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The Russian Advertising Market
1. 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
3. 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, %
4. 4
Macro Level
TV advertising as well as the Internet access will double their size by
2015 in comparison with 2010
The Internet advertising and TV subscriptions will also rise significantly
The Russian advertising market
Growth rate by segment, 2011-2015, bn €
Source: PricewaterhouseCoopers, 2011
5. 5
Macro Level
The total value of the Russian advertising market in 2012 was about
€7,4 bn
The 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%
6. 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
7. 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
8. 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 €
9. 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
11. The Russian advertising market 11
Industry Level
Five Competitive Forces reflect an industry competition which goes
well beyond buyers, suppliers, substitutes and new entrants
12. 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
13. 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
14. 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
15. 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
17. 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
18. 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
19. 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
20. 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
21. References
Advantage 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_smar
, 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
22. 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
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22International marketa sassessment
Notas del editor
In 2010, the Russian media market grew by 13% and was worth €15.4bn ($20.4bn), while the global market increased by only 4.6% (PwC, 2011). In 2010, Russia’s media market was the thirteenth largest in the world, and PricewaterhouseCoopers (2011) predicts it to maintain this position over the next five years. Moreover, already by 2014, it may become the fourth largest market in EMEA.
The communication market in Russia is heterogeneous; its segments have their own dynamic of development. As we can see, in recent years, the fastest growing segment is the Internet: the growth rate of Internet advertising is almost three times higher than the advertising market as a whole. At the same time, print media advertising reduces its dynamic which is already close to zero.
All these trends create a positive environment for marketing campaigns in the digital world. At the same time, digital is not just a new media channel. It is an environment which is substantially very similar to the natural human environment (AKAR, 2012a). Working online, it is necessary to use experience of traditional media. Therefore, marketing communications in digital and Above-the-line channels (ATL) should not be separated in order to build brand awareness and drive sales. Thus, a communication process should start with the identification of the target audiences, then thinking about how to talk to each of them, formulating one big idea and one big strategy, and only then dividing it into channels.
It is necessary to perceive the digital world not as a new tool, but as a new environment closely connected with traditional media channels and live communication.
Mobile Internet access penetration in Russia is approximately 2 times higher than the world average indication. According to Json & Partners Consulting (2013), the total audience of mobile Internet access was about 40 million users at the end of 2012.
Modern trends of the Russian advertising market encourage a strong competition not only among local SMEs, but also from large international groups which want to strengthen their positions in the growing Russian market. Many international giants are trying to capture the most perspective niche – Internet and digital advertising. Smaller Russian agencies also see their benefits in collaboration with big international companies in order to use their support, experience and brand name, as well as to get international customers.
Until a company has built a large customer base and proved itself on the positive side, it is difficult to get big orders. Moreover, attracting creative talents can be an additional challenge for a new agency. People who come up with interesting ideas, concepts and design want their skills to get very well paid.
Agencies which have a broad base of regular customers with large budgets have bargaining power with these suppliers and can negotiate better deals for their clients, thus enhancing their reputation in the market and establishing long-term relationships with suppliers.
Table: Average price for creative services in Russia – difference between Russian local agencies and advertising networks.
Today, it seems that the adaptation period has already ended and the consumer has become reasonable, because they satisfied their basic needs. However, in 2012, we could observe a purchase activity burst. Almost all the markets began to grow again. At the same time, one of the main things that we have to keep in mind is the heterogeneity of the Russian consumer.
Some businesses report that there are greater differences between neighboring regions in Russia than between neighboring European countries. Accordingly, the perception of advertising campaigns may also vary in different parts of Russia. Today, almost 70 million Russians are online (Internet World Stats, 2012). Mobile internet penetration, in turn, is 55% ( Json & Partners Consulting, 2013) which is already almost in line with the European average.
65% of Russians are buying something else in addition to the planned products and 57% are buying products under the influence of promotion.
While considering the characteristics and features of Russian consumers, it is important to keep in mind that the Russian market is rapidly expanding, borders become more transparent, Russian citizens travel a lot to other countries and become more knowledgeable and qualified in their brand experience. These processes provoke constant changes of brand equity in Russia.
