Internet and TV slug it out for advertising dollar in tough market

The advertising market has taken a hit in the downturn, with companies slashing spending, driving some advertisers to the wall. Major players, have remained but there is a shift towards the Internet.

After a nosedive in the market and tumbling rates in late 2008 and the first half of 2009, Russian advertisers were prepared for worse to come this autumn. But with the economy predicted to start growing next year, companies are starting to increase their advertising spending, especially on the Internet.

Aleksey Katkov, Commercial Director of one of Russia’s biggest mail portals, MAIL.RU, says internet advertising is growing while TV and print media still face a 10-30% decline.

“Some traditional TV advertisers tend towards diversity and increase their presence in the Internet, and that yields good market growth. This year major players such as Procter and Gamble and Coca-Cola, increased their internet activity several times over, along with the other FMCG companies.”

The surge in demand prompted Mail.ru to even raise prices for ads on its front page starting from September.

But other market players are less optimistic. They expect the advertising market to fall more than 20% for the year. Boris Podolsky, CFO of CTC Media is also sceptical about a redistribution of the advertising market towards the Internet from TV.

“TV remains the cheapest in terms of the cpp i.e. the cost per point for the advertising. Second, the share of the Internet advertising if you look at the advertising pie as a whole thing, is very marginal. It’s very difficult to substitute TV advertising, particular in Russia, because in Russia TV remains the only nation-wide media source.”

Many analysts are forecasting a further fall in the market this year, but not as dramatic as that seen at the beginning of the economic crisis, and are hoping the market will bottom out in 4th quarter.