Sostav presents to your attention a small series of articles included in the recently published “Russian advertising Yearbook 2018”. Yearbook, 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.

For anybody not a great discovery a statement of the fact that over the past few years, the domestic advertising market (after the world, and sometimes ahead of it) has changed radically.

Formally, at the most superficial level, this change is manifested in the change of leader among the media segments of the advertising market — the Internet ahead of television: the world in 2017, in Russia in the past 2018. it would Seem, so what? This has already happened. On the world market TV came in 1st place in terms of advertising budgets in 2009, having moved from her press, in our country the same press was the first in 1995, and television in 2002, but no one in the first case nor the second was not talking about any radical changes. Everything was more or less clear trends are obvious, the predictability of future changes is quite high.

But today the situation is, in our opinion, is completely different. The fact that at the present time there are deeper changes than just a change of leader, and these changes are already changing, and further change to an even greater extent the entire vector of development of the advertising industry.

Such changes in the Russian advertising market according to the degree of its radicalism was never. Even in the crisis of 1999 when the volume of the market fell twice, and for some time it was not clear if he survives at all, the changes perhaps weren’t so deep. Perhaps, in the world market to find an analogue of such changes will be difficult, though, if a little joke, then, perhaps, on a par with the current situation it is possible to put the invention by Johannes Gutenberg of the printing press. Then the world really has CHANGED! Some enthusiastic experts believe that the event is the third information revolution (assuming the first appearance of speech and the second is the appearance of writing), someone calls it a landmark invention that radically changed mankind, someone- an important milestone in the history of communications… it Seems that now is the time to talk about a new information revolution (at least in part the advertising industry).

The core of the current radical, global, and — what’s important! — a very rapid market changes is as radical, global and rapidly changing media consumption of the audience. If you ride the subway or bus, more than half of the passengers were buried in their electronic gadgets, if the car, then you have almost certainly included the Navigator, if there is any dispute, then the dispute will almost always climb in Google (well, or “Yandex”, as you like), in order to find evidence of his innocence, etc TV, of course, is still the main “window to the world”. But not all and not always. More and more people watch movies, listen to music, read books wrong, as it did just a few years ago.

To a certain extent this change in audience behavior caused by technical progress. And increasingly accelerating. Traditionally, there are three areas defined as significant and rapid changes in the media consumption of the audience.

First, the emergence and development of means of communication (smartphones, tablets, etc.), “tricked”, and most importantly, the performance of which is growing from year to year. Now you not only can call or send a TEXT, but to obtain access to any information resource, watch TV, listen to music, read a book (the choice is huge), and learn where you are as somewhere you can get, take your picture, record an audio or video message, to chat, to see the doctor, to tax, to pay, to play games, including games in real time with partners that are hundreds and thousands of miles away from you, well, as they say, etc, etc… But the question arises here is the constant presence “inside the gadget” really is a media consumption? It seems that by far not all and not always.

Second, the changing media consumption of the audience influenced the emergence of technologies that provide ever-increasing data transfer speed. A few years ago movies through the Internet you can see is that with a desktop computer, and it is often with problems, today viewing the live football match online in good quality on a mobile device has ceased to be exotic. To download a two-hour film format Blue-ray when using mobile technology 5G takes only a few seconds. And ten years ago the owners of Telecom companies, which paid on tenders for the right to use frequencies for mobile communication technologies 3G, suffered huge losses, because they do not really understand how to use they won resource …

Third, the important role played by the formation and development of the Internet infrastructure. There are various technologies and services access to content, for example, OTT technologies provide simple and understandable even for “narodnoto” audience consumption of diverse content. The principle of obtaining access content “anytime, anywhere, on any device” is implemented in practice today, if not all, then definitely for a very large part of the audience.

In other words, the audience (probably is more correct to say, the part of the audience) instead of having to watch this channel on TV, or read a newspaper and a magazine, buying them, or listen to radio with traditional radio is doing the same thing, but using a computer or even a mobile device (which, in essence, is also a kind of computer). Further, if we are talking about the advertising business, the question arises, how in this changing environment must keep key players on the advertising market — advertisers, advertising structures and advertising platform? Let’s look at their behavior.

So, the advertisers. The actions of these key advertising market players, in our opinion, still confused, not fully meaningful. Advertisers work to increase their budgets online. Why? Crazy? Once all together? Unlikely. In the words of a character from the famous books by Eduard Uspensky: “crazy go alone. It’s just the flu all together sick.” So, in addition to the universal epidemic with the slogan “Everything to the Internet!” there are some more rational reasons. Let’s try to Express our understanding of such reasons. However, we believe that just transition the audience from one media to another is unlikely to automatically and EN masse to cause the ka— Kie some action on the part of advertisers.

In our opinion, there are several reasons why advertisers in the changing media consumption of the audience are increasingly turning to the Internet.

First, the Internet (or rather, the Internet community) very well how to sell themselves. Not advertising, this of course, but the industry in General, including to advertisers. In the eyes of society it is something progressive, modern, if you will, by bright … the Internet industry very well, both in the world and in Russia “hyped” themselves, saying, in effect, “who is not with us is without a future”. And such aggression is sometimes too hard, and not always correct from the viewpoint of the result itself actually acquitted. Here I am reminded of a situation on the Council ACAR, when one of the most reputable advertisers, apparently, yielding to such influence, said almost the same thing: “He who today is still not in digital, he will die tomorrow!”.

Spending a huge amount of conferences, round tables, discussions, forming efficient industrial organization, and, of course, using the Internet space to promote their ideas, the Internet industry in a sense it formed fashion for the Internet. Today advertisers sometimes are accepted by the scheme “this should really do not know why, but doing that means I have to.” That is emotional is often superior to the rational. In this regard, the Internet advertising field gives what is called a head start in a hundred points and a few arrogant television, and not very agile radio and press. In other words, one of the major reasons for such popularity of the Internet among advertisers is generated by the Internet industry fashion on the Internet.

But, of course, the fashion just from scratch to form a complex, no matter how steep the PR you are (although, if you remember the fairy tale by Hans Christian Andersen about not quite dressed the king, I suppose…). The success of the Internet as an effective advertising medium, of course, are technology. And this is the second major reason (and perhaps even the first), according to which advertisers go online. Modern technology in the media industry, the emergence of many of which is the advent of the Internet, most actively developed, implemented, and promoted on the Internet. Internet promise Internet users the advertiser, gives you new opportunities. But what happens next?

It would seem that you, the advertiser, come to the Internet precisely because it’s all very, very precisely, specifically, address, etc. Sites and their advertisers convince you that you (if you wish) in real time get the opportunity to record all contacts with your target audience, to see all of the clicks your advertising messages, to link your Internet advertising activity with your sales of goods and services, to confirm the achievement of the ordered frequency and coverage, to assess the effectiveness of your advertising campaign, etc. etc. Sounds, of course, beautiful, however, as some say, it’s too beautiful to be true.

Yes, of course, the emergence of the Internet as an advertising medium gave the advertiser a great advantage. But the effectiveness of the Internet for advertisers are more likely to have issues. Measurements in the Internet today, in fact we are talking about the transparency of the Internet — according to most marketers, to put it mildly, leave much to be desired. Moreover, efforts to change the situation in this area at present insufficient. Only enormous pressure from major advertisers, headed by Marc Pritchard of Procter & Gamble and the largest communications holdings, headed by Martin Sorrel, who headed until recently, WPP, has given some, albeit partial, result, when Internet giants Google and Facebook were forced to accept and allow to check data on the behavior of the audience on their resources independent certified companies-measuring instruments.

In fact there is currently absolutely apparent contradiction: on the one hand, advertisers go online, because there are, like, all accurately and specifically, and on the other with the transparency the Internet is not so well as I would like… the manifestation of opacity has a variety of forms. The most famous of them boil down to a triad — fraud, viewability, brand safety. In other words, when advertising on the Internet advertisers can face situations when you are actively cheating, is taken into account is that the consumer does not see and is located close to unacceptable to advertiser content.

A normal reader will ask: is the Internet so bad and there are only crooks? God Forbid! No, of course! Advanced technology in the segment of online advertising, do allow the advertiser to obtain what he never previously could not get, and now in other media isn’t always able to.

Another thing is that don’t need all of the advantages of the Internet to extend to all advertisers and all categories of goods and services. Marketers there is such a thing as a “sales funnel”. Now, the Internet works well in the so-called bottom of this funnel, where the consumer of reasoning and evaluation goes into action and makes a purchase or places an order. And this is the third reason for the interest of advertisers to the Internet.

But agree, if your business is associated not only with short-term sales, and suggests its further development and the formation of the brand, then a “performance” is clearly not enough, and you will have to turn to “branding”. But in terms of branding, in most cases, the Internet is not always on top, after the effectiveness of, say, the same телевидению1.

Finally, there is another reason why advertisers quite often turn their attention to the Internet. We are talking about the effort (and, as a rule, the efforts very successful) advertising agencies, many of which are increasingly trying to coerce advertisers to change their preferences towards the Internet. Why do they do it? The answer, alas, in the vast majority of cases is on the surface. It’s all in the business of advertising on the Internet Agency for a variety of reasons can get a significantly larger piece of the pie in the form of income than any other segment of the advertising market.

And here we can smoothly go to the behavior of advertising agencies on the market in the changing media consumption of the audience. But before we do, let us once again fix: the advertiser goes after an audience in the Internet because: it’s fashionable, it’s sophisticated, it is effective for sales in the lower part of the funnel, it is actively pushing an advertising Agency. Not saying that the sequence of these reasons corresponds with their importance for decision-making by advertisers, but the fact that they are present today in the market is, in our opinion, quite obvious.

Now try to understand how in this changing environment should lead advertising Agency. If you ask virtually any Agency or even advertising holding company operating in the advertising market in which they are located, with high probability all will answer that in a state of transformation. If rude pointeresuemsya transformation of what and what, the answer will be something like this: from the Agency (holding) pre-digital era, the Agency of the digital era. Although no — many will say that they have such a transformation has already ended…

It is clear that the author ernichat, but the reasons for this seem to have. The thing is, what is meant by transformation. In our opinion, the transformation can be real and can be imaginary, an illusion. Most likely, if the Agency will merely simulate a movement in the direction of “figures,” loudly declared the new “digital” products to attract new staff from IT companies, the development of new metrics and using Big Data, then after some time he will either have to leave the market due to lack of demand, or become very much a niche Agency working in a very confined space. Some part agencies today really started to work in the digital environment, and some just talking about it. The problem here is not that of the individual advertising structures do not want to be transformed, and that not everyone understands how to do it.

The Agency, in our opinion, too long lived in the comfort zone, at least in Russia (although, judging by the regular publications in the press and in the world too). This is not a condemnation, rather a statement of fact. For many years it was clear what to do, how to do, with whom to have relationships, how to make money, what will happen next … And then some digitalization, everything (what?) it is necessary to change, while there are technologies, which previously have not heard, there is a platform (?) and network with obscure acronyms DMP, SMP, SSP…

Still, for most agencies it is clear that in “figure” have to go, even if you really don’t want to. The Digital environment today is the most promising to agencies and most cost-effective. Why is this so? There are several reasons that explain the attractiveness of the Internet for agencies.

First, in providing “traditional” services mostly related to the “traditional” media, the yield decreased significantly. This is partly due to the constant and very serious pressure from the advertisers, headed by the Association of National Advertisers (ANA). Most likely, today even the leading advertising structures do not have each other any serious advantages in terms of technology and quality execution services (primarily in the segments of “traditional” media), despite repeated statements by agencies about the development of “unique, matchless” products for advertisers. Still working all the advertising structures in a fairly narrow segment of work for a long time, and their staff regularly migrate from one Agency to another. Consequently, almost the only effective tool of competition for agencies, especially in tenders for customer service, in fact, remains only price competition, that is dumping. And this is quite obvious way lead to lower revenue agencies. Advertisers, of course, realized this and began to “compress” the Agency, announcing the tender for the increasingly short terms of cooperation (then soon it will be possible to hold a new tender) and expecting further decrease in Agency fee. In other words, agencies in “traditional” media to catch almost nothing, well, or, put another way, this “catching” has ceased to be so interesting for them in terms of Commerce.

Second, the attention of advertisers and, consequently, their budgets, for a variety of reasons (about which you can read above) is shifted to the Internet. As they say, fish is to fish where biting. And in this sense the Agency go online after the advertisers, which is quite logical.

Third, agencies began to enter the Internet advertising and suddenly (about a miracle!) it turns out that the Internet is not only work, but can very well earn. Why is the yield for the agencies here are often significantly higher than in the other media segments? In our view, we can distinguish four such reasons.

First, a digital environment for today is the part of the advertising market, where through the development and application of new technologies for some time, you can really get ahead (the rest of the players just have not had time to come here or stayed with the developments of technology). Let a relatively short time, but it can be done, and, therefore, it is possible to obtain additional income. That is why agencies are actively seeking new forms of cooperation, new technological solutions that attract partners.

The second reason is advertisers for the most part, especially for medium and small players today have very little idea about what works in Internet advertising. Often they have only a very General idea about the effectiveness of advertising in the digital environment, and that gleaned from communicating with those same agencies. Therefore, to convince such advertisers, for example, the correctness proposed by the Agency strategy, a campaign or the success of already conducted the campaign will not be easy. So the Agency, ceteris paribus can offer your customer a variant of promotional campaign, fulfilling the wishes of the advertiser, may be the most beneficial for the Agency.

The third reason is the Internet, as mentioned above, by itself is currently very opaque and poorly measurable. Often the owner of the advertising inventory offered for sale is the same authority that provides the results of the campaign. That is, themselves sold the goods by themselves and said how many of the goods sold, while the buyer has no opportunity to verify the reality of this statement. I agree that this statement is somewhat exaggerated in nature, but that, in fact, it’s fair, it seems, already nobody doubts. By the way, something similar happened on our TV advertising market in the 90-ies. In those days, sometimes the customer who placed their ads in the regions was asked to give a confirmation of its release, but the monitoring of advertisements was not there, the sales house (which was advertised) or even the TV channel (which got money for that placement) for its seal has issued a certificate stating that so-and-so is really out Today… in such a situation, the Agency can always “nice report” about the done work, and when dealing with overly interested in the client to refer to your professionalism and… to complain about the absence of independent measurements on the market.

Finally, the fourth reason. This is perhaps the most unpleasant, negative moment, which, of course, can not speak, believing that such things do not exist. But since this edition is intended primarily for professionals who are very familiar with the add-on phenomenon, it does not mention it, the author believes is wrong. We are talking about the so-called supercoach, in essence, is a kind of kickbacks, well, or, to put it “scientifically,” of rebates (even if legally impeccably decorated). What rebates exist in virtually all media segments in all countries, like, today, no one disputes. The McKinsey study, published less than a year ago, say the following: the world average kickbacks (rebates) up to 5% on television, 15% of expenditures on outdoor advertising, from 20% to 35% — if we are talking about digital бюджете2.

So when someone says that we should not procrastinate the theme of SuperCool in Russia, he is likened to an ostrich with its head in the sand — Yes, worldwide there are rebates, and we have in the country… But this is beside the point, it’s not about whether in our country or not, and that, as in the world, on our media advertising market, they are the biggest in the digital environment. Official statistics on the Russian market on the value of supercomm, of course not, but the fact that in the domestic practice on the Internet there are numbers in 20-30-40% few people can surprise. All other media segments on this background looks much more modest.

But what does supercom have-to-income agencies? The most direct. The idea is that all discounts obtained by the Agency, needs to go to the advertiser who himself will have to decide how to promote your Agency received such a good discount. But life is more complicated (or simpler?), in particular, the advertising market, and the rebates actually never reach advertisers. It seems that it and resent the same ANA that a few pages from your multipage report dedicates this “bad” phenomenon. Although, to be honest, that advertisers push agencies to “earnings on the side” to a minimum reducing them the Agency fee, as mentioned already above.

The bottom line: the Agency, working in the segment of Internet advertising and accumulating significant rebates, you get additional income and therefore, ceteris paribus agencies is beneficial in a variety of ways to encourage advertisers to reallocate their advertising budgets to the Internet.

Next, we will try to understand the effect of advertising platform (aka — media, they — tools of advertising, etc.) in terms of mass audience migration to digital. The simple answer seems to be lying on the surface platform looking for new formats to retain or attract audiences, in particular, online. That is TV, press and radio move to the Internet? And here it is not so clear. Let’s first try to understand what is the Internet?

In our opinion, there are two approaches in answering this question and both have the right to exist. The first, traditional, assumes that everything that is distributed via the Internet refers to the Internet. Then in this case actually represents a kind of content delivery services, etc. In this sense, the Internet is sometimes called “transport”, “wires” and even “electricity,” implying that the Internet is not a “load” (that is, not the contents), but only form.

The second approach focuses on the content, namely the content. TV channels, radio stations, magazines and Newspapers in particular, and on the Internet, at some point began to wonder why their budgets in the evaluation of advertising market volume is estimated only in the traditional media (TV, radio, press), and all income they receive in the digital environment, refer to the Internet, not to mention the same TV, radio and press? From the point of view of, say, the channel, what difference is it where the viewer will look at the show or a football match — on the Internet or on TV, if he watched it on the resources of the network, and the advertiser who placed there advertisements, give their budgets to the channel?

This question asked in many advertising markets, and the world’s leading research center in the advertising industry WARC even organized a whole series of studies devoted to this issue under the title Ad Global Trends3.

On the Russian market attended this first major publishing house seeking in 2017 in ACAR with a proposal along with the existing segmentation of the advertising market by media some other approach that would take into account all their advertising revenues. Further publishers have joined the channels and radioholding.

AKAR went to the meeting and by the end of 2018 4 in addition to the traditional allocation of advertising budgets by media segment was the distribution and type of content publishing, video and аудио5.

What kind of approach in the interpretation of the Internet is more correct — in the media segment (“transportation”) or content (“content”)? It seems that the principle in answer to this question should be the same as in the poem by Sergei Mikhalkov: “mum’s different needs, moms any important”.

However, it seems that many have realized the main in the foreseeable future will be not only the possibility of signal transmission (“transport”), but the presence of interesting content. Although this is debatable: for example, that “Rain” did not happen to go into a second television multiplex, and the auditorium, which he expected, the TV channel has not received. Or the history of the Telegram — Yes, the resource in its confrontation with the controller survived, but part of the audience, he clearly didn’t get. Earlier there was so — if you have an essential frequency, you can very successfully work for the TV advertising market, and if not, how would you fine the content was not.

But back to the content. Do you have a competitive content, and not just one program, and all of the required amount, and you can in any environment — from linear television and print media to OTT environment, including a variety of content distribution channels is to be, as they say, a godfather to the king; you have no such content, and you won’t help anybody, including the state. Examples of the same NEG or channel “Spas” clearly confirm this. Both channels are included in the same multiplex, and two dozen other channels, i.e. technical coverage they have is comparable, but the size of the audience, or rather, according to the rating, the OTR in 2018 is inferior to TNT and STS almost 8 times, and “Spas” — 15 times; even educational channel “Culture” (“Russia”) OTR and “Saved” inferior respectively two and four times.

In any case, all media, if they want to remain active players in the advertising market, should work in at least two directions in the development of its content and in terms of formats and ways of delivering this content, whether “traditional” or digital environment.

Wrote this sentence and thought: the last time we increasingly model (such a fashion or what?) the term “Internet” with the term “digital”, but is it correct? It seems that completely wrong. Digitization (“digitalization” absolutely unpronounceable vocabulary design, particularly in speech) is a translation of the content from the analog format to digital and broadcast (transmission). And nothing more. No reference to the Internet here. “Figure” is in TV and radio, and publishing business. In Russia on TV in 2019 analog formats of the broadcast signal in General there should be, in many other countries, it has long passed the stage of — what? Now digital TV is part of the Internet? Of course not.

Well, it is, some side arguments.

But now let’s return to the prospects of the advertising market in the conditions of this digitalization. The slogan “the Internet is our everything!” of course, very spectacular, but largely this is only a slogan.

Not all innovations on the Internet that show up and are offered really work. Blockchain, which avidly in the beginning of 2018, said almost all advertisers, as it turned out, very little can be useful for the advertising industry. And how many were enthusiastic expectations of the whole year назад6.

RTB, which is a couple of years back again, almost all “progressive advertising” was saying how “everything”, just a few months later radically changed his position: well, RTB, it’s kinda cool, but it’s actually a special case of the broader concept of programmatic. What earlier it was not obvious?

Or native advertising? Who knows what it is? The variation in definitions is huge. One extreme is hidden advertising (so called “jeans”), which is probably as old as advertising itself. Another claims that it is a complex “highly intelligent” communication, providing the “natural” advertising, which takes the form and characteristics of the platform on which is placed and, therefore, not a feeling of rejection among consumers. And how many intermediate versions… That is, the market is still undecided and probably will not soon define what actually is “native”, but is already trying to “sell”… If all this talk about high intelligence and naturalness to be taken seriously, then we must assume that native advertising is something very personal, almost boxed product that is called “handmade” (at least, many agencies are promoting exactly native advertising). Well, you will agree, so be it, but then why almost immediately start talking about programmatic in respect to native advertising? In common thinking, programmatic is, first and foremost, optimizing the placement for which the major criterion is price and not quality. Programmatic can work well on large arrays of data (about customers, about product categories and sites for advertising, etc.), but it basically eliminates the “manual work”, personal approach. In other words, it is a mass and the most impersonal approach. So before you begin to actively advocate for native ads, it would be necessary first to define what we mean by mentioning it.

Another important point, if to speak about prospects of the advertising market in light of the “explosive” nature of Internet activities. A friend of mine, a rather authoritative Internet user, said that he is not very worried, if some of the projects that it launches, are “fluff”. “I think it’s normal, if you start ten projects and only one of them shoots, but it shoots! And no guilty feelings — business is business — I don’t experience if someone inadvertently fills, selling him is not a very successful project. (By the way, is anyone familiar? For me, it’s almost a copy of the behavior of the players of the national team of Russia on football of the days of Arshavin against the fans — “this is your expectations”). But representatives of some other traditional media segments somewhat shy or something “vparit” to customers outstanding products or offer is not obvious, but very fashionable, chipofya options advertising campaigns. And it seems, in particular, due to this “shyness” other media aggressive Internet grows well.

Interesting question about the correlation of conditionally conditionally old and new players in the content market. As an example, take the segment of video content. Who not only enters the market of video production. Among the new players here and online cinemas, and telcos and social networks, and search engines and so on : Netflix, Amazon, Google, Apple, Yandex, Mail.Ru Group, etc., etc., and all claim to produce their own content. But “old” — traditional producers of film and video don’t give up — for example, the Disney or Russian TV channels active online presence.

Whatever it was, but a radical change of the situation in the media and advertising markets that occurred in the last few years, not to mention that now all advertising must be only on the Internet. It tells a different story. If you’re the area and want to be successful in the advertising market, you must have quality content and effective ways of delivery. If you are an Agency, then you need a new technology and, it seems, some new footage. Well, if you are an advertiser, try to understand what you offer (in order not vtyuhivali, but it is offered), and follow not what is fashionable and what is profitable.

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