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Seville Efendieva, NewForm International

Advertising and the Metropolis
Düsseldorf
September 2005



The Russian advertising market is one of the fastest growing in the world … and is now one of the nine largest … advertising markets … in the world. 2004 saw 30% growth. This year it is expected to grow a further 28%. Combined advertising and promotion spending is now running at over $4 billion per annum.

To put it in perspective … That’s about the same as Canada … after a hundred years of advertising development … while Russia has about a dozen or so years experience in modern marketing.
The Russian industry has lots of scope to grow. I come from a country of 145 million people who all aspire to live the way you do.

Russian GDP is growing at around 7% per annum, and now runs at around $4,000 per capita. Total advertising expenditure represents just $27 per capita. That is a fraction of the $500 per capital spent in the world’s largest advertising market, … the United States.

In setting the scene here … I feel it is important to recognise that the remarkable thing about Russia’s $4 billion marketing industry is that is has grown from the devastating levels of well under $500 million of 1999, … when the market was in a slump following the economic crisis, … financial default and devaluation of 1998.

I think you will agree, growing by a factor of eight in just five years is impressive by any standards. This growth is solidly based on marketing expenditure designed to generate sales and profits.

Today advertising is accepted as an essential business tool in Russia. It is recognised that it directly affects a company’s bottom line financial performance. By building brands and fostering customer loyalty … advertising creates valuable equity for a company … that can be transferred into balance sheet projections over the years.

According to the Russian monitoring agency, Espar Analitic, Outdoor advertising commands the third largest share of advertising expenditure after TV and Press. However Outdoor advertising is growing at a rate of 35% per annum, greater than the growth in TV … and bested only by growth in Internet advertising.

Outdoor accounts for 18-20% of advertising expenditure.
This is roughly twice the proportion of outdoor advertising’s share across Europe. From this we can see the structure of advertising in Russia has its own characteristics. This is partly because of the extremely fast growth of the consumer market and the Russian geography. Russia covers the largest land mass in the world, from frontiers with Europe in the West … across eleven time zones … to facing Alaska and Japan in the East.

Local advertisers generally have limited budgets that mean they cannot afford to buy national television, … there are no national newspapers and….the ability of the average population, … with an average national salary of $300 a month, … restricts the buying of heavy glossy magazines at around $3 a copy. Outdoor advertising is attractive to advertisers because it allows targeted media planning and buying. First of all, the basic audience for outdoor advertising is the most active, mobile sector of the population … That is to say drivers. By definition this means a sector of the population with above average income and spending power.

This drives image advertisers to outdoor. Increasingly brands are more and more recognised … and brand promotion and battle for market share … is another factor driving outdoor advertising. Last year, 61,000 brands were advertised in a country that, 10 years ago had hardly any.

There is now more billboard advertising in Moscow alone … than in all of Britain.. This creates a jungle and makes it hard to stand out. One of the most effective ways to capture and hold attention of motorists with outdoor advertising is the use of technology, … in which I am pleased to say, … my company is a leader in Moscow.

From tri-vision signs at roadsides, and above the entrances to pedestrian cross street underpasses … From revolving unipoles in Moscow’s main squares…. to 4m BY 8m spectaculars. We hold about 15% of the market for Tri-Vision and Unipole signs in Moscow. New Form international has proven time and time again, the value added benefit to advertisers of high technology solutions to their communications needs.

We are now installing the same curved design with robust technology and downscaled to 3 By 6 metres as created such an impacty with our 4 By 8 metre signs. They are going up in the outer dormitary suburbs of Moscow. Over ten years we have never hesitated from investment … Whether in design or in manufacturing.

We have continuously developed super high quality outdoor media.
We rigidly adhere to ecological standards that are aesthetically pleasing, safe and are environmentally friendly. We design our signage in Russia. We contract the manufacturing of components using the highest quality materials to suppliers in Germany France and Sweden. We assemble the signs in Moscow and erect them around the city. Our oldest constructions are 10 years old and are still standing, as clean and as eye-catching as ever. By using modern and environmentally friendly materials the maintenance requirements of our signs are low and the down-time is insignificant.

In doing this, we are supported by the Moscow City Government, who apply a sliding scale of taxes to outdoor advertising sites. The higher the technology used, … the lower the tax rate. We have always searched out the best locations for our big format and super sites. An example of this is the repeated use by CNN of a city background for their reports … featuring one of our unipole advertisements for Coca-Cola.

There are now a number of outdoor LED screens being used as outdoor advertising media in Russia and Moscow. Our group has studied this medium and its application in Russia. We are aware of constraints … such as reduced visibility during periods of bright sunlight and have been reluctant to rush in,… just because something is new.

However, we have now found a way to employ this medium.
We have signed agreements to represent Lighthouse Technologies in Russia and … later this year will install the first lighthouse LED screen on a major urban intersection in Moscow. Lighthouse, as you probably know, manufacture the Coca Cola LED display screen at Piccadilly Circus, in London. This is three times bigger than the previous Coca Cola advertisement on the site and, … at 32 metres wide by over 6 metres tall, is Britain’s biggest permanent LED Display. It's an "intelligent sign", with state-of-the-art computer technology, built-in cameras and even an on-board, heat sensitive weather station.

The latest steps by our group are in taking outdoor … indoor. The reasons are clear. In the first six months of this year Russian consumers spent over $150 billion buying goods and services. Russia is now the fastest growing importer of food and beverages from the 25 European member states, accounting for 7.8 per cent of all exports.

With real disposal incomes climbing over 10% year on year, Russians are spending more and saving more. The value of their shopping basket is fuelling increased profits for European consumer packaged goods companies … from L’Oreal to … Scottish and Newcastle; … from Nestle to … Lipton Tea.

Research shows that 75% of the final purchase decisions are made by consumers at the point of purchase. The tobacco and liquor industries ability to communicate is increasingly limited by legislation in Russia, …as elsewhere in Europe. Retail sites,… where their products are sold…. are one of their last bastions, and in-store TV is their last chance to influence purchase before the check out.

I am sure you in this audience are aware of the advances being made in this medium in Wal Mart and, closer to home, in the UK through Tesco TV.

Our group has studied these systems. We have teamed up with international technical partners and this year launched IMTV in Ramstore, the largest chain of malls in Russia. By the end of this year we will have 1,000 plasma display screens in 70 Ramstores in 10 Regions of Russia. Currently we have some 300 screens live in Moscow.

The main advantage that IMTV has over similar systems is that it has a unique inter-active advance warning system. While everything is controlled from our central offices in Moscow and you can check any time what is being broadcast … on any screen in the network …. it is our interactive reporting system that is truly unique.

I am pleased to say that our Russian software engineers have been able to utilise all the technology and communications power going into the network to enable each screen to notify the central control room of any potential fault 100 hours before it is due to become a problem. Our central control engineers receive a signal … informing them of the identity number of the screen, … it’s physical address … and details of the problem. That same night … while the store is closed for maintenance and re-stocking … the screen is replaced, meaning that there is continuity in the advertising; … and there is no disruption to the store’s floor traffic.

It is difficult to envision what the next 10 to 15 years will bring in the way of innovation to outdoor advertising but, one thing I am sure of, these changes will surprise us all.

Thank you,
And Now, I have pleasure in showing you a few minutes of film… demonstrating our work …

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