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By the end of 2014, radio advertising has kept a positive trend. The volume of radio advertising revenues increased 2% and amounted 16.9 billion rubles. However, there will be a difficult year for the advertising market and radio is no exception. The 4th quarter of 2014 showed 6% slash in advertising revenue against the same period of the last year. Regional advertising suffered the most (-11%). At year-end, radio kept 5% of all media advertising budgets.
As a reminder, radio advertising is divided in two segments: advertising for a particular selected region (so-called regional advertising) or nationwide advertising (or so-called federal advertising). In 2014, federal segment increased 4% as compared to 2013, while regional decreased 1%. Thus, there was a redistribution of advertising budgets toward federal segment in 2014.
Advertising budget share, radio advertising (commercials + sponsorship), by geography, 2012-2014, billion rubles.
Throughout the year, there was a tendency of slowing down the dynamics of advertising budgets for federal segment. Thus, the 1st quarter of 2014 ended with an increase of 11.5% as compared to the 1st quarter of last year, in the 2nd and 3rd quarters of the market showed growth of 6.4% and of 5.7%, respectively. In the 4th quarter radio advertising budgets decreased 2.6% as compared to the same period in 2013.
Quarterly changes in advertising budgets, federal segment (commercials + sponsorship), 2012-2014, billion rubles.
At the regional level, radio advertising growth was in the range of 2-3% in the 1st-3d quarters and in the 4th quarter advertising budgets were reduced 11%.
Quarterly changes in advertising budgets, regional segment (commercials + sponsorship), 2012-2014, billion rubles.
One of the main reasons of general reduction in advertising activity in federal and in regional segments is economic instability in the country. Unlike television, where advertising contracts are long-term, radio segment is more mobile and quickly responds to different economic situations. It is confirmed by a significant reduction in advertising budgets on the radio in the 4th quarter.
Let us consider in more detail product categories and largest advertisers of federal segment.
Large part of advertising budgets on the radio is steadily concentrated in six product categories: "Medicine and Pharmacy", "Trade Organizations", "Automobiles", "Leisure, Entertainment and Tourism", "Real Estate", "Financial and Insurance Services". In 2014, these categories provided 75% of the total budget allocated to advertising in federal segment. Cumulative increase of budgets for these categories in 2014 was 10%.
Advertising budgets share distribution, by product categories, federal segment, 2013-2014, %
Source: AC Vi
The remaining product categories hold 25% of the total advertising budgets on the radio. During the crisis, the dynamics is quite predictable - usually small advertisers place ad in these categories, but in times of economic instability, they reduce marketing costs or leave the advertising segment.
In this regard, we can see a significant reduction in the share of other product categories at the end of 2014. In absolute terms, their budgets have dropped 16%. While advertisers-leaders of radio segment continue to increase their budgets.
Budgets of separate product categories on the radio (commercials of federal segment), 2013-2014, mln rubles, %
Source: AC Vi
For the sake of convenience, advertisers are usually divided into several groups: TOP 20, TOP 21-40, TOP 41-100, TOP 100+. Each group has its own behavior in different economic situations. Despite the general trend in reduce of advertising budgets, advertisers that are focused on radio, increase advertising budgets by reducing their presence in other segments of advertising market.
The budgets of TOP 20 increased 12% in 2014. As a result, teh share of the group increased from 29% in 2013 up to 32% in 2014. It should be mentioned, that the lineup of TOP 20 advertisers did not have significant changes during the year: the leaders, as before, are medical and pharmaceutical companies, trade organizations and manufacturers of passenger cars - these categories showed a steady growth in the volume of advertising budgets throughout 2014.
Budgets of advertisers outside TOP 20 reduced 10%, which affected the decrease 3.9% in their share. In groups TOP 21-40 and TOP 41-100 we can see the growth of advertising budgets: 2% and 1%, respectively.
Dynamics of budget shares of advertiser groups (commercials, federal network), 2012-2014, %
Source: AC Vi
Features of the radio:
- In times of economic instability, small advertisers are the first who reduce advertising budgets on the radio or who leave media segment at all. At the same time, large advertisers, despite everything, stay in the segment and even increase their budgets.
- Radio segment is characterized by a specific budget allocation by product categories - budgets are concentrated in six major product categories. They provide 2/3 of all advertising budgets. In 2014, their cumulative increase was 10% as compared to 2013.
- In 2015, during the economic crisis, it is difficult to expect positive dynamics for the radio. However, radio is quite dynamic segment and, if the economic situation improves, it will quickly increase advertising budgets.
More information about the structure of TV/radio advertising market read in our White Paper "How Does the Media-Buying Market in Russia Work? A Media Buyers' Quick Guide for Effective Work in Russia"
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About the Author
Ksenia Kuznetsova is the Editor of the Blog about Successful Marketing Strategies in Russia. She has been working at RMAA Group as a Assistent of Client Service Director since 2015. Ksenia has experience in planning and carrying out of advertising campaigns for foreign companies in Russia.