MFB 2018

TV viewing remains a strong habit in the CEE, therefore TV advertising is still the most cost efficient way to reach mass audiences rapidly. On the other hand, Internet is the fastest growing medium by audience and media investments and its uptrend will continue in the following years, with digital media channels reach performance getting closer to Television.

Despite some political uncertainty in the region in 2017, the CEE economic growth continued to boost in 2018. The regional economy was marked by a tremendous growth over the past year on the back of strong demand from the EU, a major trading partner - booming investments, tight labor markets, accommodative and fiscal stimulus in the region.

Consumer prices inflation is seen rising this year after averaging 2.0% in 2017. Higher commodities prices and the economic boost will fuel slightly higher price pressures. Inflation is expected to average 2.5% this year, unchanged from last month’s forecast.

The positive economic trend will continue to push up the demand for TV air time, generating severe sold-out situations on most TV channels and creating strong premises for TV cost inflation in the next couple of years – Czech Republic, Romania and Bulgaria are more likely to face this situation in the next year.

More media houses are expected to merge, growing sales of multimedia advertising kits – the purchase of individual media will continue to decline, while cross media will get a bigger role year on year.

2015, 2016 and 2017 were peak years for the media market investment over the last years, the evolution being meant to confirm the return to a stable growth.

In 2017 the total market consolidated its upward trend by growing much more than the early predictions: +13% vs. 2016, up to 412 Mio Euro.

TV kept leadership and drove the total market growth with +14% vs. 2016, from 240 Mio Euro to 273 Mio Euro, reflecting the highest increase since 2009. Besides TV, other media channels were also on ascending trend: Online, from 64 Mio Euro to 73 Mio Euro (+14% vs. 2016), Radio, from 20 Mio Euro to 23 Mio Euro (+15% vs. 2016, also the largest increase since 2009), OOH, from 28 Mio Euro to 29 Mio Euro (+5%, reflecting the first expansion over the last years), while Print remained the only medium to slowly decrease, from 14 Mio Euro to 13 Mio Euro (-5% vs. 2016).

Total market it’s expected to keep the same growing rate in 2018, reaching 455 Mio Euro (+10% vs. 2017). Television is expected to increase by 10% (from 273 Mio Euro to 300 Mio Euro), Online by 16% (from 73 Mio Euro to 85 Mio), Radio by 10% (from 23 Mio Euro to 26 Mio Euro) and OOH is estimated to increase by 5% (from 29.2 Mio Euro to 30.7 Mio Euro). Print is the only medium which is expected to slow down by 5%.

In 2017, TV not only kept leadership (66%), but drove the total market growth with 14% increase.

The average commercial rating decrease of 2% (18-49,urban, 07:00-26:00) and the boost of TV spending led faster the market to high sell out rates. Overall, market ended in an average loading level of 93% for All Day, 98% for Prime Time, and 90% for Off Prime Time.

Regarding the sold inventory, the TV market was stable vs.2016, driving a two digits advertising investments increase for the second consecutive year, and setting a new record since 2009 - 273 Mio Euro advertising revenues vs.240 Mio Euro in 2016, and 14% CPP average inflation.

For 2018 we estimate that the inflationary trend will keep up the same fast track, showing an increase of 10% in the advertising spend. Although Digital and Mobile are following the global ascending trend, but at a slower pace, the consumption of linear TV continues to be strong and steady in Romania. TV maintains the broadest reach and captures the highest share of advertising, driving revenue growth through cost inflation.

Romanian Advertising Market

Last year revealed an increase of 14% in the online advertising spend, from 64 Mio Euro in 2016 to 73 Mio Euro in 2017. Google and Facebook maintained the leading position with 66% share of digital market, while local display had a stable evolution and reached 20.6 Mio Euro. Programmatic (excluding Adwords tools) followed the same fast track versus previous year and increased by 80%.

Regarding the internet penetration in Romania, 2017 revealed a growth of 3% vs 2016, from 70% in 2016 to 73% in 2017. All age groups have increased, with 16-24 y.o. as the most active, followed by 25-34 y.o. and 35-44 y.o.

Looking at the online activities, in 2017 we noticed a stable trend of search for info and online games, a decreasing trend of email, and an increasing one of social network usage and video watching.

The major change from Google from the advertising industry perspective was the new Adwords experience, an update which came with many useful improvements. Facebook maintained the highest increase up to 9.8 mil users vs 8.4 at the end of 2016, followed by Linkedin, Skype, TPU (local), Instagram and Twitter.

Transparency and brand safety were also important themes of 2017 and also as steps forward for 2018 GDPR preparing.

2017 maintained the ascending trend: 15% In revenues compared to previous year.

Radio audience proves to be quite stable from one year to another, as people tend to show a strong loyalty to their Radio consumption routine.

The Radio channels audience performance reconfirmed Radio ZU as the leader in Bucharest with 15.1% average rating and Kiss FM as leader at urban level, with 14.6%.

The end of 2018 is expected to reveal an increase of 10% than previous years.

The major difficulties which occurred during the recession (distributions networks problems, DNA investigations etc.) continued to impact the print industry, which reached in 2017 an estimated net of 13.4 Mio Euro.

In terms of rate card advertising revenues, Ringier and Adevarul Holding reflected the same market share (20%) followed by Burda, Mediafax and Convergent Media . The readership decline was steeper from one measurement wave to another in 2017 compared to previous years. The readers and advertisers decreasing interest had a strong impact in the circulation.

The publishers will continue to integrate print-online advertising packages, to use additional tools (special projects, dedicated supplements and spin-offs) to improve business results. In 2018, the print market is expected to decrease by 5%.

As expected, after a prolonged period of deflation or at best flat evolution, 2017 was the first year to register a 5% increase of the OOH market, with an estimated net investment of 29.2 Mio Euro.

Despite the rather uncertain context related to the implementation of the new OOH Law, the 2018 outdoor budgets look solid and it is expected that at the end of the year the net market will register a 5% increase, with an estimated total of 30.7 Mio Euro.

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