire advertisement market in Russia, in 2005 it decreased to 27.7%, and in 2006 ACAR forecasts 25.6%).
During 2005 the share of those who trust the Internet also grew (to 5%), at that в in the cities with population of million and more, about 8-9% of the interrogated expressed trust to the Internet. 7% of respondents called Internet the usual channel of obtaining the interesting information. At that, expansion of Internet in Russia is estimated about 2% of population.

Notwithstanding that in the recent years development of regional media carriers market is observed, however, according to results of poll held by Romir Monitoring, level of trust to them remains very low (for 2005: TV  – 3%, radio – 2%, press – 2%). People trust the central mass media more than the regional ones, that are to a great extent controlled by local authorities. As before, they watch and trust Moscow.

Television

Television as before remains the main media carrier in the world (in 2005, by estimate of ZenithOptimedia, 36% of world amount of advertisement market). On result on 2005, advertisement on TV took $2,330 mln. or 46.5% of the entire advertisement market in Russia. Under forecast of ACAR, in 2006 television advertisement market will show good growth of 28% (at the general market growth of 22%), thus reaching the level of $2950 mln. (that is 49.2% of Russian advertisement market). In 2005, just during the first six months market of television advertisement grew by 33% (with the entire market growth of 28%).

Further growth of budgets on TV will be mainly due to prices growth, which, under forecast of leading media sellers (“Video International” and NTV – Media), will grow by 25 – 30% per year (Diagram 3). Nevertheless, prices of advertisement in Russia will remain considerably lower that the world ones, that is quite justified by lower purchasing capacity and living standard in Russia (see advertising costs per head provided above).

Diagram 3. Media inflation of TV for 2001 – 2005 years and forecast till 2008.

Media inflation of TV for 2001 – 2005 years and forecast till 2008

Starting with 2002, media inflation on TV was gradually decreasing, however, on forecast of VI and “NTV – Media”; in 2006 prices growth for TV advertisement by 30% is expected. It is connected with absence of opportunities for quantitative increasing of advertisement amount, that is why the market grows due to prices growth. Prices growth by 30% at once, to opinion of VI and NTV – Media, will help to equalize offer and demand that grows incommensurably fast. According to preliminary results, for 2005 demand grew by 36.5%, and offer from TV channels – only by 7.8%.

One of the main questions of 2005 was restriction for advertisement of beer implemented since January, 1st. However, in spite of the restrictions, volume of beer advertisement (see Table 1) in January, 2005, by number of minutes reduced only by 1.7% as compared with the similar period of the previous year, in February the volume in minutes reduced by 14.9%, and since March began growing again, and by results of the first six months grew by 4% as compared with the first six months of 2004. At that, number of purchased points of rating (GRP) reduced by 16% as compared with the 1st quarter of 2004.

The most noticeable growth of volume of beer advertisement (see Table 1) was at TNT and Pervy. The channels assisted brewers having placed in the evening the programs first of all interesting to the target audience of beer advertisement. Thus, if at prime time at Pervy a serial is shown that is watched mainly by women, recently boxing is broadcasted there, with lower ratings, but covering men as target audience. And TNT extended showing of night program of its high-rating project “House - 2” from 10 to 30 minutes, thus having covered youth audience.

Table 1. Volumes of beer advertisement at some TV channels of Moscow. Comparison of the 1st quarter of 2005 with the similar period of 2004 (according to data of TNS Gallup AdFact).

Channel I quarter 2004 II quarter 2005 changes
Perviy Channel 642,75 931,68 45,0%
Russia 791,43 750,93 -5,1%
NTV 1371 975,8 -28,8%
STS 857,83 669,88 -21,9%
ТNТ 727,08 1247,33 71,6%
RenTV 553,52 736,68 33,1%

The main trends of TV programming of season 2004 – 2005

During the television season 2004 – 2005 Russian television became still more entertaining and politically indifferent. As before, Pervy channel and “Russia” stroke the keynote and struggled for leadership during all the season. Nothing fundamentally new was brought by the resent years into ratings distribution: shares of “Russia”, STS and TNT were growing, shares of NTV and Pervy channel were falling. However, in April of 2005 channel “Russia” passed Pervy by rating, and did not yield up to the end of the season. STS also considerably caught up with NTV. The main question of the season 2005 – 2006 is: who will become the leader? Before end of 2005 serious struggle for ratings was in progress, to earn as more points as possible and sell advertisement for 2006 more expensive.

We should note that serials remain the main trump in struggle for ratings for TV channels both in Russia and in the whole world. Thus, American TV channel ABC managed to move to the second place from the fourth having shown in the past season the television serial “Desperate Housewives”. And TV channel NBC fell from the first place to the fourth just because is finished showing of television serial “The Friend”.

“Russia” also obtained its victory in the season due to serials. During New Year holidays of 2005, Pervy channel interrupted showing of the most popular serial “Clone” for one week, and it was that moment when “Russia” inserted serial “Karmelita” into the viewing grid, the audience got interested and the serial at once obtained high rating. After finishing of the serial in season 2005 – 2006, “Russia” inserted three serials in pre-prime and two more in prime time.

By the way, in the new season STS also actively catches up with NTV due to serials. STS inserted three serials in the evening prime time: “Don’t be born beautiful”, “Lyuba, children and divorce” and “My fine nanny”. An on weekend several series of “Desperate Housewives” are shown. Besides, this year STS obtained one more TV channel “Domashny”. The new TV channel is oriented mainly to women audience, with extensive day-time program; thus, in the day-time broadcasting it will compete mainly with the Pervy channel and “Russia”.

NTV, that had always been an information and political TV channel, became more entertaining in this season, having replaced programs “Switch off the light” and “People’s voice” by talk-shows “To barrier!” and “Sunday evening with Vladimir Solovyev”. Respectively, traditional audience starts leaving the channel, in season 2002 – 2003 share of NTV was 14.5%, in 2003 – 2004 already 12.3%, and in season 2004 – 2005 it was still less – 12.1%.

During all the year TNT struggled for the broadcasting using reality shows. The most popular one, that is been demonstrated already for year and a half, “House – 2”, was placed in prime time seven days a week, besides, in pre-prime in turn at first “Big brother” was set, then it was replaced by “Hunger – 2”. On weekends the main reality shows were not interrupted, several more shows were added to them. As a result, just in 2004 due to “House – 2” TNT earned about $4 mln. just on Product Placement and sponsorship.

Surely, Russian advertisement market is still developing, but physical resources of federal TV channels are actually exhausted.

Nowadays active struggle for audience takes place, in 2005 leader changed for the first time for long period, TV channel “Russia” became the first in ratings. We will wait for results of season 2005 – 2006; they will show the winner in this hard competition.

The new act “About advertisement” will also affect greatly the ratings distribution. Starting from 1 July, 2006, the new act will limit the advertising time at channels first to 15% per day and no more than 20% per hour, and since 1 January, 2008, restriction will be established of no more than 15% of advertisement per broadcasting hour. To compensate loss, TV channels promise additional jump in prices, that will in its turn lead to redistribution of budgets of small and middle advertisers in favor of other media. We should just wait and see how many programs and channels will survive this change. However, authorities left way out both for channels and advertisers. The new act in no way regulates product placement. Possibly, in the nearest future we may expect change of advertisement form.

Radio

Considering that radio has quite a high credit of population – see Diagram 2 (according to data of Romir Monitoring, radio takes the second place after TV, 8% of population of Russia as a whole and 10% of village inhabitants trust radio), the market of radio advertisement in 2005 made 6% of all market or $300 mln. Under forecasts, in 2006 advertisement market on radio will grow by 20% (at general growth of advertisement market in the country of 22%).

According to the new act “About advertisement”, duration of advertisement on radio should not exceed 20% of broadcasting time per day, besides, radio programs may be interrupted as many times as many 15-minutes breaks are included in these programs, programs shorter than fifteen minutes may not be interrupted for advertisement.

Tendency of media holdings at Russian radio market continues, new ones are established, old ones are strengthened. Actually all leading radio stations are related to media holdings. Integration of stations into media holdings allow to reduce maintenance cost of a radio station, process of advertisement sale is also cheapened. Besides, in case of integration of several radio stations into a holding, their shares are also integrated, larger and stronger participants appear at the market.

In 2005, Russian Media Group “thickened” to six radio stations. Besides, rebranding of “Russian radio – 2” happened, which since this year changed its format to the information-broadcasting. In Moscow about one fourth part of radio stations broadcast in the information-broadcasting format, that is quite much, however, these formats are not popular enough with the audience.

As before, music and entertaining formats have the highest ratings. However, in 2005 musical radio “Disco” performed rebranding and became “Humor FM”, now it broadcasts humorous programs for entire day.

Diagram 4. Dynamics of daily audience of the largest media holdings of Moscow in 2005 (thous. persons).

Dynamics  of daily audience of the largest media holdings of Moscow in 2005 (thous. persons)

As we see on Diagram 4, Russian Media Group continues occupying leading positions at radio market. As for position of the main RMG radio station was a bit shaken this year: “Europe Plus” several times took leadership from “Russian radio” at Moscow market (Diagram 5).

Diagram 5. Dynamics of daily audience of 10 largest radio stations of Moscow in 2005 (thous. persons).

Dynamics  of daily audience of 10 largest radio stations of Moscow in 2005 (thous.  persons)

At the end or 2005, radio stations “Mayak” and “Mayak 24” consolidated into unified network “Mayak”, firmly surpassed “Autoradio” and took the 4 place in Moscow. Radio station “Retro FM” (part of holding “Europe Plus”) in 2005 seriously broke through from the ninth place to the second, thus having surpassed radio “Chanson”, “Echo of Moscow” and “Love Radio”. The latter one fell from the seventh place to the tenth. At that, actually for all the year “Radio 7 on seven hills” and “Love Radio” were going even with each other by amount of daily audience, surpassed each other repeatedly, but at the end of the year “Radio 7” after all surpassed “Love Radio” and took the ninth place in Moscow by amount of daily audience. We must also mention the meaningful consolidation that took place at the beginning of 2006. Holding “Europe Plus”, comprising two radio stations “Europe Plus” and “Retro FM” purchased another holding “Radio 7” that comprised three radio stations (“Radio 7”, “Melodia” and “Eldoradio” of St Petersburg).

Radio is quite and efficient carrier from the point of view of covering of certain audience. Prime time of radio lies in the middle of day, when other mass media actually do not reach the audience, people listen to radio on their way, at work, radio may function in public places. At that, radio stations have quite permanent, prevalent audience (for instance, television viewers are not adherents of one channel but rather switch all the time); therefore advertisement may be directed to certain audience.

However, share of the Russian market of radio advertisement is quite small (6%) and is unlikely to grow the nearest years. Nowadays in advertisers’ budgets money for radio is appropriated on leftovers (what is left from all other); radio is not taken as serious carrier. Several reasons for that may be. Probably the main reason here is insufficient market regulation, that is unacceptable for large brands, especially western ones (nowadays radio is in the lead by share of Russian advertisers: in 2003 the domestic brands covered 78% of all the money paid to radio, while at market in general share of Russian brands made 62% in 2003). Besides, nowadays many radio stations exist which sell their advertising time individually, that is quite improper for advertisers, since they have to negotiate with each radio station separately, under various conditions, it is difficult to orientate oneself in such big number of radio stations.

Low cost of television is also of no small importance, which always stays priority for advertiser. If advertisement at regional TV channel cost actually the same money for 1000 contacts as advertisement on radio, advertiser will prefer to place on TV. Radio advertisement turns out to be hostage of television.

Radio market today is very scattered, unlike markets of other media carriers. Nowadays there is no organization to unite participants of radio market such as is there on television or in press. On calculation for 2003, only about 8% of broadcasting time is filled with advertisement (at 20% allowed by the law).

Press

By amount of expenses, the press market nowadays takes the second place in Russia after television. By beginning of 2005, 46 thousand names of periodicals were registered (26 thousand of them are newspapers and 16.5 thousand magazines).

In 2004, Russian market of press made 30.7% or $1.2 bln. On results of the first six months of 2005, the press market share has already decreased to 28.8%. And on results of 2005 in general, the market of advertisement in press made $1,390 mln. (27.7% of total advertisement market of Russia) and showed growth of 16%. On forecast by ACAR, growth of the press market in 2006 will make 12% at total market growth of 22%). At that, however, Russian market of advertisement in press grows faster than that in the world. Thus, in 2004 European press market grew by 4%, of the USA – by 3.93%, of China – by 29%, of Russia – by 28%.

The share of press market reduces during several recent years, in 2000 this market was the largest of media markets (41%), in 2005 its share fell to 27.7%, and by 2010, to ACAR forecast, it will represent only 19% of total advertisement market in Russia.

Change of the advertisement market structure in press is expected. The nearest years share of magazines will increase taking some share from advertising editions, at that, share of newspapers will actually stay unchanged. Share of advertising editions in 2005 made 37.4% of total amount of the press, but it is expected in 2006 that the mentioned share will decrease to 31.6%, and by 2010 ACAR forecasts reduction of advertising editions share to 25% of total amount of press. At that, magazines speed up, in 2005 magazines took 41.7% of the press market, in 2006 they expect to have 45.9%, and by 2010 magazines share will increase to 52.8%. Dynamical growth of the magazines segment by now is explained by the experts with appearing of foreign publishing brands at the Russian market.

Diagram 6. Ratio of national and regional press in 2004. (Data by GIPP)

Ratio  of national and regional press in 2004

It is seen at Diagram 6 that magazines already cover 49% among national mass media, however among regional mass media the share of magazines advertisement is only 5%. At that, in 2004 it was regional magazines market that showed the largest growth – 36% (at general growth of magazines market by 33%, by 30% of regional market in the total growth). We should note that measurement results of the press market, especially the regional one, are quite approximate due to opacity and closure of the market. In particular, first of all market of regional advertisement remains unrated (estimates by GIPP and ACAR noticeably vary on some subjects of the Federation). Market of advertising editions is either not completely rated, sectoral and highly specialized editions are also actually not taken into account at calculation.

In spite of that press remains the second largest segment of Russian advertising market, and by growth rates the Russian press market yields only to Indian and Chinese press markets, circulation of even the most famous editions diminish.

As for the press market, Russian trends are close to global ones. In 2005 the worldwide press market was estimated as 28% (in 2005 share of Russian press market was 27.7%). At that, growth rates of printed mass media decrease. Mainly the press audience is enticed by electronic editions (according to Rospechat data, for 2004 average daily audience of Runet news web-sites increased by 65%). At that, according to poll made by All-Russia Public Opinion Research Center (VCIOM), 13% of respondents of 18 to 24 years read newspapers in the Internet (in groups of 25 years and older – not more than 4%).

Press is very popular with small advertisers (100 largest advertisers in press cover only 31.18% of all press market budget in Russia).

Newspapers are distributed in regions quite evenly (Moscow and St.Petersburg include not more than 10% of all names). According to VCIOM data for 2005, each fifth Russian (21%) actually does not read newspapers.

According to the poll performed in May of 2005 by researching company “Levada – Center”, the most popular newspaper with Russians is “Argumenty i Fakty”, it is read by 21% (including 24% of Moscowers). However, Moscowers more like “Moskovsky komsomolets”, 28% of capital residents (8% of Russians) read it. The second popular with all Russian citizens became newspaper “Komsomolskaya pravda” - 18% (including 16% of Moscowers). Russians in general prefer “Speed-Info” - 11% (7% in Moscow), and Moscowers prefer newspaper “Zhizn” - 13% (7% in all Russia).

Outdoor advertisement

By expenses amount, outdoor advertisement market in 2005 made 18.2% or $910 mln. In the first half of 2005, share of outdoor advertisement showed the highest growth rate of the “outdoor advertisement” in the world. Under ACAR forecast, in 2005 the outdoor advertisement market will make $1100 mln. (18.3% of total Russian advertisement market), showing 19% growth. However, rates of the outdoor advertisement during following years will be the lowest, by 2008 growth rates will match those of the press market at the level of 8% per year, and in 2010 growth of outdoor advertisement market will be the lowest among the main media carriers – 3% per year.

Share of the outdoor advertisement market will also reduce gradually, and by 2010 will fall the level of 13% from the current 19%.

One of the main drawbacks of outdoor advertisement is its local disposition, thus, it is governed by local authorities, not federal ones. Their competence cover placing or removal of advertising panels, distribution of tenders for placing of outdoor advertisement.

Analysis of legislation of Moscow for 2005 in the area of outdoor advertisement market regulation (see below) showed that violation of equal rights and fair auctions for placing advertisement are present. Mainly this question can be personally solved by the mayor. If such things happen at the capital market, we can hardly imagine the situation in regions. There is no efficient federal regulation, clear legislation and restriction of officials’ self-will for outdoor advertisement. Probably, the new act “About advertisement” will manage to cope with the situation.

Legislation of Moscow. Outdoor advertisement, advertisement in the subway and transport

In spite of rapid development in regions, the outdoor advertisement market in the capital is by now the most developed. Enormous number of advertising media are located in the entire city.

At the beginning of January, 2005, Government of Moscow published new resolution “About measures on development of advertisement and information in Moscow”. The document amended scheme of making agreements on renting space fir advertising media. Before, only major operators were able to make long-term five-years contracts, this document gave equal rights to all. Now those who had one-year contracts will be offered to make contract up to the end of 2006 (by that time five-year contracts will expire), following which seven-years contracts will be offered to all operators at the outdoor advertisement market. In case of operator’s refusal to prolong the contract, the place will be sold by auction.

In general, the market participants liked the document, however sorry that the resolution did not affect such important question as pricing.

In February, 2005, at meeting of city government mayor of Moscow made sudden present to Moscow businessmen having ordered his subordinates not to collect advertisement tax from signboards and navigator points. Before for simple pointer on front of building a businessman, as Moscow mayor Jury Luzhkov said, had to pay about half a million rubles to the exchequer, that was a hard yoke for small business.

At the beginning of 2005, deputies of Moscow city Duma discussed actively the program of reduction of advertising media number in the capital. We should remind of that in 2004 advertising media began being removed at the main arterial roads of the city (the Garden Ring, New Arbat, Mozhayskoye highway and others). Those advertising media owners who had contractual relations with the city received new places for their constructions.

The deputies also discussed respective legislative draft about allocation of advertisement-free areas, and also limitation of boards sizes for remaining territories. It is expected that the Red Square and the territories adjacent to sacred and historic places will completely be advertisement-free. Besides, it is planned that within the Garden Ring panels will not be more than 10 sq.m, within the Third Ring – 18 sq.m.

In March of 2005, at meeting of committee on social policy deputies discussed legislative draft “About main cultural and ethic requirements to the outdoor advertisement and artistic designing in Moscow”. Advertisement and designing must not contain: “images with partial or full uncovering of genitals, and also images of obscene gestures and poses; abusive words and expression, and also words and expression causing association with them; violation of Russian language rules”. To the deputies’ opinion, the outdoor advertisement market operators should be responsible for this; advisory council will supervise observing of the rules. However, at the first reading of the legislative draft it was ascertained that control upon observing of the advertisement legislation, including meeting the mental and ethical requirements, is performed by Federal antimonopoly service.

On March 31st, 2005, direction of Moscow government was issued, according to which all advertising constructions are subject to compulsory owner liability insurance. The reason for such direction was increasing of number of sufferers from advertising constructions. This item will henceforth be stated in all contracts of outdoor advertisement placement, and also supplementary agreements will be made to the existing contracts.

Confrontation of Government of Moscow and FAS in 2005 reached a new level. We should remind that in spring of 2004 the capital Government issued the resolution that obliged the Moscow underground to make agreement with LLC “Olymp” to grant the latter exclusive rights for placing of advertisement in the underground. The agreement cost made $ 22 mln., while by expert judgement, market of subway advertisement makes $30-50 mln. per year. In April of 2005, FAS made decision about violation of the antimonopoly legislation by the city Government and demanded cancellation of most of units thereof, since they restrict freedom of managing subject. However, in August, 2005 Arbitration of Moscow declared decision of FAS groundless. The city considers that is has all the right to dispose its property, part of which the underground. Operators of the outdoor advertisement market support position of FAS, since resolution of the Government grants the fast growing market of advertisement in the underground (30% per year) to one company on deep discount basis. After that judicial proceedings may drag on for years.

Another decision of FAS regarding advertisement on surface transport, validity of which was confirmed two years ago by Arbitration, was just ignored by mayor of Moscow. In 2003 Igor Kozlov, who headed SUE “Advertisement and information at transport”, lobbied for his enterprise exclusive rights for placing of advertisement at surface transport of Moscow. At the beginning of 2004, Federal arbitration of Moscow district declared a series of items of the Moscow authorities’ resolution invalid, which granted control upon market of advertisement at Moscow transport to Igor Kozlov, since it infringed rights of other participants of the market. In July of 2005, mayor of Moscow ordered to return the former rights to SUE “Advertisement and information at transport”. However, it remains obscure how order of the mayor correlated with competition for making exclusive contracts with Moscow passenger transport. It was planned to offer five-year contract for sale at the end of 2005 but now all the rights without competition were returned to Igor Kozlov.

Contrary to general conditions of performing of competition, also contracts were made in 2005 for placing of advertisement at Moscow Ring Road and the third transporting ring.
On results of 2005 we may mark out some trends regarding legislative regulation of outdoor advertisement in Moscow. First, there is the tendency for reduction of number of advertising media in the city. Second, at last the process of renting of advertising spaces will be regulated by law. Third, we should note that lawfulness is not always observed at renting of advertising spaces, in particular, the tender rule is violated, and officials’ directions are issued regarding granting of property to some companies.

Internet

Market of Internet advertisement by now is the most rapid-growing segment of advertisement market, both in Russia and in the whole world. In 2005 in Russia, amount of expenses for Internet advertisement grew by 71.4%, according to ACAR forecast in 2006 growth rates will be 70%. However, now the Internet advertisement market makes only 1.2% of all volume of advertising market in 2005, or $60 mln. According to ACAR forecasts for 2006, market of Internet advertisement will earn $85 mln. (or 1.4% share), having shown growth by 70%.
Under ACAR forecast, market of Internet advertisement will continue its rapid growth the nearest years, peak of such growth will fall on 2006–2008, advertisement in the Internet will grow by 70% per year, then growth rates will decrease somewhat to 52% per year, at that by 2010 share of the Internet advertisement market will increase to 4.9% of total amount of advertisement market in Russia, that will make more than half a billion US dollars.

Diagram 7. Comparison of various data and forecasts of Internet advertisement market development in Russia.

Comparison of  various data and forecasts of Internet advertisement market development in  Russia

One of the most exciting events of 2005 for those who use Internet as advertising medium was expansion of advertisement into interactive games. Test in general showed positive results. Most of games participants (88%) found this innovation positive, to their opinion, advertisement approximate the game world to reality. If advertisement in games becomes wide spread, it will open new wide prospects for advertisers, since there is opportunity for selection of audience, that is advertisement will be placed in games of certain subjects, it is easily replaceable, it may be emphasized from background by brightness, which is at times difficult to do in the outdoor advertisement, since everything around gleams from various panels, sign-board, etc.

Distribution of catalogues to patrons via e-mail is also very popular, as well as performing of advertising campaigns via ICQ, LJ and blogs. However, in Russian reality such methods of advertising are still not well familiarized, and generally speaking not effective due to insufficient equipment of most part of Russian audience.

In the USA and EU the younger generation more and more prefers Internet; the simplest way to reach audience of 16 to 25 years is gadget. Internet also provides the opportunity of direct communication with audience (interactiveness), you may trace interests of another person. Nowadays behavioral marketing in the Internet is being developed which tracks moving of a user in the network, thus finding out sphere of his interests and selecting respective advertisement for him.

In general, development of Internet in Russia is still insufficient to use it as a system of mass communication with the audience. However, Runet continues expanding, volume of advertisement in the Internet in 2005 made 1.2% of total volume of advertisement market in Russia. According to forecasts, by 2010 market of Internet advertisement will approach 5%. It is the most rapid-growing segment, at that its perspectives and advantages are present. In the world Internet advertisement already took 4% of global advertisement market. Young people more and more prefer receiving information via Internet. Advertising campaigns via Internet now become imprescriptible part of major world brands advertising campaigns.

Non-traditional media carriers

According to data of ZenithOptimedia, recently quite many new types of media have appeared. By the present moment already about 35 various segments are under analysis. The reason may be mainly exhausting of the main media potentials, especially television, which has been the main advertising medium for 10 years in the world. Now kinds of advertising become more and more varied.

We would like to speak separately of advertisement using mobile technologies, since it is mobile telephones which may enter the number of the main media carriers. Advantage of mobile telephones is wide range of covering, personified message, presence of telephone subscribers base and opportunity to select target audience. Mobile telephone will become not only means of advertising information, but namely communication device in full meaning of this term. Nowadays communication with TV audience using SMS already becomes widely spread. For instance, in spring of 2005 company “Rollton” issued interactive advertising serial “BigBon – where feelings are real”. Six series were issued, and after each of them the audience could define the plot development via SMS. Just during the first three days 8.5 thousand people voted, and for month the number of voted persons reached 100 thousand. Such kind of advertisement is extremely popular in the West, however for the first time it came to Russia in 2005. Radio “Europe Plus” also used SMS technologies, after having sent message, the radio listeners became participants of a game, according to the company, and response was shown by 5% of the radio station audience. In SMS-quiz of magazine “Cosmopolitan” performed at the end of 2004, 250 thousand people participated, more than million messages were sent for the period of the action. Similar actions allow carrying out operative and personal communication with the consumer, and also making the base of active mobile telephone users that are ready to continue communication with the brand.
Recently in the developed countries mobile television also becomes popular. Besides, using the newest technologies, outdoor advertisement may suggest to a subscriber to be downloaded into his telephone directly in the street as an image or a trailer, at that the subscriber may receive some additional bonus (images, tunes, etc.).

However, advertising specialists went still farther, now brand may also be smelled, at sales points special sprayers are installed that create specific aroma of the brand.

In addition to installation of LC–screens in shopping centers, this year three-dimensional image became popular, it may emerge suddenly, just around a person. For instance, in Japan illusion of rain may be reproduced.

However, not only the newest inventions are used for advertising. Nowadays everything may become advertising media: human body, child’s name, and names of inhabited localities. Everything is filled with advertisement: walls of houses, public toilets, and litter bins. Advertisement is written on asphalt, on blank sides of cheques and credit cards. Today advertisement may be placed not only on superstores counters, but also on conveyer belt, weigher, checks, just on packing. And advertising specialists continue finding new places for advertisement allocation.

Summing up on development of non-traditional media in 2005, we should note that more and more advertising media appear each year, however, budgets of new media are still insignificant in the total advertising budgets of the global market.

TRENDS AND PROSECTS

Frankly speaking, now, at the existing development of advertising market in Russia it became much more complicated than it was two or three years ago to analyze all the variety of advertisement, find out the trends and make conclusions in one article. From the events marked out by us like from mosaic of the modern world, the following prospects of advertising market development in Russia are formed.

The Russian market is more and more closely integrated with the global advertising market. Its growing amount and still high growth rate become more and more noticeable in the world and attractive for international participants. Great prospects of Russian advertising market development exist connected with increase of budgets of foreign and local advertisers with rise of living standard of the country population.

Media business is leading at the advertising market. It is media business that brings the main part of profit as strategic assets of any full-service agency, and its turnover measured in millions well correlates with the agencies ratings. As for media carriers, they are being actively developed, structured and specialized.

At increasingly big selection audience fragmentation is intensified. It takes place both among goods/services consumers, and among users of media channel (they are the same people after all). At that, people’s psychology is being changed, their consumer behavior and attitude to advertisement. Differentiation of traditional media channels is observed even regarding TV, not to mention the most fragmented segment of press. In the Internet, mobile communication, computer games, differentiation reaches its limit – one unique user is marked out about which almost everything may be learned. And here advertisement stops being advertisement in the initial meaning of the term and receives new enormous opportunities. Trying to protect himself from direct advertising pressure and looking for feedback (communication first of all), a consumer goes to more interactive means of communication which are now at hand (mobile telephone, Internet, computer game, etc.). Here mass advertisement, by definition not targeted to a certain user, becomes progressively less effective. An advertisement carrier that provides feedback with each individual consumer allows to find out his real behavioral portrait, preferences and wishes. After accumulation of the “new advertisement” databases, it is quite simply to offer a certain person the article and brand which he really needs. It will be perceived by the consumer not as tiresome hackneyed advertisement, but rather with thanks for help. Thus, a consumer formally gets the opportunity to escape from advertisement with actually significantly more dependence on it. Thus gradually, together with the ageing generation, market of traditional media ages and new media environment, joined with human being, grows stronger.