KYIV – As consumer confidence returned, Ukraine’s advertising spending jumped by 27 percent last year, according to All-Ukrainian Advertising Coalition, Ukraine’s largest public advertising association.
“Consumers understood that they can’t sit this situation out,” Maxim Lazebnik, the coalition’s director, said in an interview. “It’s necessary and possible to live in the current conditions and, consequently, they started to spend money.”
An agile industry, advertising is often an early indicator of consumer trends.
This year, the coalition forecasts a further rise of 28%. Boosting confidence of marketing directors, Ukraine's State Statistics Service announced last week that the country's GDP in the last quarter of 2016 grew by 4.5-4.8%, compared to fourth quarter 2015.
But, like much of Ukraine’s economy, advertising is merely starting a horseshoe climb out of the steep fall prompted by Russia’s 2014 annexation of Crimea, the war with Russian-backed separatists, and the subsequent severe economic recession of 2014-15.
“We lost our audience in Crimea and Donbas, we lost equipment there,” said Lazebnik. “These factors had the market plunge by approximately 15%.”
“Now we see it recovering from a dive into its deepest point,” he continued. “It’s not growth. Frankly speaking, it’s rather a restoration of lost positions.”
Indeed strong ad growth in 2017 would only bring Ukraine’s annual advertising spend up to $582 million – about half the level 2013.
Advertising’s mix also is changing rapidly.
Digital advertising is jumping, Print – magazines and newspapers – is stagnant.
Last year, digital advertising grew by 33 percent to take one quarter of the nation’s advertising pie – equal to the total spend for print, outdoor, and radio.
Driving forces for digital were: mobile telephone, digital video (including YouTube), and search engine advertising. Mobile advertising soared by 67% as Ukrainians used smartphones to make purchases, stimulating ads from e-commerce companies.
TV remained strong. It climbed 36 percent last year and accounted for almost half of the total spend.
Radio also attracted interest, with both regional and national advertisers selling out spots in the fourth quarter and making unprecedented advance purchases in January and February 2017. Outdoor advertising grew significantly in the regions. Advertisers with limited budgets switched to cinema advertising, which climbed 46 percent.
The market still remains far below its pre-crisis state, according to Andrew Bain, president of Atlantic Group (AGL) communications holding company. He said Ukraine’s per capita ad spend is only $9, compared to about $45 for Poland, and $212 for Germany.
“From where it was four years ago, the market is still down.” Bain said. “It is just getting back on its feet.”
With 14 divisions operating in Ukrainian media, advertising and strategic marketing, AGL’s revenue grew about 40% last year, Bain said. Digital advertising grew even more.
“We have seen stronger growth last year,” said Bain, an American who founded his initial ad agency here 25 years ago. “Maybe we will see stronger growth this year.”
The Eurovision song contest to be hosted by Ukraine, with its huge international audience, will boost the market Bain said.
“Eurovision will have some impact, some companies will step up for sponsorship,” he said of the talent competition which will take place in Kyiv during the first half of May.
For comments or story tips, Ukraine Business Journal Kyiv contributor Kateryna Bezruchenko is reachable on this email:email@example.com
Photo: Outdoor ads clutter Kyiv street. The City Council is working an ordinance to make outdoor advertising less jarring. (Credit: Kateryna Bezreuchenko)
Photo: Maxim Lazebnik, Director General of All-Ukrainian Advertising Coalition (supplied)
Photo: Andrew Bain, President of Atlantic Group (AGL) communications holding company (supplied)
Photo: Shopping with mobile telephones is growing. (Credit: Kateryna Bezruchenko)
Posted Feb. 13, 2017