the russian advertising market

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1 International markets assessment The Russian advertising market 1 Arseny Veber, in cooperation with the Full Service Advertising Agency “ArtDirection”, Munich, Germany Kufstein, Austria September 2013

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Page 1: The Russian Advertising Market

1

International markets assessment

The Russian advertising market

1

Arseny Veber,

in cooperation with the

Full Service Advertising Agency “ArtDirection”,

Munich, Germany

Kufstein, Austria

September 2013

Page 2: The Russian Advertising Market

Agenda

+ Macro Level

+ Industry Level

+ Consumer audience analysis

2The Russian advertising market

Page 3: The Russian Advertising Market

Russian media market is one of the fastest growing in the world

Almost all the segments of the Russian media market are growing faster than their counterparts in the global market

Source: PricewaterhouseCoopers, 2011

3

Macro Level

The Russian advertising market

Growth rate by segment, 2011-2015, %

Page 4: The Russian Advertising Market

4

Macro Level

TV advertising as well as the Internet access will double their size by 2015 in comparison with 2010The Internet advertising and TV subscriptions will also rise significantly

The Russian advertising market

Growth rate by segment, 2011-2015, bn €Source: PricewaterhouseCoopers, 2011

Page 5: The Russian Advertising Market

5

Macro Level

The total value of the Russian advertising market in 2012 was about €7,4 bnThe rate of growth is 13% that is lower than in 2011 (21%)

The Russian advertising market

The growth rate of Internet advertising is almost three times higher than the advertising market as a whole

Source: DigitalTVEurope, 2013, AKAR, 2013

Revenue, bn €

Growth Rate

2012 January – March 2013

TV advertising 3,40 9% 13%

Internet advertising 1,35 35% 32%

Print media advertising 1,00 2% -5%

Radio advertising 0,34 23% 18%

Outdoor advertising 0,89 10% 13%

Page 6: The Russian Advertising Market

6

Macro Level

The development of modern communication technologies leads to the structural changes of the market and the ways of advertising

The Internet can be considered as a replacement of the TV campaign for those who are not watching TV at all

The Russian advertising market

Source: Public Opinion Foundation, cited in Upi.com, 2013, Synthesion, 2013, eMarketer, 2013, Statista, 2013

Use the Internet every

day 13,1%

44,3 mio | 50,1 mio

2011

2012

+ YouTube audience stands at 25 mio users on the site itself and 51 mio in other websites

+ Russian spend more time on social networks than in any other country

+ Vkontakte – 40 mio visitors per day

+ Odnoklassniki – 33 mio visitors per day

+ Twitter – 21% of online population

+ 45% of population will be active in social media by 2014

Page 7: The Russian Advertising Market

7

Macro Level

What has really changed with the development of digital technologies?

The Russian advertising market

Source: AKAR, 2012a

People‘s mindset, motivation and

behavior

People need to be in network

Impact on people‘s memory

Brand recall is sinking immediately after the cessation of the marketing campaign

Consumption patterns have changed

Page 8: The Russian Advertising Market

8

Macro Level

The market of digital content: mobile is a leader

The market is expected to grow by more than twice by 2015 in comparison with 2012

The Russian advertising market

Source: Json & Partners Consulting, 2012

Russian market of digital content Market size of mobile marketing in Russia in 2012 and 2015, mio €

Page 9: The Russian Advertising Market

9

Macro Level

Mobile advertising, loyalty programs and SMS-marketing are taking the leading positions

The Russian advertising market

Source: Json & Partners Consulting, 2012

The market structure of mobile marketing in 2012

+ Popularity of App advertising

+ Development of mobile networks

+ Emergence of mobile loyalty programs

+ Growing population of the location-based services

+ Growing impact of social networks

Trends in the Russian mobile marketing

Limitations in the Russian mobile marketing

+ Limitations and challenges of SMS marketing

+ Lack of market statistics

+ Lack of experience in use of mobile marketing tools

Page 10: The Russian Advertising Market

Agenda

+ Macro Level

+ Industry Level

+ Consumer audience analysis

10The Russian advertising market

Page 11: The Russian Advertising Market

The Russian advertising market 11

Industry Level

Five Competitive Forces reflect an industry competition which goes well beyond buyers, suppliers, substitutes and new entrants

Page 12: The Russian Advertising Market

The Russian advertising market 12

Industry Level

Very high competitive intensity: there are thousands of communication agencies in Russia

International Ad Networks

Local companies

“Symbiotic” collaboration

The head is a large international company

which controls and support the local partner

The local Russian partner which perfectly deals in the

national market

Page 13: The Russian Advertising Market

The Russian advertising market 13

Industry Level

Threats of new market entrance - low

Newcomers must understand that the other companies who entered the market before will never give up their clients and are always ready to fight for the new

ones

In spite of the high competition, there are 3 main factors which may determine company’s success

Experience and market awareness

Long-term relations with existing clients

Reputation and solid portfolio

Page 14: The Russian Advertising Market

The Russian advertising market 14

Industry Level

Bargaining power of Suppliers- high

SMEs do not have in-house photographers , production

crews, software developers, etc.

They have to rely on independent contractors

Bargaining power of Buyers- high

Clients with big budgets have strong bargaining power

Clients with smaller budgets can be more flexible

Identity of big companies adds more prestige to the list of

customers

Page 15: The Russian Advertising Market

The Russian advertising market 15

Industry Level

Threats of new substituting products - low

There are no absolute substitutes for an advertising campaign

Ongoing evolution of technology, such as e-commerce, social media

tools, mobile applications, etc. offers just new channels which can

be integrated into creative concepts with relatively low switching

costs

Page 16: The Russian Advertising Market

Agenda

+ Macro Level

+ Industry Level

+ Consumer audience analysis

16The Russian advertising market

Page 17: The Russian Advertising Market

The Russian advertising market 17

Consumer audience analysis

In order to understand the Russian buyer today and make a forecast for tomorrow, we have to know what happened yesterday

20th century 1990s 2000s

2012

• Civil war• Two world wars• Famine• Socio-political changes

Abrupt transformation of the society from

one socio-economic system to another

The way of transformation and business development influenced the

consumption patterns

A purchase activity burst

Almost all the markets began to

grow again

Page 18: The Russian Advertising Market

The Russian advertising market 18

Consumer audience analysis

Russia is a multinational Eurasian country where significant differences exist from region to region

+ Especially, there are vast differences in consumer behavior between the centers such as Moscow, St.Petersburg, Rostov, Krasnodar, etc. and Russia’s provinces

+ When entering the Russian market, a multifaceted plan has to be prepared

Half of Russians live in rural areas and small

towns (less than 100.000 inhabitants)

They are in a condition of market

infantilism

The second part of the population was able to adapt to the market

deveopment

Socially active citizens of middle age

The third part is the new generation that

was born in the market economy

Warmly welcome new technologies

1 2 3

Page 19: The Russian Advertising Market

The Russian advertising market 19

Consumer audience analysis

In order to adapt an international advertisement, specifics of Russian advertising message perception should be considered

An advertising appeal has to be more informative

+ Russian customers make their purchase decisions impulsively, impressed by immediate circumstance

A lot of attention to the product’s brand name

+ They are willing to overpay for it

Emotionality during the purchasing process

+ They cannot pass by promotion

Page 20: The Russian Advertising Market

The Russian advertising market 20

Consumer audience analysis

Russian consumers have different attitude towards domestic and international brands

Driving forces to buy a Russian brand Driving forces to buy an international brand

+ Price

Local brands can be much cheaper than their foreign counterparts

+ Perceived image

Can be perceived to be healthier

Feeling of patriotism

+ Brand name

+ Better representation

Increases customer’s prestige in the eyes of others

Page 21: The Russian Advertising Market

ReferencesAdvantage Austria (2011). Fresh view on architecture, design, film and music [PDF]. Retrieved from http://www.advantageaustria.org/zentral/publikationen/ae/148_Architecture_Design_Film_and_Music.pdf, accessed on 09.06.2013 Advertising Industry (2013). Развитие рынка рекламы [Advertising industry development] [HTML]. Retrieved from http://www.adindustry.ru/doc/1159, accessed on 02.06.2013 AKAR (2012a). Digital marketing outlook Russia [PDF]. Retrieved from http://www.akarussia.ru/files/docs/digital_marketing_outlook_russia_2012.pdf, accessed on 03.06.2013 AKAR (2012b). Стоимость креативных услуг в рекламных агентствах в 2009-2011 [Pricing for creative services in advertising agencies in 2009-2011] [XLS]. Retrieved from http://www.akarussia.ru/files/docs/stoimost_kreativnyh_uslug_2009-2011.xlsx, accessed on 06.06.2013 AKAR (2013). Объем рынка маркетинговых коммуникаций России по итогам 2012 года [The size of the Russian market of marketing communications in 2012] [HTML]. Retrieved from http://www.akarussia.ru/knowledge/market_size/id2990, accessed on 04.06.2013 Creativ wirtschaft austria (2013). Der Fünfte Österreichische Kreativwirtschaftsbericht [The fifth Austrian report on creative industries] [PDF]. Retrieved from http://www.creativwirtschaft.at/document/5KWB-web_2.pdf, accessed on 09.06.2013 DigitalTVEurope (2013). Russian advertising market growth slows in 2012 [HTML]. Retrieved from http://www.digitaltveurope.net/32229/russian-advertising-market-growth-slows-in-2012/, accessed on 03.06.2013 ECCO International (2010). Social Media in Austria [PDF]. Retrieved from http://www.ecco-network.com/wp-content/uploads/2011/08/austria.pdf, accessed on 09.06.2013 Ernst&Young (n.d.). Making it work in Russia: middle class consumer profile [HTML]. Retrieved from http://www.ey.com/GL/en/Industries/Consumer-Products/Making-it-work-in-Russia---Middle-class-consumer-profile, accessed on 08.06.2013 European Travel Commission (2013). New Media Trend Watch: Austria [HTML]. Retrieved from http://www.newmediatrendwatch.com/markets-by-country/10-europe/36-austria, accessed on 09.06.2013 Goldbach Audience (2013). Werbemarkt Österreich [Advertising market Austria] [HTML]. Retrieved from http://www.goldbachaustria.at/research-de/werbemarkt-oesterreich, accessed on 09.06.2013 Google (2012). Our mobile planet: Austria. Understanding the mobile consumer [PDF]. Retrieved from http://www.thinkwithgoogle.com/insights/library/studies/our-mobile-planet-Austria/, accessed on 12.06.2013 Internet World Stats (2012). Internet users penetration in Europe [HTML]. Retrieved from http://www.internetworldstats.com/stats4.htm#europe, accessed on 08.06.2013 Json & Partners Consulting (2012). The market of digital content in Russia and the world, 2009-2013 [HTML]. Retrieved from http://www.json.ru/en/poleznye_materialy/free_market_watches/analytics/rynok_cifrovogo_kontenta_v_rossii_i_mire_2009-2013/, accessed on 03.06.2013 Json & Partners Consulting (2013). Mobile Internet market review. Use of mobile Internet through smartphones and tablet PCs [HTML]. Retrieved from http://www.json.ru/en/poleznye_materialy/free_market_watches/analytics/obzor_rossijskogo_rynka_mobilnogo_internet-dostupa_ispolzovanie_mobilnogo_interneta_na_smartfonah_i_planshetnyh_pk/, accessed on 03.06.2013 Kalinicheva, D. (2010). Situational approach for foreign advertising adaptation on the Russian market (Master Thesis, University of Amsterdam, 2010). Retrieved from http://dare.uva.nl/document/202708, access on 08.06.2013

21International markets assessment

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References

Mediascope Europe (2012). Austria Launch Presentation Summary [PDF]. Retrieved from http://www.iabeurope.eu/files/6413/7182/9251/MEDIASCOPE_2012_AUSTRIA_SUMMARY_LAUNCH_PRESENTATION.pdf, accessed on 12.06.2013 Milehin, A. (2013). Российский потребитель: вчера, сегодня, завтра [Russian consumer: yesterday, today, tomorrow] [HTML]. Retrieved from http://www.marketologi.ru/publikatsii/stati/rossijjskijj-potrebitel-vchera-segodnja-zavtra/, accessed on 07.06.2013 Mobile Marketing Association Austria (2012). Mobile communication report 2012 [PDF]. Retrieved from http://startmobile.mmaaustria.at/html/img/pool/2012_MMA_Communication_Report_kostenfreie_Praesentation.pdf, accessed on 11.06.2013 PwC (2011). Media market in Russia: a future full of potential [PDF]. Retrieved from http://www.pwc.com/gx/en/entertainment-media/publications/pwc-outlook-on-russia.pdf, accessed on 01.06.2013 Region-Media (n.d.). Consumer behavior in Russia: highlights on consumer segments, brand perception, advertising and channels [HTML]. Retrieved from http://www.region-media.ru/behavior.php, accessed on 08.06.2013 Russian Marketing & Advertising Agency (n.d.). Russian consumers and Russian advertising agencies [HTML]. Retrieved from http://russia-promo.com/features-russian-consumers-and-russian-advertising-agencies, accessed on 08.06.2013 Statista (2013). Twitter penetration in selected EMEA countries as of 4th quarter 2012 [HTML]. Retrieved from http://www.statista.com/statistics/254799/twitter-penetration-in-selected-emea-countries/, accessed on 03.06.2013 Statista (2013a). Einsatz von Social Media im Corporate Publishing 2012 [Social Media usage in corporate publishing in 2012] [HTML]. Retrieved from http://de.statista.com/statistik/daten/studie/246019/umfrage/einsatz-von-social-media-im-corporate-publishing-nach-segmenten/, accessed on 10.06.2013 Statista (2013b). Umfrage zur Bedeutung Sozialer Netzwerke im Corporate Pubishing 2012 [The importance of Social Networks in corporate publishing in 2012] [HTML]. Retrieved from http://de.statista.com/statistik/daten/studie/246026/umfrage/bedeutung-sozialer-netzwerke-im-corporate-publishing/, accessed on 10.06.2013 Statista (2013c). Internetnutzung in Deutschland, Österreich und Schweiz 2012 [Internet usage in Germany, Austria and Switzerland in 2012] [HTML]. Retrieved from http://de.statista.com/statistik/daten/studie/245079/umfrage/internetnutzung-in-deutschland-oesterreich-schweiz-nach-endgeraeten/, accessed on 10.06.2013 Synthesio (2013). 4 fascinating facts on the Social Media landscape in Russia [HTML]. Retrieved from http://synthesio.com/corporate/en/2013/uncategorized/4-fascinating-facts-on-the-social-media-landscape-in-russia/, accessed on 03.06.2013

22International marketa sassessment