Russian advertising market set for growth

17 March 2010

MOSCOW: The Russian advertising market is set to record substantial growth in the next five years, with television and the internet being among the main drivers of this trend.

According to estimates from VTB Capital, the investment specialist, the media industry in the European nation was worth 204.2 billion rubles ($6.9bn; €5.1bn; £4.6bn) in 2009.

This equated to 0.5% of domestic GDP, which can be compared with a ratio of between 1% and 1.5% across the European Union.

More positively, the company predicted that the value of this sector would more than double over the period to 2014, as the economic climate brightens following the financial crisis.

Television currently takes 55% of all Russian adspend, and is "among the cheapest in the international peer group", according to Anastasia Obukhova, an analyst at VTB Capital.

In demonstration of this, she stated that the cost per thousand of advertising via this medium stands at just $2.70 in Russia at present, compared with totals varying from $6 to $11 in Europe.

While this channel registered a 17% contraction in revenues last year, prices are set to increase in 2010, and inventory sales should also climb to 100% as demand returns to "pre-crisis levels".

Looking to the long term, it is predicted that TV will receive 200bn rubles in advertising expenditure by 2013, boosted by heightened outlay on the part of retailers, automakers and services.

At present, the top ten advertisers are responsible for 25% of all TV adspend, with manufacturers in the FMCG segment making up two-thirds of this group.

CTC Media, the free-to-air broadcaster, is thought to be particularly well-placed, as it has a "premium audience", a "clear programming focus" and an ability to produce shows in-house.

Online received just 9% of Russian media budgets last year, equating to 19bn rubles, meaning it lagged behind the normal share of 15% to 20% posted in most developed markets.

From 2003 to 2008, web advertising expanded by 100% on an annual basis, and VTB Capital forecast it would experience a "six-fold" improvement in the next five years.

This will result from an "explosion" in broadband uptake, with penetration set to leap from 25% to 60% in this timeframe.

RBC, which has a prominent presence in the TV and online industries, could this benefit from the two major trends shaping the Russian market this year.

Data sourced from Moscow Times; additional content by Warc staff