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Gallery Group Buys Transport Advertiser
Gallery Group, through Vestdia Media, which it purchased this summer, has acquires Tekhprogress, the company that places advertising on Moscow overground public transit. The value of the deal has been estimated at $10-12 million. Analysts call Tekhprogress a dubious asset and think that Gallery Group overpaid for it, possible by several times. That market shrunk by 20 percent, from $10-11 million in 2005 to $8 million in 2006. A Gallery Group spokesman said that Tekhprogress was purchased as a new business direction for Vestdia.
OOO Tekhprogress was founded in 2003. It won a tender in December 2005 to place ads in Moscow's buses, trolleys and trams and received a five-year contract with all 30 Moscow transport depots. The company is paying about $40 million under that contract. Tekhprogress also concluded a contract three-year contract in 2005-2006 to place advertising signs on the inside of transport with 20 depots. It also has also placed 200 1.2 x 1.8-meter signs on ticket booths. The company's turnover in 2006 will total $13-14 million. It is owned by the company's executives, headed by Grigory Kuznetsov.
Kuznetsov explained that the company's turnover fell in the last year because the company won the tender that took place at the end of 2005, when advertisers had already planned their campaigns for the season. Therefore, major advertisers, such as LG, which has an annual ad budget of over $1 million, and television channels TNT and STS, did not advertise with them. In addition competition from mobile billboards has heated up. “After the new law On Advertising' came into effect in July, which bans that form of advertising after 2006, those owners instituted an extremely flexible price policy,” Kuznetsov observed.
In spite of general industry pessimism about its market, Tekhprogress holds that the transport advertising market will pick up next year. “The sector has become much more transparent in the last year,” said Kuznetsov. “We are now making year-long contracts with a number of major advertisers.” He predicted that the market would grow up 20-25 percent in 2007.
www.kommersant.com
All the Article in Russian as of Dec. 15, 2006
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