Gref Urged not to Curtail Advertising
At the yesterday’s sitting of Consulting Council on Foreign Investments in Russia, spokesmen of transnational corporations, including Procter & Gamble, Nestle and Unilever, urged the cabinet to shelf advertising restrictions that are due to take effect in 2008. Even though Russia’s Economic Development and Trade Minister German Gref backed up the giants, the analysts don't think that advertising community will succeed in this undertaking.
The Advertising Act that took effect in Russia on July 1 limited the TV adverts to 15 percent of channel’s daily broadcasting and to 12 minutes an hour. But tougher restrictions are slated to come in force in 2008, when the advert air will go down to nine minutes an hour.
In today’s Russia, the biggest advertisers are transnational corporations. So spokesmen of Procter & Gamble, Nestle, Unilever, PepsiCo, Coca-Cola Co. attempted yesterday to persuade the Consulting Council on Foreign Investments not to trim TV advertising. The reasons were that further restrictions will drive the GRP price to 92,000 rubles on average in 2008, while the annual budget to promote a brand via TV will exceed 200 million rubles. In 2005, the indicators amounted to 35,300 rubles and 70 million rubles to 100 million rubles respectively.
The media inflation is bound to affect the market, the giants warned, reasoning that manufacturers will hike prices in the wake of higher costs for advertising, driving up retail prices by 1.1 percent in 2008 as a result.
Russia’s Economic Development and Trade Minister German Gref didn't challenge the arguments of the giants yesterday. “Advertising does materially affect cost of the sold goods,” the minister agreed. In the end, the Council decided to set up a taskforce, where the above companies will be represented. The purpose to attain is to come up by December 15 with recommendations to shelve restrictions till 2010 or to decide against their introduction.
www.kommersant.com
All the Article in Russian as of Oct. 17, 2006
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