An Overview of the Advertising Market in 2022

At the start of 2022, the Russian economy and advertising market were significantly impacted by a tighter sanctions policy and the subsequent departure of foreign brands. This forced many marketing agencies to adjust to new realities, such as loss of clients and the search for new promotional channels. Experts predicted significant cuts in advertising budgets and procurement volumes by the end of the first quarter of 2022.

In an interview with RBC, Sergey Piskarev, president of the Association of Communication Agencies of Russia (ACAR), stated that the market decline could range from 30% to 70% this year. Despite the situation being unstable, Piskarev noted that the volume of advertising has not returned to the indicators of 2008, which still gives hope to minimize losses by the end of 2022.

While it is too early to make long-term forecasts about the market’s development, it is possible to draw some conclusions about how the advertising industry has changed over the past six months. Based on all the analytical data on the Russian market, QB Agency experts conducted their own analysis to show the progress made by domestic advertisers and the significant problems they faced during this time.

Positive Momentum. Q1 2022.

The advertising industry in Russia was on a steady growth trajectory in the beginning of the year until foreign brands started exiting the market. According to data from the Expert Commissions of the Association of Communication Agencies of Russia (ACAR), the total advertising volume on the Russian market reached approximately 130 billion rubles in the first quarter, indicating a 5% increase compared to the same period in 2021. However, the situation took a negative turn in March due to the aforementioned reason, and the impact of this decline varied across different market segments.

Online advertising

It has been hit the hardest, according to experts. In March of this year, the segment experienced a simultaneous reduction in supply and demand for the first time due to foreign advertisers and advertising platforms leaving the market. This led to leading companies such as Nestle, Reckitt Benckiser, PepsiCo, Procter & Gamble, Coca-Cola, and McDonald’s leaving the market. Additionally, many foreign communication channels such as Meta, Google, Twitter, and TikTok have become inaccessible in the Russian market. Advertisers quickly adapted to the new reality and began seeking alternative ways of promotion. The use of domestic services, which have improved their functionality in recent years, contributed to the improvement of the situation. Despite this, the first quarter of 2022 ended with positive growth indicators for the internet advertising market.

According to the Yandex report, the company’s online advertising revenue amounted to 41.7 billion rubles for the first quarter of 2022, an increase of 45% compared to 2021. Mail.ru, another Russian holding that owns popular resources VKontakte, Odnoklassniki, My World, etc., received 11.1 billion rubles from advertising for the period from January to March 2022. In the same period in 2021, the indicator was at the level of 10.4 billion rubles. Telegram also showed rapid growth in advertising revenue, with a turnover of 7.45 billion rubles at the end of 2021.

The TV advertising

This market demonstrated a steady growth in the first quarter of 2022, similar to the previous year. The federal channels and thematic TV played a significant role in sustaining the growth of the segment. The dynamics of TV advertising exceeded the average market indicators during the beginning of the year, but at the end of March, the segment experienced a general slowdown in activity, which did not significantly affect its volume growth.

Andrey Chuvaev, director of Havas Village, stated in an interview with the portal Sostav.ru that the growth in cumulative volume during the first two months of the quarter was driven by an increase in budgets in the sports segment and sponsorship.

Out Of Home

Similar to TV advertising, the Out of Home segment, also known as “outdoor advertising,” did not experience significant budget cuts in the first half of 2022, but it did not show the typical seasonal growth in commercial activity for this period. While the proportion of brands leaving Russia in outdoor advertising was relatively small, the cancellation of some advertising campaigns in this segment did impact the overall market dynamics.

Radio Advertising

Radio advertising in the first quarter of 2022 shifted its focus to regional placements and ended the period with higher indicators compared to Moscow and network placements. This change in trend could be attributed to the fact that the regional market mainly works with Russian advertisers and is thus more resistant to economic changes. Notably, the leading category of car advertising aimed at promoting foreign brands left the network radio, while the real estate and financial sectors were the main drivers of radio campaigns during the period. RACA experts also observed higher growth dynamics for special projects that were broadcast on various radio stations, which was a trend that was also observed in 2021.

However, experts noted that the first quarter may not be too indicative of the radio segment’s overall performance due to the wait-and-see attitude of advertisers in March, and minimal carryforward and removal of budgets mainly affecting the federal market due to the concentration of international brands that were later affected by sanctions. This was according to Ekaterina Rybakova, ADV Press&Radio Media Director in an interview with the information and analytical portal Sostav.ru.

Print Media Adverticement

The revenue from advertising in magazines in the print media segment remained stable at the beginning of 2022, similar to 2021. However, the overall picture for print media advertising was mixed. Although there was a reduction in advertising budgets for newspapers, the revenues generated from native advertising and special projects implemented by federal media in February-March were not factored in while calculating the results. According to Marina Mishunkina, the First Deputy General Director of the Publishing House “Arguments and Facts,” these projects accounted for approximately 55% of the revenue from such initiatives across the market.

At the end of the first quarter of 2022, the advertising market demonstrated certain indicators, but experts predicted a further decline in all segments, especially if the sanctions policy against Russia continued. OMD OM Group calculated that every month of such a situation would result in a 5% decline in the advertising market at an annual rate. Dentsu Russia experts predicted a significant drop of 40-60% in the April-May period compared to 2021. However, the exit of foreign companies created an opportunity for local brands to increase their market share.

Business Development Director of Igronik, Ekaterina Gorkina, suggested that the future of the market depends on new logistics chains for companies from China, Turkey, Brazil, and India. Anna Sergeeva, CEO of Main Target Group, believed that the market would replace the budgets of large Western companies with medium-sized advertisers. These players are less dependent on the geopolitical situation in the world.

While some forecasts of a decline in the market proved true in the second quarter of 2022, there were also positive results.

April-June 2022. What happened further

As anticipated, the advertising market in Russia faced a steeper decline of up to 45% in the second quarter, as reported by Kommersant, citing OMD OM Group study. The industry suffered a total loss of approximately 190 billion rubles (-26%) in the first half of the year.

Following the trend of the first quarter, online advertising (-34% for H1) experienced the biggest decline, amounting to 91 billion rubles, according to experts. Press advertising recorded the second largest losses (-29% for the same period), with a figure of up to 3 billion rubles. Investments in TV advertising and Out of Home declined by 17% and 18% respectively, while radio advertising showed the least impact, with a volume decrease of only 3% in H1 (up to 6 billion rubles).

Based on these findings, OMD OM Group analysts predict an overall market decline of 33% by the end of 2022. They also expect print advertising to suffer the most, with a projected 57% decline for the whole year. Internet advertising is predicted to decline by 43%, TV advertising by 22%, and Out of Home by 24%. Once again, radio advertising (minus 3%) is expected to sustain the least amount of losses going into 2023.

The market situation was impacted not only by the departure of foreign companies, but also by the uncertainty that followed, affecting various segments including domestic companies. According to research by Tochka Bank, published in Kommersant newspaper, many advertisers have reduced their promotion budgets.

In March-June 2022, the education category saw the largest reduction in advertising costs (down 74%). For instance, Netology, a major Russian online education platform, decreased their advertising budget by 20% due to general restrictions and blocked Google Ads and Facebook cabinets, which they used for marketing.

The category of advertising and PR agencies, media publishers, and typographers had the second-largest reduction in advertising budgets for promotion (down 68.8%). Public organizations followed (down 66%), then auto dealers (down 55%), book publishers and museums with libraries (down 47%), and tourism (down 39%). The category of cafes, restaurants, and hotels had the smallest reduction, with advertising budget savings of 37%.

The findings mentioned above have been acknowledged by representatives of the respective industries. According to Andrey Kamensky, the Marketing Director of Avilon AG, the car market began reducing advertising budgets in February 2022 due to uncertainties associated with car deliveries. In addition, the need for new advertising tools arose to replace blocked Google and Meta* services. Meanwhile, Oleg Kuznetsov, the Marketing Director of Avtodom Group and Avtospeccenter Group, explained that the reduction in advertising costs for the car market mainly affected premium European brands, while Korean, Chinese, and Japanese manufacturers increased their promotion budgets.

According to Dmitry Gorin, the vice president of the Russian Union of Travel Industry (in an interview with Kommersant), the tourism sector has also experienced a shift in priorities, with advertising budgets decreasing amidst a general market decline. However, he noted that domestic online services have increased their advertising activity following the exit of Booking.com and Airbnb from the market. Additionally, some companies are actively seeking out new promotional channels. For instance, Tvil.ru, a tourist platform, has launched TV advertising for the first time and expanded their outdoor advertising coverage from 3 to 10 cities, as reported by Oksana Shustikova, a representative of the service, to Kommersant.

Meanwhile, during this same period, there has been a global “restructuring” of channels and services within the online advertising segment.

New Digital Inventory

With the blocking of foreign advertising services, Russian companies faced difficulties in promoting their products at the beginning of 2022. However, this situation was quickly resolved as domestic platforms offered alternative solutions. In addition, the activity of Russian users on these services has increased.

According to a study by Tochka Bank, advertising costs on Telegram increased by 591% between March and June of 2022, compared to the same period in 2021. VKontakte, another domestic service, saw a slightly lower increase of 146%. Analysts attribute these figures to the fact that Russian advertisers have largely abandoned Google and Meta* tools, as payments on these services decreased by 96% and 99% respectively. Telegram and VKontakte have been praised for their efforts in implementing new advertising systems on their platforms. In 2021, TelegramAds was launched, and in the first half of 2022, VKontakte introduced a support program for young authors and developed a full-fledged version of the VK Video application.

In 2022, Russian companies were faced with challenges in promoting their products due to the blockage of foreign advertising services. However, this situation was resolved promptly as domestic platforms offered alternative solutions, and Russian users started using them more actively.

One of the Russian platforms that experienced an influx of users and introduced new features was Rutube. According to Yulia Talapanova, Director of the Marketing Communications Department of the platform (at the Russian Internet Forum (RIF)), Rutube developers planned to attract about 10 million active users by the end of 2022. However, in March, the audience already exceeded the mark of 21 million people, and the number of content views increased by 70%. Moreover, the platform offered a new option for authors to transfer videos from YouTube and provided comfortable monetization conditions, allowing the blogger to receive 100% of the earned amount in the first 6 weeks from the moment of registration.

Yandex is another Russian platform that offers a wide range of functionality for content placement. In May of 2022, approximately 355 million Russian users benefited from Yandex services. The project developers added new functions during this period, such as increasing the number of product spaces on Yandex.Direct to attract more advertisers, introducing two new formats of advertising banners, and updating Yandex.Metrica to provide more accurate analytical indicators.

New platforms have also emerged, offering a significant number of users and advertising opportunities. For instance, the social network TenChat, whose audience grew ten times in a couple of months since its official release, had 100 thousand users in January 2022 and 300 thousand in March. In May, the developers released a new version of the service, providing additional features such as stories, profile links, statistics, and more. Additionally, Yappy! and IRus are blogging services that have gradually gained popularity among the Russian audience.

Mixed Outcomes in the First Half of 2022

While leading foreign companies with significant media coverage left the advertising market, causing a decrease in budgets across various segments, the situation also presents opportunities for new brands seeking a Russian audience and large reach. Domestic companies are also exploring new promotion strategies amidst the current uncertainties, though a global market decline by the end of 2022 is premature to predict. Furthermore, the online advertising segment has shown growth with the emergence of high-quality services offering various functionalities for both users and advertisers.

Effective promotion in the Russian market will require consideration of various factors, trends, and analytical data, and QB Agency specialists can provide an integrated approach to ensure successful product promotion to the Russian audience.