Ad Growth Moves East, But Not that Far Away.

Michael Hedges September 22, 2005

Widely reported and now taken as simple truth, ad spending world wide – except in Asia and except for the internet - is shrinking. Aegis, a division of media buyer Carat, recently revised downward its ad spending forecasts for 2005. But you might have missed the part about Central and Eastern Europe.
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Less reported are ad spending projections for Central and Eastern Europe which are, according to Aegis, tracking higher than earlier forecasts. The region will comprise 16% of European advertising in 2006, vs. 12% in 2004. Anecdotal evidence points to very good news for broadcasters.

“The radio industry is doing well and we are waiting for a 6% increase of radio advertising spending and 9,5% radio share of total advertising spending,” says Czech Broadcasters Association (APSV) Director Michel Zelenka.

“The gross (radio) advertising revenue accounts for 26.5 million leva (€13.6 million),” reports Bulgarian Broadcasters Association (ABBRO) Director Antoneta Arsova. “This represents growth of over 15%, compared to 2003. In 2004 some companies even managed to nearly double their revenues.”

Ad spending is expected to rise in China by 18%, followed by 11.4% in CE Europe. Then follows everywhere else: Spain – 5.1%, Nordics – 4.7%, US – 4.5%, UK – 3.7%, Italy – 2.7%, Japan – 2.5%, France – 2% and Germany – 1%.

The report also said that Russia is now the 6th largest European ad market, just after Spain. Ernst & Young forecast 2005 Russian ad spending at €3.11 billion, most going to TV but €123 million to radio, a 200% increase over 2000.

The media buyer also expects the Football World cup in Germany and winter Olympics in Italy to boost 2006 European ad spending.

Each of these studies point to one important fact: Ad spending growth in Central and Eastern Europe, and Russia, is higher than Gross Domestic Product (GDP) growth. And in Western Europe, where GDP growth has been far slower in the last five years, ad spending responded with even greater slow-down.

Consumer confidence – and even lipstick sales – are leading economic indicators, while job growth is a lagging indicator. Consumer confidence points directly to ad spending; consumers responding to advertising before incomes rise. The rise of consumer markets in Central and Eastern Europe is likely to continue, pushing ad spending higher and with it income growth and GDP.

Gross ad spending in Western Europe will, for the foreseeable future, remain higher than Central and Eastern European countries. But the growth has definitely moved east.

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Czech Radio Consolidates Around Sales-houses - October 15, 2006

Czech-owned Stamford Managing moved to consolidate its radio ownership under the umbrella of sales-house Media Marketing Service (MMS). Stamford acquired the outstanding equity in five radio stations as part of an overall networking strategy.

The transaction involves regional broadcasters Fajn Radio Hity, Radio Apollo, Hitradio Orion and Radio Sumava. Stamford Managing owns shares in 20 other Czech radio stations. MMS sells ads for about 50 local and regional stations.

The strategy shift comes quickly after three Stamford Managing partners sold their interests in the company to the remaining shareholders in September. The three, all owners of local radio stations, wanted to continue operating “family-businesses,” according to Czech Business Weekly.  MMS will also consolidate local sales-houses.

All of this is taking place under the watchful eyes at Lagardère-owned sales-house Regie Radio Music (RRM), which primarily represents the three national private channels; Lagardère (French) owned Freqvence 1, Evropa 2 and the Londa/Eurocast (German) owned Radio Impuls.

MMS represented stations have a combined Czech market share of 39.5%, toping RRM’s 36.5% and ARBOmedia’s 22.7%, according to the SKMO Radio Projekt survey for the first half of 2006. ARBOmedia represents stations of the Czech public broadcaster. Communicorp/Radio Investments’ stations are represented by wholly owned sales-house RadioNet.

Operational consolidation in Sweden’s commercial radio sector left only SBS Broadcasting (SBS) and Modern Times Group (MTG) standing. The ad share for radio in Sweden continues to shrink.