Ad Spending Forecasts Plot The Future

Michael Hedges February 26, 2020 Follow on Twitter

Ad spending keeps growing, particularly in emerging markets. Digital transition is seen as an opportunity. Broadcasters find ad revenues replaced by subscription revenues. Publishers shift to digital platforms. While political advertising reduces inventories, outdoor advertising is more popular than ever.

Projections for 2020 by the All-Ukrainian Advertising Coalition (VRK), released at the end of 2019, expect advertising revenues to grow 18% from 2019 to UAH 28 billion 443 million (about €1.065 billion). “In 2019, the advertising and communication industry of Ukraine has shown remarkable growth,” announces chief executive Maxim Lazebnik, quoted by Detector Media (December 9, 2019), “which cannot but rejoice and inspire. At the same time, we are talking about the growth of the commercial advertising market, which occurred in the context of a shortage of media inventory due to political advertising.” Ad spending in 2019 jumped 25% from 2018.

The VRK is particularly excited about digital advertising growth. Taking into account estimates from IAB Ukraine, advertising on all digital platforms brought in UAH 14 billion 516 million (about €544 million). The growth rate for 2020, they project, will be 31% to UAH 18 billion 920 million (about €708 million). They credit the growth to Facebook, YouTube and “the positive dynamics of mobile internet consumption.”

Television advertising is another story. Political advertising in 2019 took a lot of inventory. “Some customers had to review their advertising policies and reduce the number of brands on television or opt out of TV completely,” noted Mr. Lazebnik. He is looking forward to the European Football championships and the Tokyo Summer Olympics. The VRK is expecting 2020 TV ad revenues to rise 15% to UAH 11 billion 600 million (about €434 million).

Ukraine’s TV broadcasters, like elsewhere, are adjusting to the shifting digital TV sands. A change in encryption rules is expected to drive a shift to subscription platforms. The two primary satellite providers Viasat and Xtra TV see a 15% boost coming this year, about 500,000 more subscribers. Others believe subscribers will be divided among pay-TV and satellite TV providers. This could bring increased revenues up to 30% over 2019 figures, said NB Business (February 14). At the same time, lower viewing totals could cause a drop in advertising revenues.

Members of the Verkhovna Rada (parliament) have appealed to president Volodymyr Zelensky for a moratorium on the encryption plan. Television broadcasters object to this as “unjustified interference with the economic activities of commercial entities.” Encryption, said a statement from Media Group Ukraine, is a “logical, civilized step in the development of the media market. There is a worldwide redistribution of revenue around the world: advertising revenue is being replaced by user subscription revenue.”

For the print sector, ad revenues are expected to remain static, despite two major newspapers leaving print for digital platforms. The big advertising winner is expected to be women’s glossy magazines. Overall, 2020 ad revenues for Ukraine’s print media are expected to rise 13.5% to UAH 2 billion 99 million (about €78 million).

Radio advertising is expected to rise 17% to UAH 839 million (about €31 million). “If global economic cataclysms do not occur and Ukraine's economy will grow within 3 to 4%, then it will be possible to count on the growth rate of more than 20%. Radio advertising is reaching the most economically active audiences in cities and guarantees one of the highest ROIs across all media tools.”

Outdoor advertising should also jump to UAH 4 billion 990 million (about €187 million). Like television, outdoor sector was negatively affected by a loss of inventory in 2019 due to political advertising. The VRK does not report political advertising as the sources are not deemed reliable. However, the association estimates political advertising comprised 10% of all ad spending in 2019, except for outdoor, which they estimate was about 17%.

See also...

• Hot Topics - Media in Ukraine

• Hot Topics - Ad Spending

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