Sostav completes the publication series “Russian advertising Yearbook 2018”. Previously released article Sergey Veselov “the Russian advertising market and digital — waiting for further changes?”, Alexey Andreev “Branding “then” and “now” and Alexei Perfune, representative of the AKAR Urals and New business & PR Manager AG Deltaplan. Today we present to your attention an article Artem Radkevich, the expert of Department of digital research and Analytical center of the NSC.
By the end of 2018 AKAR published a new classification of the advertising market, or rather offered it to the new segmentation. In addition to the basic classification of media were submitted to classification by content type. This article describes the background to the establishment of such additional, in a sense, alternative classifications, its advantages and disadvantages, features, technique and technology evaluation.
Background review of the classification of advertising rentalsbryce Russian advertising market exists since 1997, when RARA (Russian Association of advertising agencies) published its first assessment of the market. Over time it has varied slightly, but the base remained the same media as means of distributing advertising content (TV, radio, press, outdoor advertising).
Over the past 20 years, media consumption and media market have undergone dramatic changes, mainly due to the advent and proliferation of Internet. Initially, the Internet functioned as a tool for information-sharing, and the content produced therein to monetizirovat banners. A little later came the search services and contextual ads that show up based on user’s search query. In 2008 the Internet was included in the ACAR assessment of the market as a separate media. The RACA experts also conducted a retrospective assessment that the first advertising budgets came in Russian online in 2002 1, although the Zenith experts believe that the first more or less obvious advertising budgets in the domestic Internet advertising was in 1999 comprised just2. Then, in 2008, after a series of assessments, adjustments and revaluations, the experts came to the conclusion that the Internet had slightly less than 6% of all advertising budgets in the market. But over the last 10 years the situation has changed dramatically. Technological changes in the creation, storage and dissemination of information gave rise to the processes that have led to deep and extensive change in information, social and economic systems.
In modern society, occupies an important place in the activities related to the production and exchange of information, which is implemented through a variety of modern information and communication technologies, among which special importance is the Internet. The unique properties of the Internet as information and communication environment has greatly enhanced the effectiveness of all activities based on communication and working with information. The Internet has expanded the space of possibilities: the whole sphere of human activity is rapidly transferred to the communicative space of the Internet. Generated new Internet-based practices of communication, information consumption, consumer behavior, education, entertaining, etc. Principal economic, social, political and cultural activities around the world are structured through the Internet and around him.
Both business and personal communication flows in the Internet. This is facilitated by the unique characteristics of the Internet, providing the possibility of low-cost transmission of large amounts of information at any distance, processing and storage of the transmitted information, the remote nature of communication and the possibility of anonymous communication, the ability to communicate with many people simultaneously without leaving your home (office), arbitrarily set the mode of communication, if necessary, to interrupt it, and so These benefits are due to the expanding use of the Internet in business, politics, government, science, everyday life, etc.
The penetration of broadband, mobile communications and mobile Internet, the falling costs of communication allow us not only to communicate through the Internet, but also make available the consumption of “heavy” content, especially videos. The main part of Internet traffic today accounts for video content and flows from computers to mobile devices. International statistics and studies indicate that the Russian Internet audience in numbers is one of the largest in the world. However, Russia still lags behind many countries in terms of Internet penetration. So, in the international ranking of countries by number of Internet users Russia occupies the 7th position after China, India, USA, Brazil, Indonesia and Japan, and the level of Internet penetration — only 86-ую3. According to Mediascope, 2018 Internet penetration was 74% for Russians over the age of 12, and with mobile devices in the Internet there were 63% and from the computer 51%. The practice of using the Internet is already tightly integrated into the daily lives of our citizens. Among users 87% goes to the network every day, every year increases the time spent on the Internet.
Such enormous changes in the media consumption and turned the advertising market. Physical media media thing of the past. It and the cassette, and compact discs, and books, and of course the traditional newspaper. Among all the media in the most affected was the printing press. From a business point of view, Newspapers often became simply unprofitable to print and distribute compared to the traditional price distribution via a website is negligible, but with increasing Internet penetration, the demand for the print version continues to decline rapidly. But that doesn’t mean “dead” publishing house, the publisher. They began to use a new distribution channel for your content, create new content (which was impossible on paper) and seek new monetization opportunities. It publishers another year and a half ago turned into ACAR with a proposal to consider the amount of advertising budgets received by the content producers in a variety of environments. After them came other market participants (television and radio), which, following the audience, also provide access to its contents through streaming on the Internet or in formats like catch-up, VOD. If physical media content (music and video, movies, books) had been largely replaced by digital distribution, the content consumption of the broadcast media (radio, television, press) via the Internet serves more as a Supplement to traditional forms of consumption of these media. A gradual decrease of the audience of linear television does not constitute a waiver, but only the shift of video content consumption in non-linear environment.
Now all the media to a greater or lesser extent adapt to the new reality and produce content specifically for the web. So, on the websites of the publications you can find the videos on the websites of the TV channels — text news, equipped with pictures, radio stations doing special projects, redirecting the audience from your live site and back.
Global trend was that the largest Internet companies are beginning to engage in the production of professional video content. For example, Netflix, Amazon, Apple and others produce the content and broadcast its own network. Our domestic IT-company “Yandex” has launched special hour Christmas channel with movies and cartoons in high quality, and also held its first Christmas show with popular entertainers and stars of the Internet. Social network Vkontakte online cinema ivi also attempted to produce their own video content (mini-series, animated films).
Thus, the audience goes to consume content from the traditional media to the Internet, TV channels, radio stations and publishers follow. But existing since 1997, segmentation of the advertising market, this situation in no way taken into account and the evaluation of ACAR, which is used by all media advertising market, does not reflect the full picture of the market: it segment of the Internet began at the end of 2019 the largest (43.3%), ahead of television (39.9%).
But in fact more than 95% of the segment “TV” is classic TV commercials, and in the segment “Internet” included different types of advertising (banners, video, text and graphic ads), each of which is divided into subtypes, depending on the specifics of pricing, methods or placements, etc. and this “piece of cake”, in addition to the advertising revenues of Internet services, included the income of the traditional media, which they get by spreading your content over the Internet.
Advertising money online is really a lot, primarily at the expense of medium and small advertisers using relatively inexpensive and effective for them text and graphic-based ads based on user’s search query. Large advertisers for business growth requires building of brand awareness and inform a broad audience about their products and services. Still cheap reach the maximum number of people, ceteris paribus, can only be achieved on television. Even the largest Internet companies are very active in using TV advertising to attract a mass audience for their services.
Some incompleteness and inconsistency in the performance of the market in the framework of the existing classification led to the need for its revision, or rather, an alternate slice of the market, reflecting the demand for professional content, regardless of the environments. In addition, many of the company within its marketing strategy, the concept of the so-called omnichannel, that is seamless and continuous customer communication through all channels.
Base classificationhave the request of market players, ACAR requested the Commission of experts to develop new approaches to the classification of the advertising market. At the first stage it was necessary to determine the classification. Options base there are many, the specific choice depends on the purpose. Simultaneous use of multiple grounds, even at different levels, is impossible, because the result is a multidimensional matrix, individual cells which also will be impossible to assess. The most relevant options were only two — this type of advertising and content type. The choice was made in favor of the second option and here’s why. First, the original request came from content publishers who wanted to reflect their income in the Internet. Thus, the main objective of this classification was a reflection of the income of publishers in all environments, regardless of the form of advertising. Second, the new classification was supposed to be “countable”, that is allocated to the segments and sub-segments of the market must then be estimated by market participants. It was therefore decided to focus on the division by content type. The result is a three — segment video content, audio content, publishing content, the monetization of which should be assessed. The developed approach allowed to observe the basic requirement of any classification is to have a common basis necessary to avoid intersections. In addition, this approach provided continuity, giving the opportunity to use the teaching practices and evaluation of sub-segments of the “old” classification when working on a new one.
So, the task of the experts AKAR was the creation of a new classification of segments of the advertising market, on the first level which is the type of content and the second level is the environment in which monetized each content type.
Specifics of methods and assessment for each type of contentin the nature of business (types of advertising, the ways of placing, pricing, market structure, negotiability parties, financial statements of companies, etc.) and possibilities of the correct assessment of the sub-segments to divide revenues from online and from offline is not always possible.
Therefore, the study estimates the segment was assigned to the working groups for each type of the studied content (video, audio, and publishing) with the subsequent bringing to a common denominator on the market. As such denominator was proposed to use the medium of monetizing these content types, that is, to one part be attributed to advertising budgets obtained in the “traditional” environment to another — in digitalnoj. Below we describe each of the segments of the new classification separately. Note that the work was carried out separately for radioholding, publishers and television holdings. But in each of the working groups included representatives of the digital business.
Videoconferencia of the working group on the evaluation of the volume of advertising budgets in video content identified three sub-segment, reflecting the distribution of video in different media — traditional TV, cinema and Internet. In the sub-segment of the traditional television included the budgets received from the placement of direct and sponsorship advertising in live TV channels. In the subsegment of cinemas included advertising revenues from display advertising on the screens in cinemas before the screening of the film (so-called display advertising). The sub-segments of television and cinema are evaluated ACAR in the traditional classification, and the volumes on them were all taken from the official estimates of the Association. Therefore, in this case, there is only a redistribution of the sub-segments under the old classification.
The most problematic segment was the Internet environment. First, according to the chosen methodology was to be assessed ad monetization of video content (in this case professional content broadcasters and filmmakers), distributed on the Internet. The main method of monetization of such content is instream video ads, but there are other kinds of banners and contextual ads on the page with the video player, branding the video player etc. unfortunately, correctly and in full, to quantify the parameters of such monetization at this stage proved to be very problematic for a number of reasons.
Second, there is methodological problem of the separation of professional content (i.e. content created for money) and Amateur content (video being shared). While Amateur or user content (UGC) and monetized video-sharing websites and social networks, the authors don’t get views for his reward. The criterion for inclusion or notesini to publishing content only video that exists on the Internet, not obvious. Do I need to determine the degree of professionalism content by referring to publishing? Or the criterion to make the possibility of earning on the content through advertising? Or any video posted online is considered publishing video content?
While experts are more inclined to the second approach, but the discussion is still ongoing. If we talk about professional content, but you cannot ignore the significant phenomenon of the so-called vlogery (help) falling in the border zone. In fact, they are digital publishers: their content originated and exists only on the Internet, it is created for making money, often has high-quality production, typical TV programs, and the owner receives a reward for him from the platforms on the model of revenue sharing. Experts today have not yet developed clear criteria for the Department of professional content producers, broadcasters and “semi-professional” content vlogery from UGC.
In practice, as a first approach to assessing monetization of video content in the Internet, it was decided to use the evaluation of budgets in in-stream video advertising, which is carried out by experts RACA and IAB Russia. Therefore, the third sub-segment in the new classification became a sub-segment of online video (stream+VOD), including budgets only from video advertising in video content in online cinema sites, television stations and on video, as well as in licensed players in social networks.
Further development of methods of assessment of sub-segment videos on the Internet is supposed in several directions. First, it is consideration of other possible advertising ways to monetize video content (banners, contextual ads in the video player and its environment and, possibly, integration). Second, a clearer definition of the boundary between professional and non-professional video content for a more correct accounting of the volume of advertising in video-sharing websites and social networks.
Audiocommentary of the working group on the evaluation of the volume of advertising budgets in the audio content when evaluating the monetization of audiocontent divided segment on the types of players that implement is:
Advertising revenues radioholding and radio stations, including special projects (and in ether, and in the digital environment).advertising revenues of other players in the digital audio environment; other players were classified as any audio-streaming online service that obtain income from advertising monetize your audio content. The following results are obtained:
Evaluation of this segment corresponds to the claimed method, according to which takes into account all possible ways of ad monetization professional (publishing) audio content, namely:
budgets radioholding/radio stations, received from the placement of direct advertisements and sponsorship of live radio stations;budgets radioholding/radio stations received from the Internet-models monetize your audio content with advertisements (pre-, mid-, post-, pause-rolls), and both independently and through intermediaries (technology partners for the distribution and sale of digital audio advertising);the budgets of all other forms of advertising and sponsorship related to the consumption of audio content, banner, video and other forms of advertising on the websites and mobile apps radioholding; revenue from advertising on the Youtube channel when the post of radio and music content; revenues derived from the sites of radio stations using the radio content, is monetizing on digital models;the budgets of streaming online services earning income from Internet models monetize your audio content with advertisements (pre-, mid-, post-, pause-rolls), both independently and with the help of various intermediaries (technology partners for the distribution and sale of digital audio advertising), as well as the budgets of all other forms of advertising and sponsorship. Problem was the division of revenues of radio stations on special projects (270 million rubles in 2018) in the digital and offline components. Since this is contrary to the General market methodology, the Commission of experts at ACAR decided not to include the advertising income from special projects in the final figure for the entire market. This explains the discrepancy between the total value of the segment “Audiocontent” in the framework of the working group (see Table 2) and within the total market (see Table 4). It is anticipated that this methodical contradiction is resolved.
Publishing contentexport of the working group on the assessment of the volume of advertising in the publishing content identified three types of publishers:
The publishing house, having only the printed edition (code name shardlet — “print”). The publishing house that has both print and online publication (called the “print+digital”). Internet companies, which, according to experts, can be attributed to the publishing business, and who do not have printed versions (sub-segment “digital”). After long, almost eighteen months of work, the experts provided the following market estimates on the volume of advertising budgets in the publishing content (table 3). Advertising budgets at publishing houses that only have printed versions of books, count was relatively easy — the evaluation of the Commission of experts AKAR holds constantly. By sub-segment “print+digital” printed component was known in the framework of the standard evaluation, but digitalnoj required additional work leading publishing houses held very successful.
However, the greatest difficulties arose with the sub-segment digital, as there were no allocation criteria among a huge number of resources on the Internet is those that need to relate to the publishing business. Interestingly, the representatives of individual Internet resources, when they were asked, to which publishing or Internet business they takes their activities actually always clearly answered — to the Internet. What, in General, is understandable — even from a purely public relations reasons, the representatives of the sites more willingly itself was considered to be highly successful digital and not to the embattled press.
In this situation, when estimating advertising budgets, the experts arrived on the principle list: created a list of specific Internet resources, which, in their opinion, should be attributed to the publishing business. Plus added a certain percentage of resources that must, in principle, this includes, but amounts are difficult to calculate (so-called “tail”). But even with this approach because of the limitations of classroom measurement and monitoring of advertising on the Internet to evaluate digital publishers that do not have offline business was not easy. The experts developed an evaluation model based on the attendance of the top Internet resources in editorial content, public data on financial performance and expert assessments of market participants. The assessment of this sub-segment is that it is impossible to name absolutely correct. But still it allows us to understand the order of the budgets that have content Internet resources. In the future, this subsegment requires a thorough and detailed study with the involvement of representatives of digital publishers for the verification of volumes of budgets.
Old and new klassifikatsii a result of the work on the development of new classification was divided into three segments by type of content: video content, audio content, and publishing content. To avoid confusion, in the final (consolidated) version of the table estimates the advertising market by types of content were included, the remaining segments of the advertising media market, namely the segment of the Internet (including Internet services and excluding the volume of advertising, obtained through consumption of video, audio and publishing content in the digital environment) and the segment Out of Home (minus the onscreen advertising at cinemas), which is pure advertising outside of professional media content (see Table 4).
Please note that the sum of the budgets of all segments was virtually identical to the amount in the “old” classification (media segments). A small difference is observed only for the segment “Audio content” due to the delisting of special projects, the proceeds of which were not divided into offline and online, as mentioned above. Actually at such approach of the media segments of the Internet and Out of Home were reallocated part of budgets, which content is more likely to be manufacturers and distributors of video, audio and publishing products, rather than to Internet services and to OOH.
Zaklucheniya until recently, the traditional system of segmentation of the advertising market by media segments (TV, radio, the press, the UN and the Internet) is not fully consider the realities of modern media business and media consumption. Audio, video and publishing content in addition to traditional methods of dissemination (through radio, TV channels, Newspapers and magazines) for several years applies in the digital environment, collecting a large enough advertising budgets. The Commission of experts AKAR has worked on new, additional segmentation of the advertising market by content type and estimated volume of advertising collected through the distribution of audio, video and publishing content, both in traditional media and in the digital environment.
Of course, at the initial stage not all looks uncontroversial, the technique obviously needs work, and that will happen with the accumulation of practical experience, expanding the circle of experts involved in the assessment, and, of course, improvement of measurement tools digital environment.
The proposed approach is not unique and unchanging. The main purpose of the new classification is useful for industry, in particular, a deeper understanding of the advertising market in the country. It is therefore possible that the methodology will be amended depending on the requirements of concerned market participants.
Despite some shortcomings, the new method data for “traditional” fully correspond to the assessment of the market by media segments, which usually publishes the Association. This avoids confusion in the market. The new classification is not positioned as the antithesis of the old, but only gives the opportunity to analyze another slice of the market, demonstrating that the Internet is not only a new media environment, but also acts as a means of delivering content to traditional media to the end user, while providing ample opportunities for interactivity, flexibility, time of viewing, accessibility from different devices.
Russian advertising Yearbook 2018 prepared by OOO “NSK” commissioned by the National advertising Alliance, with the assistance of the Russian Academy of Advertising and Association of Communication agencies of Russia, science editor — Sergey Veselov. The edition is preceded by introductory remarks by the head of FAS Igor Artemyev.
The Yearbook includes more than 30 articles by leading specialists of the Russian advertising industry, an extensive array of statistical information on the global and Russian advertising market, reference materials.
The Yearbook addresses a variety of issues virtually all spheres of advertising industry — creativity and festivals, Agency business and advertising in the regions, Antimonopoly regulation and government advertising, branding and sports marketing, digital and artificial intelligence in advertising and more.
The authors present the different areas of the advertising industry — television, radio, publishing, Internet, outdoor advertising, advertising in cinemas. Among the authors of articles 10 people are members of the Council ACAR, generally occupying senior positions in major advertising agencies in the market, there are representatives of media companies, Federal Antimonopoly service, regional industrial associations, higher education. Traditionally have a broad representation of experts of the Analytical center NSC — in this release, they have written 11 articles, plus virtually all of the prepared statistics.
The publication is intended for representatives of the business community, professionals of the advertising and media industry, public authorities of various levels, including antitrust, as well as for students learning the specifics of development of the advertising industry.
Read more •••