Trends and Forecasts: Digital and Media Advertising in Russia
The advertising market in Russia faced significant challenges throughout 2015, primarily due to the decline in the value of the Rouble in late 2014. This led to a contraction in advertising revenues across various segments. However, as the situation stabilized towards the end of the year, there was a noticeable recovery in volume. Notably, contextual and mobile advertising emerged as resilient segments during this period.
Within the digital landscape, several noteworthy trends took shape. Advertising within Russian social networks gained prominence, with a growing emphasis on native promotional methods. Additionally, the emergence of the Periscope network marked a significant development. To delve deeper into the most significant trends of 2015 and gain insights into the forecasts for 2016, refer to the comprehensive material provided by Quarter Billion Agency Group.
The year 2015 presented numerous challenges for the advertising market in Russia, primarily due to the deepening economic crisis in the country. This resulted in a significant reduction in advertising budgets and a heightened search for effective marketing strategies. A telling indicator of the overall situation was the performance of advertising on TV channels.
In the first quarter of 2015, TV channels experienced a notable 21% decline in earnings from advertising. However, the market showed signs of recovery in the second half of the year, partially compensating for the earlier decline. Despite the odds, industry experts predict that TV will continue to hold its position as the number one media channel in 2016, serving as the primary means of communication with brands.
The cable and satellite TV market faced significant challenges during this period. In early 2015, a law was enacted to prohibit advertising on channels that viewers paid for. However, the ban was later eased. According to RACA, the amount of advertising on cable channels decreased by almost half, specifically 46%, in 2015.
In 2015, radio advertising followed the trends observed in the overall advertising market. It experienced a decline of 25% in the first quarter but gradually recovered over the course of the year. The situation at both federal and regional radio stations followed a similar pattern, although there were variations in the dynamics of specific product categories. For instance, the advertising share of financial and insurance services grew at the federal level but declined at the regional level. Looking ahead to 2016, experts believe that the segment will remain stable.
The situation within the printing press segment is notably dire. In the first quarter of 2015 alone, the segment experienced a substantial decline of 34%. Although it managed to regain some ground by the end of the year, the recovery was minimal. Experts predict that while the decline rates within the segment may lessen, the anticipation of a crisis will compel advertisers to favor prominent publications and publishing houses.
Simultaneously, the print media will remain a vital communication channel for luxury advertisers. Despite the challenging circumstances, it is expected that high-end brands will continue to rely on print publications to reach their target audience.
The outdoor advertising segment has witnessed a decline, and this downturn cannot solely be attributed to economic factors. In September, Dmitry Medvedev, the Prime Minister of Russia, signed a national standard for outdoor advertising, set to take effect on March 1, 2016. If implemented, it is estimated that up to 90% of the existing structures in Moscow and St. Petersburg could face a threat.
Conversely, the situation in Internet advertising appears to be more favorable. Currently, contextual advertising serves as the primary driver of the segment, accounting for 80% of total online advertising. In 2015, contextual advertising underwent several changes, which are detailed in the Quarter Billion Agency Group’s material available here.
Furthermore, the mobile segment is anticipated to experience continued growth. According to forecasts from various agencies, the mobile advertising market is projected to reach RUR 23-25 billion by the end of the year. In 2016, experts predict the emergence of cross-screen campaigns, encompassing TV, desktop, and mobile platforms, with unified dimensions.
One of the noteworthy trends of the previous year was the active involvement of the state in the advertising market. In addition to the State All-Union standards for outdoor advertising and the ban on advertising on cable networks, which we have already mentioned, a law was implemented at the beginning of this year to limit foreign ownership of Russian media organizations. According to this law, foreign entities are now restricted from acquiring more than 20% ownership in the share capital of a company that acts as a shareholder, founder, editorial body, or broadcaster.
Furthermore, ongoing efforts have been made to impose legal restrictions on advertising for certain product categories, including fast food and pharmaceuticals. The Federal Supervision Agency for Information Technologies and Communications (Roskomnadzor) also intends to initiate regulation within the contextual advertising market. These developments highlight the increased state intervention in shaping the advertising landscape.
In the digital segment, a significant trend highlighted by experts was the notable rise in the usage of online advertising blockers by customers. According to a report from Adobe and Pagefair, the global number of ad blocker users reached 198 million people, reflecting a 41% increase in 2015. Furthermore, these programs are not only gaining traction on desktop computers but are also extending their presence to mobile browsers. Worth mentioning is the introduction of ad blockers in Apple devices with the release of the new mobile OS version, iOS 9 API. It is evident that the popularity of ad blockers is expected to continue to grow in the future.
Moving forward, a significant trend in 2016 and beyond will be the pursuit of advertising opportunities on the internet that are not susceptible to blocking by ad-blocking programs. A notable development in 2015, widely discussed among Russian websites, was the emergence of “native advertising.” This term typically refers to advertisements that not only provide value to readers but also seamlessly integrate into the content of the website where they are placed. It is evident that such advertising offers several advantages over traditional banners:
- It is less intrusive and irritating to readers.
- It has a higher likelihood of being read and noticed.
- The thematic material is inherently interesting to visitors who are already engaged with the website’s content.
- It can be consumed comfortably across both computer screens and mobile devices.
Nevertheless, experts emphasize that the effectiveness of such advertising relies heavily on careful selection of the appropriate website and ensuring that the “natural” integration of this advertising aligns seamlessly with the surrounding content on the site.
There are three primary categories of native advertising:
- Sponsored content: This involves paid material featured on websites, channels, or other media outlets.
- Recommended content: This encompasses suggested materials on websites, recommended videos on platforms like YouTube, and suggested mobile applications.
- Advertising within social media news feeds: This category warrants separate consideration due to its unique characteristics.
In 2015, advertising within the news feed became prevalent across various social networks in Russia. In April, the introduction of promotional posts in the social network “Vkontakte“ was announced. These posts are specifically targeted towards users. Notably, a distinctive characteristic of such advertising on “Vkontakte” is that these posts can remain visible in the news feed for an extended period, persisting until the user has been offline for an extended duration. It is worth mentioning that the social network allows for the attachment of various applications to these posts, such as videos, photos, surveys, and more.
Similar advertising opportunities also emerged in the autumn within the social networks “Odnoklassniki” and Instagram. We have previously covered these tools in detail on our blog, which can be found here and here.
Another noteworthy development is the emergence of the service called LableUp, which facilitates the automated search for bloggers who can advertise products or services on Instagram. This platform offers a convenient solution for connecting advertisers with suitable influencers in an efficient and streamlined manner.
An additional significant occurrence in 2015, extensively deliberated by numerous experts, was the advent of the Periscope service. Periscope, as a communication tool, has the potential to be an excellent means of establishing a closer connection with one’s target audience. Presently, the most popular Periscope channels in Russia are owned by renowned bloggers and showbiz personalities. Politicians have also actively embraced this new avenue for promotion, with United Russia, for instance, intending to broadcast their primaries through the application.
There are various ways to leverage this service for marketing purposes, including hosting webinars, live streaming company events, CEO video blogs, showcasing the manufacturing process, or demonstrating unique business approaches. Live broadcasts enable the establishment of trust with the audience, which can be more challenging to achieve through other means.
Thus, 2015 served as a litmus test for the advertising market. In 2016, TV and radio will continue to be the most reliable channels for promotion. Additionally, the volume and reach of content and mobile advertising will expand further. 2015 introduced several notable innovations in the digital space, and there is no doubt that new promotional tools will emerge in 2016. For detailed information on these tools, you can refer to our blog, and our experts will assist you in selecting the best approach for your advertising and promotional endeavors this year.
Stay connected with us on social media by following our accounts!