Media budgets set for growth in 2015

After winning a small victory and managing to get through the Chamber of Deputies an amendment to the controversial emergency ordinance that sparked an outcry from media agencies last year, the industry is hoping for a less rocky road ahead in 2015. Budgets are poised to slightly grow and the market is set for consolidation.

Otilia Haraga

According to the latest Zenith Romania Advertising Expenditure Forecast, investments in advertising will post 1.9 percent growth this year, reaching USD 403.9 million by the end of the year.

“We are expecting a small hike in budgets in 2015, of about 4 percent. If I take the 4 percent growth as reference, Romania is doing better than most countries in Europe. The allocation of budgets will be roughly the same, with probably a little more emphasis on digital in 2015,” Radu Florescu, president of the Romanian Advertising Association (UAPR) and CEO of Centrade, told BR.

Mobile will see by far the most spectacular growth. The report predicts that it will become more and more visible in the ad consumption mix between 2014 and 2017, due to widespread mobile devices and technological innovations that are also beneficial for the advertising industry.

Still, however dynamic it may be, mobile’s share in overall advertising consumption will represent just 1 percent of the total in Romania this year and just 7 percent of the investments made in digital.

This is because much conventional advertising does not display well on mobiles. Compared to a desktop display, the banners on mobile devices need more screen space and are considered much more intrusive, according to the report.

The document also points out that there is one area in digital display that has proven to be successful in the mobile domain which is social media.

Overall, digital posted the most spectacular and steady annual growth, up by 12 percent in 2014 versus the previous year.

Over the next two years, Zenith Romania foresees a constant 10 percent advance for this field.

TV continues to attract the bulk of advertising investments in Romania, namely 63.5 percent, and this will hold true for the next two years.

Digital, with a market share of 13.6 percent, has risen to second in the ranking, followed by outdoor advertising, with a 10.7 percent market share.

“Digital registered double-digit growth and will continue to do so. (…) Mobile continues to attract much interest, and we believe that clients will continue to look at the ability of agencies to combine good ideas with today’s technology. Why? Because technology helps us measure the effectiveness of a good idea. What better way to measure the success of an idea/campaign when it is backed up with specific data and results? I can`t think of a client who would say no to that,” said Florescu.

Print accounted for 6 percent of the total investments in advertising, closely followed by radio with a 5.8 percent market share and cinema on just 0.4 percent.

Turning to the industries that invested the most in advertising, the top five cover half of the market. These are drugs and pharma products, food products, retail (including online commerce), telecommunications and FMCG.

Media agencies expect a more peaceful year

After strenuous efforts and numerous appeals for dialogue with the authorities, the media industry has managed to somewhat contain the effects of emergency ordinance 25/2013, which was expected to wreak havoc among agencies.

“We are delighted that the Chamber of Deputies passed OUG 25/2013 with the amendment proposed by the International Advertising Association (IAA) and the UAPR. On February 2, the Culture Commission in the Senate will review the OUG and the amendment and we feel confident that they will understand the position of media agencies, stations and clients supporting a quick passage,” Florescu told BR.

The emergency ordinance published in the Official Gazette on April 21, 2013, removed media agencies as intermediaries from the equation, putting TV channels in direct contact with advertisers.

The measure was meant to bring broadcasters more revenue, but IAA representatives argued fiercely against it, claiming that it did nothing but complicate matters for both advertisers and television outlets, with smaller agencies and TV stations bearing the brunt.

Florescu said that hopefully, no such major moves will shake the market this year.

“Actually I remain optimistic that the government has recognized the need to consult the business community on any new proposed legislation. Arguably, there are still many laws on the books that remain unclear; however, I have seen even at the beginning of the year a concerted effort to address these issues,” said Florescu.

He also predicted that the consolidation of the market will continue in 2015. “The consolidation process is ongoing. Given what are still difficult economic conditions in Europe and Romania, albeit with a positive trend, we will still feel the pinch. Companies in all sectors will continue to search for efficiency and the best value for money,” he concluded.

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