MFB 2011
After a full year of crisis, the contraction of the Romanian media market continued in 2010 but at a significantly lower rate compared to previous year (- 9% in 2010 vs.2009). All major media have been impacted – TV, radio, print and outdoor – with Internet being the only medium with a significant volume increase (more than 30% growth compared to 2009).
Graph 1: Total net Ad-spend by medium (Mil €) – Estimation
Print continued to be the most affected medium in 2010 (-30% vs. 2009), followed by OOH ( -20%), Radio (-16%) and with the smallest decrease on TV (-6%).
TV had the highest share of the total net media market (66%) &grew in share versus 2009 (64%), OOH followed with a share of 11%. The growth in online spend meant that online budgets matched Print's share at 8% and overtook Radio (7%).
In 2010, the TV market continued its development by launching new channels: TLC, 10 TV and new channels have been added to the audiences monitoring systems: VH1, TVR3, Dolce Sport, Eurosport2.
Facing a severe drop in readership and advertising investment, the Print market struggled to defend revenues through aggressive marketing actions: creating new impactful formats, launching supplements for niche audience groups and developing integrated promotional campaigns on print, TV and online. Sachet insertions covered products from cosmetics to food, with more books and CD / DVD sold together with the newspaper or magazine. Some titles moved entirely online, while others were closed down.
Radio tried to adapt to the new market situation through launching new programs, PR activities and improving their online presence through dedicated websites and social network sites. Despite the crisis, in 2010 most of the leading stations were sold out in Prime Time.
In 2010, OOH was the second medium after print with a dramatic decrease in revenue, as happened in 2009. Due to the uncertainty in the legal environment and the difficult market conditions (price deflation &low occupancy rate) the vendors did not invest in building new sites or in modernizing the existing ones. The major categories with significant OOH investments were retail chains and telecom companies.
The cinema market in Romania is growing with new multiplexes and new technologies (digital projection, 3D technology, 6D movies). The main categories using cinema advertising in 2010 were: Beverages, FMCG, Clothing &Footwear, Telecommunications, Electronics, Auto, Banking and Insurance.
In 2010, online advertising was the only media type reflecting a net growth in advertising revenue. The main drivers of growth were the social media platform extensions and performance marketing activities, mainly search. Social networking sites have recorded unprecedented growth rates, pulling significant investment from advertised brands (estimated 3% of online net advertising investment).
Graph 2: Market shares in 2009 (net ad-spend by medium) Graph 3: Market shares in 2010 (net ad-spend by medium)
"Medical &optical products &services" became the leading category, up from 2nd position in 2009 with one of the highest budget increases (+55%). "Mobile Telecommunication Services", the leader last year, dropped to 2nd position in 2010 despite an increase in budget (+11%). "Dairy products" and "Hygienics" are some of the categories which kept the same ranking, while "Cosmetics", "Banking &Insurance Services" dropped to lower places, whilst others fell outside of the top 10 ("Beer", "Cars &4x4 vehicles").
Categories with growing investment in 2010 are "Other sugar, confectionaries, honey" (+51%), "Household cleaners (+26%), both new into the top 10 and "Laundry products" (+40%).
In 2010, P&G seemed to recover from the crisis, showing a growth in spend (+58%) and kept the leading position as the major advertiser on the market. Kraft (+5%) and Reckitt Benckiser (+19%) followed in 2nd and 3rd places, as in the previous year, whilst Danone (-5%) and Cosmote (-1%) slightly reduced their budget and dropped to lower positions.
According to Initiative's estimation, the total net ad spend in 2011 will continue to decrease at a much lower rate than in 2010, with an overall drop of 3% .
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In 2010 TV consolidated it's position in a declining market (increasing share from 65% of net spend in 2009 to 66%) after the share decrease seen in 2008. The Economic crisis continued and television remained the favoured entertainment source, however advertisers decreased their TV budgets slightly.
CME kept it's leading position followed by Intact Group in terms of rating delivery. These were followed by TVR, SBS, Dogan and Realitatea.
The changes in TV market dynamics were a little slower than the previous year, with a total of 55 monitored TV stations (from 52 at the end of 2009). The newest TV stations registered to the service are: VH1, Eurosport 2, TCM, TVR3, Dolce Sport, 10TV, TLC. There were also stations which withdrew from the service like GSP2 and GSP3, Telesport, Sport Klub and Vox News.
Regarding the TV penetration by reception type, there is an increase in the penetration of DTH. After a big increase in 2008, we can see a constant growth from year to year and in 2010 more than 26% of households in Romania have Direct to Home reception. In addition, terrestrial reception is declining from 13.5% in 2007 to 6% in 2010. Analogue cable and digital cable are steady, without significant variations.
In 2010, audiences have declined on average by 4%-5% for the overall market, with the niche channels significantly more affected than the major ones. 2010 was characterized by a new wave of deflation of around 22% in conjunction with a massive increase of sold GRPs in the market, 20% higher than 2009.
The deflation resulted in a CPT decrease to an average of 1.2 € (All urban). The sold out rate jumped from 64% (average 2009) to over 76%, with long periods (starting February 15th – until the end of the year) of fully sold out airtime in Prime time and large segments of Off Prime time.
The money allocated by advertisers decreased by 6% - indicating a lower demand from clients, the channels reacted with discounted offers to reach the demand of significant deflation – so, for the first time the market reached a balance between supply and demand, the price deflation was mainly generated through the large amount of inventory available and unsold during the previous year.
As the market was still declining in 2010, and the pressure for TV channels to maximize their share of market was huge, besides deflation and special seasonal deals, the stations were ready to offer better deals for polarized shares of GRPs. So by the end of 2010 40% of GRP's where spent on a channel mix with polarization towards either MPI or Intact – which lowered the prices even further.
After another year of decline for the TV market in 2010 - stations have adapted, learning that demand is the driving factor and the market volatility should lead to a faster response; that beyond annual deals short term deals are just as important and the battle to sell their entire inventory is now more difficult than in 2010.
The first quarter of 2011 started with an increase in audience of 4% versus Q1 2010 and the TV stations eagerness to grow advertising volumes higher than Q1 2010. Unfortunately the desire to generate budget growth collided with the demand of the market, down by 9% - leading to lower costs and at the same an time increase of inventory sold (min) from 61% to 65% across all day (particularly in off PT).
Polarized budgets remain a buying/ selling strategy, in Q1 2011 we estimate over 45% of GRP's were bought/sold in a channel mix polarized towards one of the major TV groups in the market. This practice creates competition between the major players by offering lower prices for receiving a larger share of budgets.
In an economic environment still in crisis, the advertising market managed to reduce the double digit falls from the previous 2 years - Initiative estimates for 2011 a 6% decrease for TV expenditure.
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Reflecting back on 2010, it was a strong year for the digital market in Romania, continuing the increasing investments and interest from all players.
The main drivers of growth were from social media and performance marketing activities, mainly search. Social group buying was an important addition to the internet landscape of last year and is driving rapid increase of investments from brands.
Eurostat, the statistical office of the European Union, reports Internet penetration in Romania to be at 42% of households in H1 2010, compared to 38% in 2009. The same report states that household broadband penetration registered a similar level as 2009 - 23%. As a main conclusion, ISDN or modem connections registered the largest growth in domestic connections.
The same Eurostat report indicates a 36% internet penetration to population.
In the latest report on the status of the telecommunications market published by ANCOM (The National Association for Communications) in June 2010, Romania counts a total number of 6.25 million broadband connections nationally, a 23% increase from the previous year. The increase is largely driven by mobile connections (mobile internet and smartphones), which now stand at 3.32 million connections, representing a 36.6% increase from June 2009.
Social networking sites have recorded unprecedented growth rates. For example Facebook.com grew in terms of world-wide reach from 10% in early August 2008 to 36% in August 2010 and passed 500 mil. users, while Twitter.com reaches today 11% of the total world-wide internet users compared to practically nothing in late 2008 (Source: Digital Fact Book).
H1 2010 marked one premiere in the Romanian online market - 10 of the biggest sales houses signed a self regulatory agreement on performance media practices. The new rules come to restrict important developments, since almost none of the players put any solutions in place to offer performance tools for advertisers
Approx. 70% of all budgets are estimated to be placed on awareness campaigns – traditional or innovative formats. SEM continues to grow up to ~23% of ad spend, social media and others ~ 7% (Initiative estimation).
As a conclusion for 2010, online advertising continued to be mostly used for brand/awareness activities, but performance-led campaigns are increasing fast. Initiative estimates increasing budgets being allocated from other activities than commercial communication (ex.: sales, PR).
As the "year of mobile" phrase is played out we could say that 2010 was the year of the "rise of smartphones". They have become a viable alternative to feature phones, PDAs and laptops, offering phone features such as voice and SMS coupled with mobile internet applications, multimedia functionality, high speed data processing capabilities, and inbuilt GPS capabilities. Also Smartphone penetration has increased to the point where brand marketers can deliver rich experiences through pocket-sized devices.
2010 has been a milestone of mobile marketing in Romanian landscape, the year when it finally left behind the association with just SMS marketing.
The most important factors influencing the evolution of mobile marketing are the penetration of mobile phones, in particular smartphones and also Operators' mobile data plans.
The Romanian mobile market is evolving together with the growth of Smartphone penetration and the emergence of other mobile devices. In 2010, 1 out of 10 mobile phones sold by Mobile Operators in Romania, was a Smartphone. This led to a penetration rate for Smartphones of nearly 11% out of total mobile phones.
On the other hand, Mobile Internet Connections have experienced the largest growth in 2010, although the increase was not as spectacular as in past years, reaching about 4.03 mil connections.
Mobile internet access has seen considerable increase over the last years. We now access the internet through mobile devices about 7 times more than we did in 2006.
In the Romanian market SMS Push is known as a mobile advertising technique, being in fact the most used one, with 80% of mobile advertising being performed through SMS in 2010. The remaining 20 % is advertising through MMS, mobile search or banners in mobile websites.
Mobile technologies that allow consumers to interact with their physical environment will be the hit of Mobile Marketing in 2011. Technologies, such as QR codes and mobile augmented reality (AR) apps, will offer a springboard for brands willing to experiment with the latest technologies.
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Despite the difficult economic environment, the key word for radio market in 2010 is "consolidation". The radio stations tried to compensate the crisis through PR activities and by launching new formats and dynamic programs. Also they continued to improve their online presence through dedicated websites and social network integration.
The radio sales houses continued to be flexible regarding special offers and discounts in 2010 and in Q1 2011. They built interesting, creative and cost efficient packages to stimulate advertising demand - this trend continues into 2011, too. In the last quarter of 2010, the leading stations were sold out in Prime Time, a fact that is due to the result of these strategies.
At the beginning of 2011, following the result of the latest audience measurement data, the leading stations Kiss Fm and Radio ZU increased their rate cards. For Radio ZU, this increase of prices has been done for the first time since they launched.
Some of the categories influenced by budget cuts are "Mobile telecommunications" (-21%), "cars &4x4 automotives" (-53%), "Domestic appliances, electrical &electronics" (-14%). However, radio remains an important support media. Other categories increased their budgets: "Stores, commercial centers, supermarkets" (+21%) – periodical offers &campaigns, "Banking &insurance services" (+61%) – trying to regain lost business and more so lost awareness, "Beer" (+42%) – sales opportunity due to various football championships, etc.
The system of measurement changed in 2008, when the joint industry committee ARA (The Association for Radio Audience) decided to conduct the audience survey in three waves (June, October and February next year, the latter containing the nationwide audience, rural and urban). The difficult times made some radio stations exit the audience measurement system, more because the radio audience is on a declining trend (smaller than the last years decrease but still present) with a daily reach decline of 2.6% nationwide and 4.2% in Bucharest.
All the stations will continue to develop their online presence to offer interesting and efficient integrated radio&online packages. Online support will bring more and more added value to radio, maximizing the interactivity and connectivity.
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Following the trend of 2009, the print market continued to suffer from lower advertising spend and lower readership, forcing publishers to implement more anti-crisis solutions: closing titles, changing frequency of publications, massive image changes, promotional offers when buying certain titles and so on, all in an effort to survive.
Big international clients decreased their budgets forcing publishers to make wage reductions, editorial cuts, decrease rate-cards and increasing the level of discounts and special offers.
Publishers continued to generate alternative income sources, through subscriptions, books, DVDs, cosmetic products and fashion items – these measures were taken for maintaining circulation and readership.
One solution for the decline in print readership was to develop and invest in online versions of the title, as an efficient complementary media for the print editions.
Compared to the significant, 35% decrease in reported advertising revenues in 2009, 2010 only showed a 4% decrease across the year. It would appear that print media has reduced its declining trend in terms of budget, but the reality is that due to the anti-crisis measures taken in 2010 - higher discounts, decreased Rate Cards, package offerings, increased barter share and so on - the net figures are expected to continue decreasing.
Another noticeable effect is the percentage of advertising spends moving from newspapers to magazines. In 2009, it was 53%/47% in favor of newspapers and in 2010 it reached 50%/50%.
The top 10 market segments with the largest gross rate card expenditures in the print in 2010 account for 61% of the total print expenditures (media barters excluded). Looking at the evolution versus 2009, the only categories to increase, though only by a small amount, were "Stores, commercial centers, supermarkets" (18% increase due to the nature of the advertising used – periodical offers, etc.) and "Cosmetics" with a 14% increase, more likely a constant evolution if we were to look at net figures due to the anti-crisis solutions adopted by all competitors. "Cars &4x4 vehicles", "Government / Municipalities / Foundations / Associations" and "Mobile telecommunications services" kept their descending trend registering 20%, 37% and respectively 33% drop in RC expenditures.
Regarding the media barters, due to the fact that all print media budgets are on a decreasing trend, the fight to survive imposed an increase in the barters offered – total media barters reached 43% vs. 41% in 09.
In 2011, the situation for printed media remain a test of durability, efficiency and feasibility
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It is generally accepted that Romania has been one of the most dynamic OOH markets in Central Europe and most forecasts at the beginning of 2010 foresaw a quick market recovery, despite the well known problems such as an environment of perpetual change, increasing media fragmentation, high media inflation, and a relative lack of stability in budgets stemming from greater pressure to generate discounts from suppliers.
Because there were no major auctions for street furniture or transit contracts and the general business environment was not favorable for further mergers and acquisitions, we estimate that the order in market share for the top 4 operators did not change in 2010:
| EpaMedia (Euromedia Group and Betacons) | - | 27% |
| Affichage Romania | - | 23% |
| News Outdoor Romania | - | 11% |
| Clear Channel | - | 10% |
| Others | - | 29% |
The top investors in OOH were clients from telecoms, retail, banking and financial services, food&drink and FMCG, while other categories such as domestic appliances and personal care &beauty products are not yet investing again significantly on outdoor.
Digital outdoor is continuing the innovative trend in services and sales, making efforts to provide clients reliable monitoring of the campaigns, studies regarding audience and most of all flexibility in planning and running campaigns. Phoenix was the first to introduce a concept of selling advertising space based on four time categories (prime, basic, inter and night time). Clients could, up until now use the classic advantage of digital indoor in choosing the targeted area, but now they can also place a spot at the desired time.
The decline of the indoor market was not as prominent as in the case of outdoor, due to better occupancy rates on the main indoor networks. Besides the stability of the networks, the opening of new Malls, predominantly in Bucharest, and the development of more special projects helped the indoor market in 2010. This higher occupancy rate resulted mainly from the continued trend of price reduction, but also due to new small clients exploring this media with affordable budgets.
Digital indoor refers to plasma screens distributed across networks in crowded venues. The biggest player in this market with over 1650 plasma screens is Monopoly Media; its plasma networks (Zoom network) are placed in extremely crowded indoor areas like: subway stations, mall food- courts, hypermarkets, airports, pubs, medical centers, and universities.
The new regulations on OOH if made law in 2011, could affect some networks in the second half of the year, but their impact on market volume might be not so important as the occupancy rates are low and other locations on private properties or special projects, or flags or even transit could absorb the budgets. Most of the TV screen locations are also vulnerable in light of the legislation on OOH.
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In 2010 cinema continued to increase in terms of admissions with a 23.3% increase, despite the number of cinemas declining versus the previous year.
Development of the cinema network is in direct relation to the opening of multiplexes in major cities.
The main players on the cinema market, covering 92% market share of audience in terms of admissions are:
- New Age Media – the exclusive Sales Media of Cinema City and Samsung Imax – representing 47.5% market share.
- Sugar Media – the exclusive Sales Media of Movieplex, City Cinema Management, Light Cinema, Odeon Cineplex – 26.47%
- Hollywood Multiplex Operations (Multiplex, Cinema Pro, Lotus Oradea) – 18.03%
The main categories using cinema advertising in 2010 were: Beverages, FMCG, Clothing &Footwear, Telecommunications, Electronics, Auto, Banking and Insurance.
The audience for cinemas in Romania is growing with new multiplex and new technologies (digital projection, 3D technology, 6D movies).
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