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Advertising Loses Momentum
The pace of the ad market in Russia slowed down by 3 percent on year to 23 percent in the first quarter of 2006, Association of Communication Agencies of Russia (ACAR) announced in the yesterday’s report, pointing out the growth decline was the greatest in print media and outdoor advertising. But the annual indicators may materially differ from the Q1 results, the analysts forecast, as a new Act on Advertising takes effect July 1, 2006.
The growth in Russia’s advertising slowed down on year in the first quarter, according to ACAR. It gained 23 percent to $1.25 billion in terms of money vs. the increase of 26 percent manifested a year earlier and the average growth of 28 percent achieved over the year. Nearly all market segments showed either the poor growth or the decline, though the print media and outdoor advertising suffered the heftiest losses. There, the growth shed from 16 percent to 10 percent and from 39 percent to 24 percent respectively.
The market of outdoor advertising has reached its ceiling and that is the reason of growth downswing, according to the market players. “The market was booming in the last two or three years. Its development will be more evolutionary now; it will be going up but slower,” explained Vladimir Pantyukhin, deputy director at Vershina, signaling one of the reasons could be the absence of growth in new space for advertising. “It has almost come to naught in Moscow and St. Petersburg and materially slowed down in the regions.”
As to the print media advertising, the analysts attribute poor acceleration to low indicators generally derived there. “The growth in advertising is continuously going down there, as budgets of classified-editions are flowing away into the Internet-media and alternative vehicles of advertising, for instance, the catalogues of different chains,” said Yevgeny Abov, deputy general director at Prof-Media. In size of advertising, Abov specified, the print media account for nearly half of the market and, therefore, worsen the overall indicators.
Advertising via Internet proved the sole market segment with the steady growth. ACAR that had spelled out no separate data on the segment for the Q1'05 signaled the Internet advertising stepped up 75 percent in the first three months of this year.
Still, the average annual rates of advertising could materially differ from those manifested in the first quarter or even in the first half-year, according to ACAR analysts. “The ad market usually gains momentum in the third quarter,” said Viktor Kolomiets, who heads the Analytical Center at Video International Group. “So, the picture is likely to change by the end of the year and the market growth will turn out higher.”
Another factor that is bound to affect financial results of the industry is the Act on Advertising that takes effect on July 1, 2006. Under this act, the size of TV advertising will lose a quarter. The analysts are yet unready to forecast the actual influence of the novelty on the ad market. Kolomiets said due to the changes in laws the work to make ad contracts for the second half-year hasn’t been completed so far.
Ad Market in 2006, 2005
| Media Segment |
Budget, $, mln 2006 |
Growth, % 2006 |
Budget, $, mln 2005 |
Growth, % 2005 |
| TV |
580-600 |
31 |
440-450 |
30 |
| Radio |
70-75 |
15 |
50-55 |
14 |
| Print Media |
320-330 |
10 |
290-300 |
16 |
| Outdoor |
200-220 |
24 |
165-175 |
39 |
| Ad Internet |
22 |
75 |
–* |
–* |
| Other |
8 |
40 |
15** |
42** |
| Total |
1200-1250 |
23 |
970-990 |
26 |
N/A
**Incl. Internet
Source: ACAR
www.kommersant.com
All the Article in Russian as of May 05, 2006
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