Advertising market of Russia in 2009 year

The first half of 2009 turned out to be not the best period of time for the Russian segment of advertising services. Representatives of RACA, the Russian Association of Communication Agencies, however, can already see some signs of their market being on the rebound. If their expectations are not justified, however, then by January of 2010 the Russian advertising business will achieve only such target goals that were forecast by leading analysts for the beginning of 2009.

As per the RACA estimation, the total volume of the advertising services market decreased by 30 per cent in the first half of 2009, as compared to the same period in the previous year, and it reached approximately 90 billion rubles. In the first quarter, the decrease was by 29 per cent and in the second quarter by 31 per cent. Major trends that were prominent in the first quarter were also quite noticeable in the second quarter. Thus the largest loss was in the print media segment, especially as far as the specialized print media were concerned, and they took a loss of over half of their advertisement volume. Newspapers got 40 per cent less of advertisement fees, with 41 per cent less for the magazines. Overall decrease of the advertising volume in the print media amounted to 45 per cent over six months.

Video International, an analytical center, that has estimated the overall decrease in the print media at 44 per cent has clarified that the smallest losses were incurred by periodicals dealing with family issues, child rearing, housekeeping and cooking, and the largest losses in terms of outflow of advertisers were taken by social and political publications, by business media and work placement periodicals.

Outdoor advertising took another downward turn. While its volume in the first three months decreased by 36 per cent, by the end of the first half of the year, the decrease reached already 39 per cent. It was especially noticeable in Moscow. In the spring of 2009 the city authorities took a decision that advertising structures installed on historical buildings must be disassembled and that billboards must be moved to the suburbs. While old advertisement structures are being removed, no new ones were put in their stead, for lack of demand. In the summer it has also become known that the Moscow City Government made another decision: in downtown Moscow there should be only 100 pieces of advertisement per line kilometer, not 180 pieces, as before. Taking into account the present dynamics of the market, however, this should not provoke advertisement space deficit.

The situation in the radio segment following the results of the first half of the year turned out to be somewhat better than it seemed after the first quarter. Advertising volume went down from 6-6.5 to 4-4.3 billion rubles, that is down by 36 per cent. The results of the first quarter were, however, showing the volume to be down by 38 per cent, so the promised rebound may have started already, especially as far as local radio stations in big cities were concerned. Thus, radio stations in St. Petersburg, as per the data from AdMonitor, a media monitoring group, had broadcast the total of 36180 minutes of advertising in the first quarter of 2009, while in the second quarter the advertising total amounted to 53056 minutes. It was not known, however, whether this result was due to an increase in advertising budgets or to discounts offered to clients by radio stations. It is quite likely, however, that the second factor may have played a major role in achieving the overall result.

The New Media segment (in which analysts lump both film theater advertising, non-broadcast TV advertising and indoor advertising—for example, using plasma-panel monitors carrying advertising in airports and supermarkets) lost 23 per cent of its earnings in the first half of the year. Taking into account the fact that the segment loss in the first quarter was as high as 35 per cent, the situation improved somewhat in this segment as well. As explained by RACA experts, the worst loss was taken by film theaters while cable and satellite television even showed some gain— approximately by 5 per cent. No one, of course, is claiming that previous volumes will be reached in the nearest future, because in 2008 the new media segment was the fastest-growing advertising segment and its key figures had gone up by 45 per cent that year.

Finally, just as in the first quarter, the TV and the Internet advertising segment has turned out to be the most stable area in terms of turning the trend of the current financial and economic crisis. The volume of TV advertising went down by 21 per cent (from 65.8-66 billion rubles in the first half of the year 2008 to 51.5-52.6 billion rubles in the same period of 2009). The decline in the first quarter amounted to 20 per cent. Analysts, however, do not see this as evidence for continuing worsening of the situation.

According to one of the RACA expert council members, some advertisers still did not “believe” in the existing crisis during the first quarter and thus they were planning to keep their advertising budgets at almost the same levels as before. In the second quarter, however, they had to adjust their plans. Besides, some percentage of the decline can be explained by the fact that in June of 2008 world soccer championship was happening while in June of 2009 there were no incoming gains for the TV segment from advertising at a comparable event. For some reason, analysts would not take into account Eurovision contest in May of 2009. Well, when summing up results of the third quarter, it should be necessary to take into account the 2008 Olympic Games, which have certainly influenced the volume of TV advertising.

There exist data showing that the percentage of regional advertising during TV channel broadcasting went up to 26 per cent while it decreased from 28 to 20 per cent in the first quarter: advertisers were certainly trying to “hook” potential consumers only in those cities where they conduct their business.

On the other hand, while giving estimates for possible results over the next few months, analysts refrain from saying something specific. The forecast by the RACA expert council can be called “moderately optimistic”: specialists claim that the situation will not be getting worse, with a proviso that all other conditions will remain the same. “If the economy collapses, no one will win”, proclaim advertising specialists. Macroeconomic forecasting does not, however, constitute their task. The RACA expert council disagrees, and in very categorical terms, with the headlines in some Russian press that sound something like “Economy engine got broken” or “Black half year of advertising.”

A separate discussion should be dedicated to Internet advertising. Even though a 15-per-cent decline was registered in this segment following the results of the first half quarter, in the period of time between January and June the online advertising volume has grown by 5 per cent (from 2.9-3.1 to 3-3.2 billion rubles). The separation of the Internet advertising segment from the rest of the market remains, in fact, at pre-crisis levels. Previously, it manifested itself in high growth rates and today it can still grow, despite the background of the general downturn. More so, following the results of 2009 the media online advertising may grow by 30-35 per cent due to the fact that the crisis accelerated the process of “moving” advertising budgets into online resources.

RACA specialists anticipate that by the end of the year they will be able, with more or less precision, to estimate the volume of contextual advertising, and the key figures, as per the preliminary estimates, seem to be even better than in media advertising. Only one player—the Begun.ru and the Rambler Media Group—have accounted for their contextual advertising results. Comparison, however, can be rather made by the number of their clients: in 2008 40 thousand clients used the company services while 30 thousand clients have been using the service over the first half of 2009. Rambler earnings from sales of textual and media-contextual advertising amounted to 516 million rubles over the period from January to July of 2009.