the russian advertising market
TRANSCRIPT
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
Agenda
+ Macro Level
+ Industry Level
+ Consumer audience analysis
2The 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
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Macro Level
The Russian advertising market
Growth rate by segment, 2011-2015, %
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
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%
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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
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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
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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 €
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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
Agenda
+ Macro Level
+ Industry Level
+ Consumer audience analysis
10The 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
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
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
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
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
Agenda
+ Macro Level
+ Industry Level
+ Consumer audience analysis
16The 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
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
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
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
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