Recently, an analysis of advertising market has been carried out and, based on the assessment of the received data, Mediaplus Group is ready to comment on the situation in the Russian advertising market in the first half of 2017. Despite the difficult economic situation, the regional advertising market has shown increase. It is also noted that it has additional opportunities for development, with federal advertisers as the key drivers.
The advertising volumes in four main media channels (traditional for Russia, TV, radio, printed media, and outdoor advertising) remain at the same level. Overall, the Russian advertising market shows optimistic performance, especially, growth of 14%. The regional advertising market traditionally consists of two parts: local media advertising distributed within one region, and advertising in federal media or local inserts of all-Russian media. When analyzing the advertising market, it is a good idea to evaluate all these positions, so that our analysis would include all types of ad placement.
Alexander Semenov, the Director General of Mediaplus, considers this indicator as clearly positive, though with a significant number of reservations: "In our opinion, a 14% growth of Russian advertising market seems rather encouraging, especially on the background of newly reviving Russian economy. However, it would be premature to talk about any trends for growth, considering the results obtained in the first half of the year, because the breakdown of advertising intensity by months remains irregular from year to year, and this irregularity especially pertains to regional advertising, which is the subject matter of our analysis. However, despite the overall positive trend, we have not observed any significant changes. Rather, there is a continuing trend of 2016, which involves the recovery of regional advertising budgets that got reduced during the crisis of 2015, where the growth is attributable mainly to the federal advertisers, which often compensate for irregularity of their national campaigns in regions or accelerate the communications intensity in those regions that require special attention. We believe that the core growth of regional advertising remains ahead, when the owners of smaller advertising budgets will follow the leading federal players recovering their regional advertising budgets. As we know, the downside of growth of regional advertising budgets is a shortage of vacant commercial airtime on national television. Currently, we recommend our Clients to take advantage of the moment when ad placement at regional level (if there is no critical shortage) can be best planned by us and as a result achieve the best value of connecting with the audience".
The figures in specific segments have also called for comprehensive analysis. For example, the advertising budgets for the first half of 2017 were allocated among core fields needed to be promoted: 2.8 bn – trade organizations - advertising on regional television, 3.3 bn – on federal television; (the growth was 12% in the first case and 29 % in the second case as compared to 2016); medicine and pharmaceutics – 1.2 bn on regional TV, and the difference from the federal channels is particularly significant here – 14.2 bn (where the growth at regional level is significantly higher – 32% vs. 6%).
Many experts point out that Russians are now spending less on entertainment, leisure and recreational activities. Indeed, the share of these categories of advertising reduced by 4% (and now is 0.8%) on national channels and, on the contrary, increased by 51% on regional television and now amounts to RUB 0.5 bn. The advertising of public catering facilities shows a record increase at regional level, and many analysts associate this with the intensification of competition in this business environment. The dynamics suggests a two-fold increase of volume of such advertising at regional level. It brought 0.5 bn of advertising budgets to regional TV channels and 0.7 bn to federal TV channels (at this point, in contrast, we observe a sharp drop by 32%). Two categories, namely Cellular communication services, Perfumery and Cosmetics, which are very important to consumers, have become outsiders and showed drop by 49% and 34%, respectively.
Though the automotive sector is seen as the most vulnerable to crisis and all car manufacturers have experienced the decline in sales, the volume of car advertisement on regional TV channels has increased by 2.5 (budgets of RUB 0.5 bn) and on national TV channels by 2.5 bn, which amounts to decline by 5%, as in 2016 this figure was 3% of the whole television advertisement segment).
When speaking about the regional advertising budgets from the geographic perspective, the proportion of regional advertising budgets for the first half of 2017 as compared to the 1 half of 2016 is 31% for Moscow (increase by 1%), 10% for Saint-Petersburg (drop by 1%), while this figure remains the same for 27 cities monitored by Mediascope: 28%. The growth of absolute advertising volumes is observed in all directions. When analyzing these values, it is easy to see that Moscow makes the greatest contribution to the development of advertising market, while other groups demonstrate the usual dynamics without any major changes.
The increase of advertising activity is observed in large cities such as Nizhny Novgorod (where TV advertising budgets were 113 mn in the first half of 2017), Ufa – 212 mn, Krasnoyarsk – 201 mn, Chelyabinsk – 226 mn (+14%). The increase in the most cities is steady, however, only in Volgograd, Omsk, Perm and Rostov-on-Don the dynamics is “in the red”, but mostly due to the drop in the amount of outdoor advertising (which is caused primarily by sharp decline of small businesses, which traditionally use this channel of distribution and provision of information to the public). Such fall could even overlap the growth of ad placement on regional TV. A decline in the amount of radio advertising is observed in the segment of regional advertising (experts note that radio advertising gradually loses its popularity among advertisers, and this can’t be stopped). Decrease is noticed in Volgograd (-2%), Novosibirsk (-3%), Ufa (-10%) and Chelyabinsk (-1%). However, it must be said that the situation is changing during the second half of the year and can be quite different, which is especially evident before New Year holidays, when one of the segments may demonstrate an unexpected growth.
Generally speaking, however, in the first half of 2017 the volume of regional TV advertising (including Moscow and Moscow Oblast) was RUB 16 bn. This figure overlaps by 13% the indicators from the same period of the past year and surpasses the advertising volumes on federal level.