Radio Advertising Trends in Russia – 2015

Greetings!

As of the end of 2014, radio advertising in Russia experienced a positive trend. The volume of radio advertising revenues grew by 2%, reaching 16.9 billion rubles. However, the following year proved to be challenging for the advertising market, including radio. In the fourth quarter of 2014, there was a 6% decline in advertising revenue compared to the same period the previous year, with regional advertising suffering the most significant drop of 11%. Despite this, radio maintained a 5% share of all media advertising budgets by the end of the year.

It’s worth noting that radio advertising is divided into two segments: regional advertising, targeting specific regions, and nationwide advertising, known as federal advertising. In 2014, the federal segment saw a 4% increase compared to 2013, while the regional segment experienced a 1% decrease. This shift resulted in a redistribution of advertising budgets toward the federal segment in 2014.

Source: ACAR

Throughout the year, there was a noticeable trend of deceleration in the advertising budgets for the federal segment. Consequently, the first quarter of 2014 concluded with an 11.5% increase compared to the corresponding period of the previous year. Subsequently, in the second and third quarters, the market witnessed growth rates of 6.4% and 5.7% respectively. However, during the fourth quarter, there was a decline of 2.6% in radio advertising budgets when compared to the same period in 2013.

Here are the quarterly changes in advertising budgets for the federal segment (commercials + sponsorship) from 2012 to 2014, measured in billion rubles.

Source: ACAR

In the regional segment, radio advertising experienced growth ranging from 2% to 3% during the first three quarters of the year. However, in the fourth quarter, there was a significant reduction of 11% in advertising budgets.

Here are the quarterly changes in advertising budgets for the regional segment (commercials + sponsorship) from 2012 to 2014, measured in billion rubles.

Source: ACAR

The primary factor contributing to the overall decline in advertising activity within both the federal and regional segments is the economic instability prevailing in the country. While television advertising contracts tend to be long-term, the radio segment is more agile and responsive to changing economic conditions. This adaptability is evident in the significant reduction of advertising budgets specifically within the radio sector during the fourth quarter.

Now, let’s delve deeper into the product categories and major advertisers within the federal segment.

Product Categories:

A significant portion of radio advertising budgets consistently focuses on six key product categories: “Medicine and Pharmacy,” “Trade Organizations,” “Automobiles,” “Leisure, Entertainment and Tourism,” “Real Estate,” and “Financial and Insurance Services.” These categories accounted for 75% of the total advertising budget allocated to the federal segment in 2014. Notably, there was a cumulative 10% increase in budgets for these categories throughout the year.

Distribution of Advertising Budgets by Product Categories, Federal Segment, 2013-2014 (%)

Source: AC Vi

The remaining product categories collectively account for 25% of the total advertising budgets allocated to radio. During times of crisis, the pattern is fairly predictable, with small advertisers typically placing ads within these categories. However, in periods of economic instability, these advertisers tend to reduce their marketing expenses or withdraw from the advertising segment altogether.

As a result, there has been a notable decline in the share of these other product categories by the end of 2014. In absolute terms, their budgets have experienced a significant decrease of 16%. Meanwhile, the leading advertisers in the radio segment continue to increase their budgets.

Budgets of Individual Product Categories on Radio (Federal Segment Commercials), 2013-2014, in million rubles (%)

Source: AC Vi

Advertisers

To facilitate analysis and categorization, advertisers are commonly divided into several groups: TOP 20, TOP 21-40, TOP 41-100, and TOP 100+. Each group exhibits different behaviors in various economic situations. Despite the overall trend of reducing advertising budgets, advertisers that focus on radio have been increasing their advertising expenditures by scaling back their presence in other segments of the advertising market.

In 2014, the budgets of the TOP 20 advertisers experienced a notable 12% increase. Consequently, the group’s share grew from 29% in 2013 to 32% in 2014. It is worth noting that the lineup of the TOP 20 advertisers remained relatively stable throughout the year, with medical and pharmaceutical companies, trade organizations, and passenger car manufacturers leading the way. These categories consistently demonstrated steady growth in advertising budgets over the course of 2014.

On the other hand, advertisers outside the TOP 20 witnessed a reduction of 10% in their budgets, resulting in a 3.9% decrease in their share. However, both the TOP 21-40 and TOP 41-100 groups exhibited growth in advertising budgets, with increases of 2% and 1% respectively.

Here is the dynamic representation of the budget shares of advertiser groups (federal network commercials) from 2012 to 2014:

Source: AC Vi

Key Findings

Radio Features:

• During periods of economic instability, small advertisers tend to reduce their advertising budgets on the radio or withdraw from the media segment altogether. However, large advertisers remain in the segment and may even increase their budgets.

• The radio segment exhibits a specific allocation of budgets across product categories, with the majority of budgets concentrated in six key categories. These categories contribute to two-thirds of all advertising budgets. In 2014, these categories experienced a cumulative increase of 10% compared to 2013.

• Given the economic crisis in 2015, it is challenging to anticipate positive growth for the radio segment. Nevertheless, the radio industry is known for its dynamism, and if the economic situation improves, it has the potential to swiftly rebound with increased advertising budgets.

For a deeper understanding of the TV/radio advertising market structure, you can refer to our White Paper titled “How Does the Media-Buying Market in Russia Work? A Media Buyers’ Quick Guide for Effective Work in Russia.”

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