MFB 2013

GDP / Capita vs. net Media spend / Capita (2008 - 2012)

Concerning the economic impact of the recession (indicated by the GDP / capita) and the media market’s response to it (indicated by the media spend/capita) the CEE countries display different patterns. This analysis spans the 2008-2012 period and uses the Compound Annual Growth Rate (CAGR) for the GDP/capita and media spend/capita.

One such pattern is represented by countries like Romania, Latvia or Lithuania which, despite the overall positive CAGR for the GDP/capita, had a highly negative CAGR of the advertising investments. This corresponds to an evolution where the initial strong drop in the GDP/ capita was followed by a recovery and increase in the last two years while the media spend/capita continued to sink.

Because advertisers were cautious in regards to budgets, we see a very disproportionate impact of the recession upon the media industry. In the case of Romania, this discrepancy between the evolution of GDP and that of media spend can be explained by the fact that the GDP growth was mostly driven by exports and not by internal consumption.

A different situation goes on in Bulgaria, Serbia, Macedonia and Bosnia & Herzegovina where the two indicators evolved in different directions like in the case of the first cluster, yet with similar amplitudes. This shows a reaction from the advertisers that is contrary to the macro economical trend, yet more balanced.

Croatia and Hungary make up the third cluster, where both indicators have negative values, showing a media market response that is in line with the economic evolution, yet the media ad spend holdback was significantly higher. This indicates an over-reactive response from the advertisers in relation with the crisis.

The fourth and last cluster contains countries like the Czech Republic or Slovenia where the advertising market reaction to the crisis was the most balanced.

The CEE media market is dominated by Poland and the Czech Republic with media spends between 1.3 and 1.8 Billion EUR, followed by Hungary and Romania with investments between 300 and 500 million EUR. The smallest market is Montenegro, which is also the smallest country, with 9 million EUR.

Net Market size evolution (mil.EUR)

In terms of evolution, many countries had a drop in ad spend in 2009, followed by marginal decreases in the year to come. Romania, Croatia, Latvia or Hungary are such examples.

In other countries like Bulgaria, Estonia, Lithuania or Slovenia, in the past one or two years, the market has been showing marginal decreases in ad spend from the depression point.

The only exception is the Czech Republic which did not seem to feel the brunt and had a moderate increase in ad spend in the entire 2008-2012 interval. This is also visible in the CAGR for the mentioned period, the Czech Republic being the only country with a positive index.

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After a couple of years with significant contraction, in 2011 the media market registered a smaller decrease (-2%), which was the case also in 2012, while in 2013 the contraction is expected not to exceed -3%.

All media was affected decreased except for Online (+21% vs. 2011) which continued to grow, although at a slower pace compared to previous years. Online growth was fueled mainly by SEM and Facebook.

Print was the most affected medium, dropping 10% vs. 2011, followed by Radio (-8%), OOH (-5%) and TV (-4%).

Total net ad-spend by medium (Mil) - estimation

All off-line media lost share in 2012 in favor of Online which continues to consolidate its 2nd place, with 14% market share.

2012 registered a more stable TV market with no significant changes: the same two major media groups (MPI & Intact) dominate a highly fragmented market and attract some 77% of the total TV investment, a significantly higher money share vs. their cumulated 43% audience share - a ratio of 1.8 investments share-points for every 1 audience share-point (18-49 urban during 07:00-24:00).

In 2012 Internet advertising continued its dynamic trend and was driven by the explosive growth of performance channels such as Google (AdWords) and Facebook. The volume growth was generated not only by the advertisers’ increased interest in using these channels, but also by the diversification of the available formats.

Currently, the smartphone penetration in Romania is of approximately 15-20%. This context creates an increasing interest from brands in other mobile communication solutions beyond SMS – mobile websites and apps, QR codes and even newer technology.

In 2012 Print continued to take the brunt, as the general tendency to read news online and search for thematic content on the internet was growing constantly. Already on a downward trend, the number of sold copies dropped by another 5-7%.

Radio dropped more than expected in 2012, losing ad revenue in favor of online and social platforms. As usual, the most active radio stations tried to keep their position through strong marketing activities like contests, events sponsorship and special summer or Christmas editions.

For OOH advertising, 2012 has been an election year, which brought a little more spend. Based on Initiative estimates, the top 4 vendors account for nearly 66% of the OOH market.

Market share in 2011 & 2012 (net ad-spend by medium)

“Mobile telecommunications services” remained the strongest category in terms of ad investment in 2012 as in 2011.“Cosmetics, Hygienic & Hair Care” had increased significantly, raising to 2nd place in the top of categories, especially due to higher investments from Unilever and GsK.“Medical & optical products & services” dropped one position in the top although it had comparable investment to 2011, being supported by strong investors like Catena, Bayer, Walmark, Sanofi-Avensis.

The Retail sector was characterized by the strong activity of Lidl, especially on TV, while Beer category growth was supported especially by promoting premium brands as well as specialties.

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In 2012 the TV market was characterized by several changes compared to previous year: a higher deflation (8 % versus 6% in 2011), a lower all-day loading throughout the year (68% vs. 76% in 2011), except the low season months of January, February and August. Overall, the total TV audience showed an increasing trend compared to 2011.

The total demand led the GRP30” inventory sold at a higher level, so by end of 2012, the TV market registered an increase of 4% in GRP30” sold. If Q3 was by far the best vs. 2011, (+14%), Q1 and Q4 registered modest growth (+3%), while Q2 proved to be the weakest with a decrease of 1%.

The total GRP30” sold by TV stations in 2012 was 1.85 million, of which 37% was sold by CME, 27% by INTACT, 8% by Kanal D, 6% by ProSieben (Prima TV+ Kiss TV), 4% by SRTV ( TVR1+TVR2) and 3.6% by RealitateaTV.

2011 – 2012 Sold GRP30” (“000) by month (buying target)

The sell out rate decreased to 68% vs. 76% in 2011, with a loading level very close to the legal limit in Prime Time during October and November.

2011 – 2012 Average Inventory sold % Min – all day and prime time vs. legal limit

The ratings were good for most TV channels in the first part of the year. The first quarter revealed a slight growing trend in sold GRP30” and an all-day market loading on decrease vs. 2012. As a consequence of the new Government Ordinance that is in force since Apr 12th, we estimate a market decrease in terms of GRP30” sold and in revenue by the end of this year.

The stations aim to improve the programs quality and the share of audience by continuing to broadcast the already successful yet expensive current shows that are delivering substantial ratings, and also by investing in new programs to keep and attract new viewership.

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In regards to internet usage, 2012 brings no big changes. It’s worth remarking that the age group with the biggest internet usage growth is 50+ (24%). Romanians use more and more online shopping and the distrust in online banking is decreasing, due largely to the push the banks have been doing on their online services.

While, globally, FB has topped 1 billion users (Sep 2012), on a local level in December 2012, Facebook had reached 5,3 million users (55% penetration among Internet users). Google+ lags way behind, with approximately 370,000 users, more than 70% of them being men. Twitter is even smaller, with roughly 66,000 Romanian users, many of these being companies or accounts with little activity. LinkedIn is on the other hand growing steadily but surely, with around 670 thousand Romanian users at end 2012.

The biggest adoption segment of Facebook is still 25 to 49. But the big growth rate of FB in 2012 was less in number of users than in number of fan pages, reaching around 20,000 at the end of 2012.

Albeit not a social network, Youtube is one of the top 5 favourite landing pages of Romanians, according to A Google property, Youtube boasts unofficial traffic numbers of 8.5 million unique Romanian visitors monthly (according to Google local representatives), reaching almost 90% of the country’s internet users.

The 2012 digital market meant explosive growth of performance channels, namely Google AdWords and Facebook.The volume growth was driven not only by the advertisers’ increasing interest in performance spend, but also by the diversification of available formats.

Online Market Volumes (`000) EUR

Innovation has been redefined. It’s no longer exclusively about visual and interactive; the innovation is now strategic, linking the banner’s content with the banner’s context, linking the commercial message with the target’s physical location and the device they are browsing on, customizing the interaction mechanism depending on the platform where the interaction is taking place. Digital innovation is now a matter of super-personalization, taking into account the exact user and her psychographic details, the moment of the day, the stage of the purchase path, the context and the gadget.

The IAB-PWC latest official report (2012) shows a 7% increase of the local online advertising market, with a total value of 98.6 million lei. Telecom, Finance and Auto are the industries that invested the most in online. The most widespread formats are the standard embedded ones, while disruptive and sponsored content are the next.

In terms of overall market, for 2012, Initiative estimates a 21% overall market growth, fueled mainly by SEM & Facebook. We believe 46.5% of the market is represented by performance campaigns, while display stands for the rest.

The smartphone penetration level in Romania is of approximately 15-20%. This segment accounts for half of the total annual mobile phones sales and is the fastest growing in terms of adoption according to industry estimations.

SMS traffic increased by 24% in 2012, reaching a total volume of 13.9 billion messages.

The mobile Internet traffic volume is also growing but at a slower pace: +28.6% at the end of 2012 vs. 2011 compared to +40.3% Internet mobile phone connections and +34.7% for all mobile Internet connections. This leads to a slight decrease in traffic per access point of 4.5% (from 1.31 TB / access point in 2011 to 1.25 TB / access point in 2012). This is a typical pattern of technology adoption where the technology penetration (access points) grows faster than the technology usage (traffic volume) by evolving from nice-to-have towards must-have.

Internet Connections

More Romanian brands use location-based solutions to communicate to consumers with particular profiles, in convenient places: at purchase points, in subway stations, at the airport or in other suitable spots.

The interest in other mobile communication solutions is increasing as brands turn not only to mobile advertising, mobile websites and mobile applications, but also to other tools, such as QR codes and newer technologies.

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Although at the beginning of 2012 the radio market seemed quite promising, the evolution throughout the year did not raise to the expectations. On the contrary, the radio ad budgets dropped compared to 2011.

After a consolidation period, in 2012 the radio stations hoped their market share will increase. Strong PR and marketing campaigns, partnerships at important events and concerts, as well as media packages integrated with social networks represented the methods radio stations employed in order to attract more budgets and audience.

MGSI consolidated its position as a leader, with 40%, followed by Camina Group and Regie Radio Music. A significant gain in the market share is achieved by ProFM.

The top advertising categories in radio does not show major changes vs 2011, Retailers remain the strategic investors of this medium. Banking & insurance category (2nd place) and Mobile telecommunications services (3rd place) switched positions in 2012 vs 2011.

In 2012, Kiss FM was the most listened radio station in urban areas, followed by RRA and Radio ZU. However, in Bucharest, Radio ZU managed to consolidate its leading position.

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In 2012, the Print industry continued the descending trend, installed in early 2009. With the general tendency of consumers to read the press online, the Print has a huge challenge to face.

Advertising budgets decreased accordingly, more and more big advertisers had cut their print investment. Striving for revenues, most publishers tried to gain budgets by offering special integrated projects mixing print with online and sometimes with events.

Last year, another major challenge Print had to face was distribution. Although there is still some demand for Print in the market, the distribution networks’ insolvency brought publishers in the situation to decrease the number of copies, the number of pages and the number of persons employed in editing, eventually failing to reach its public.

In 2012, for the first time, a FMCG sector overtook the medical products & services, a sector with traditionally significant investments in print media. Telecom maintained a strong 3rd position, although it did not increase the print investment vs 2011. A new entry in top 10 categories is Beer as 2012 was an important year for sports to which beer brands are inextricably tied.

The solution to recession, namely to invest in online versions of the print titles seems to work. Except for a few titles, with marginally lower visits, the general trend is an increased evolution in traffic versus 2011. This can be translated in online media being seen as an efficient complement to the print editions.

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There was a classical election year with almost standard layouts and investment. A welcome investment, no matter how low, in a slightly decreasing market. As ever, increasing media fragmentation and a relative lack of predictability in budget allocation induced more pressure on suppliers to discount the pricing.

The OOH market registered a 5% decline in 2012, with a total spend of 29 million euro. BRAT delivered its first investment monitoring report for OOH.

Although there were no tenders for street furniture or transit, 2012 had seen a few important transactions and rebranding processes. Joj Media House bought the entire Epa Media network from Raiffeisen. They sold the Bulgarian branch to a local media player and the Hungarian one to JC Decaux. We are expecting news for the Romanian subsidiary. Defi bought Clear Channel Romania, bringing in investments which consolidate its leading position on the big-sized OOH format market. News Romania was rebranded into Getica OOH.

Considering the above changes, we estimate the following ranking of the top 5 players based on revenue share:


The “Others” cluster maintained a steady track, consolidating the last year growth trend. Here we include companies which are strengthening their national coverage as: Universal Solutions, New Age, Way Media. Spectacular Group of Companies, despite some public animosities, continues its` major contract with Metrorex, the exception being the LCD network which was taken over and refurbished by Blitz TV. Spectacular also lost the contract with the retailer network La Reclama.

Indoor in office buildings is still the only segment that succeeded in attracting more investments mainly by offering innovative special projects. Elevate is leading with 70% market share followed by Business to Business and Invent Media. The largest budgets were sustained by the Banking and Financial category followed by FCMG, Automotive, Airlines and Pharma.

Phoenix Media succeeded in signing-up a 20 LCD contract with the General City Hall. The entire network is going to be located in the Old Town area.

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With an increase of 15.4% in number of admissions and a gross box office increase of 10.4% supported by an 8% increase in the number of active cinemas, the Cinema market continues its ascending trend.

Promotional campaigns, a lot of 3D productions launched as block-busters and, as previously mentioned, new multiplex cinemas, all contributed to this steady market increase. Special promotions like special full-day prices, family packs, loyalty cards and promotional contest together with flat ticket prices vs. 2011 made Cinema an increasingly attractive leisure destination and a good advertising environment.

The main player, as in previous year, remains New Age Media (exclusive sales house for Cinema City and Samsung Imax), accounting for roughly half of the market both in terms of number of active screens and admissions, as well as 55% of the gross box office.

The main categories using cinema advertising in 2012 were FMCG, Consumer Electronics, Automotive, Telecommunications, Clothing & Footwear, Cosmetics, Financial, Pharma, etc. Cinema advertising offers great opportunities for both regular brand exposure as well as experiential brand projects integrated into larger communication concepts.

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