Russia will overtake Spain to become a Top 5 European ad market in 2009, according to “This Year Next Year: Russia,” a media and marketing forecast from GroupM, which forecasts that media investment will grow 26% in 2007, to $9 billion, and 21% in 2008.
As in China, the main driver in Russia is consumer demand – from finance to cars to personal grooming – and it’s expanding from metropolitan centers into the regions, according to GroupM, which said the main constraint is the supply of television airtime, resulting in airtime price inflation (30% in Russia this year, 15% in China).
Russia’s internet growth does not rely on e-commerce and direct response; advertisers mainly use the internet for branding, according to the report:
- Excess demand for TV is spilling over to the web.
- Broadband penetration is quickly increasing – 25% growth overall, 80% in Moscow – resulting in improved video quality.
- Users’ time online is increasing: Half of all those online are now considered “heavy daily users.”
- Internet inventory is sold like TV, with good metrics and innovation.
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The status of other media segments, according to the GroupM publication:
- Radio is leading the shift from Moscow to the regions: 50% of radio investment is now outside Moscow/ St. Petersburg, compared with 30% in 2005.
- Radio also leads in innovation: e.g., branded programming and sponsorhip.
- Out-of-home advertising in benefiting from excess TV demand, particularly by large advertisers. Multinational outdoor owners have 35% of supply, but this medium is still too fragmented for revenue potential.
- Among magazines, it’s survival of the fittest, although in some segments (e.g., automotive advertisers) excess demand is keeping some secondary titles alive.
- Newspaper publishers are resorting to aggressive pricing to attract the TV overspill, but also engaging in active product development, which is protecting newspaper’s share of ad revenue.
