Growth in Ad Prices Covered Up by VAT
Legal restrictions on the TV advertising time prompted key TV channels of Russia to hike prices by a third in 2007. The experts say the 2007 price lists of Russia’s major vendor of the ad air, Video International, set forth more than 30-percent increase for 2007, while the primetime prices will sour from 80 percent to 110 percent.
In a cover-up effort, Video International avoided material growth in basic prices for 2007 and even maintained the prices for Channel 1 and Rossia. The tricky point is that, starting from the next year, the basic price for GRP at all TV channels is given with no VAT taken into account. So, the price will step up at least 18 percent even for Channel 1 and Rossia.
In view of extra charges/discounts set forth in the price lists, the TV advertising will sour 30 percent to 35 percent for central channels in 2007, said Boris Karasev, general director at MPG. The growth will be most significant at commercial channels, STS and Ren TV, forecasted Nikolay Anufriyev, co-director at Opera.
Video International hiked prices twice this year with the aggregate growth surpassing 40 percent.
Of all prices, the advance in primetime advertising will be the greatest. “It is the prime that has risen in price first of all, as it came under the reduction under the Advertising Act and, therefore, is even more claimed by advertisers,” said Elena Sokolova, who is in charge of the TV advertising department at Magma.
Pursuant to the Advertising Act, the ad time is limited by 20 percent of each hour of broadcasting, which trimmed the primetime advertising. “Depending on the grade parameters, the primetime is getting up 80 percent to 110 percent,” Boris Karasev said.
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All the Article in Russian as of Aug. 09, 2006
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