Actuality February 22, 2008

   Expenses for advertising attained almost $9 bln in 2007, advertisers spent $2,4 bln more on different marketing services (promotion actions, direct mail etc.), declared the Russian Association of Communication Agencies (RACA). However, the RACA does take into account the row of positions: commissions of middlemen, context advertising in the Internet, expenses for PR. With their account, as specialists counted up, expenses for promotion of products and services exceeded $13,7 bln in 2007.

   According to the RACA data, in 2007 the volume of market of advertising grew by 26%, up to RUR 228,7 bln (about $8,95 bln at the average weighted rate RUR 25,56 for a dollar). However, experts can not take the consolidated decision on all segments for the second year. If at summing up the 2007 results they were not able to agree on the expenses of advertisers on radio, this time the Internet was added to this segment. According to the RACA, last year expenses at radio and the Internet totaled RUR 15,7 bln (+26% by 2006) and RUR 5,8 bln (+92%) respectively. Analytical center "Video International" (ACVI) considers these estimations overestimated. According to its autumn forecast, the expenses at these medias should have attained only RUR 11,8 bln and RUR 4,1 bln by the year results respectively.

   Two medias – press and outdoor advertising – last year showed lesser increase of advertising budgets than market on the whole, follows from the RACA information. Growth of advertising constructions number has slowed in the outdoor advertising, explains Andrey Berezkin, the director manager of ESPAR-Analytic Research Company. According to him, if in 2006 the increase totaled 20%, in 2007 – only 10%, and in Moscow the number of constructions even declined by 5% for a year.

   Advertising in the press that in the first half of the last year demonstrated the 21% increase, increased only by 16% by results of the whole year. "It is connected with new law "About the advertising" that entered into force on July, 2006 that legalized promotion of spirits in the press", considers Alexander Efremov, the expert of the press research department of the RACA. From July, 2006 till June, 2007 due to "spirituous" money the growth rates of the segment have increased almost twice (from 12% to 21%). But from the second half-year the advertising budgets of producers of spirits were already compared to their expenses in the second half of 2006. On the whole the advertising of spirits in the press, as evaluated by the RACA, grew more than twice for 2007, up to RUR 1,4 bln.

   Expenses at marketing services (promo actions, advertising materials in the points of sales, direct marketing, programs of loyalty etc.) grew by 21%, up to RUR 25,56 bln in 2007 (about $2,4 bln). First in the last year the mass producers and distributors of luxury commodities began to use BTL advertising (promotion in HoReCa networks, organization of special events), marks Irina Vasenina, the president of Progression group. Their total budgets already approached by $20 million.

   Estimating the volume of market of advertising, the RACA names only that sums which receive media companies directly, and does not take into account commissions to middlemen, fees of creative agencies and budgets for the production of advertising. "As a rule, all these expenses total up to 10% from advertising collections of media companies", marks Vladimir Yevstafyev, the vice president of the RACA. It means that advertisers spent $895 millions in 2007.

   In their marketing budgets the companies inlay also expenses at researches and PR. As evaluated by the Association of market researchers and public opinion, expenses at researches grew by 30%, up to $260 mln last year. As evaluated by "Sokur & Associates" Agency the volume of the Russian PR market attained $550-600 mln in 2007. In the opinion of Sergey Trofimenko, one of founders of the Russian Public Relations Consultancies Association (RPRCA), it is a marginal estimation: up to $1 bln is spent at PR in Russia.

   Finally, the RACA does not take into account the expenses at the context advertising in the Internet (commercial links at the query in the search engine). For 2007 its volume has doubled and totaled $225 mln, sure in iContext agency. Estimation of Mindshare Interaction Company is about $247 mln. Thus, the RACA does not eliminate in its calculations about $2,4 bln. With their account no less than $13,7 bln was spent on marketing communications in Russia in 2007.

* Council of RACA experts could not come to the unanimous decision

** Information for 2006 is adjusted

*** Advertising within business-centers, retail networks, airports, railway stations etc.