VOR: The amount spent on advertising in Russia was up 13% last year compared with 2011, how expected was this result?
Ilia Rachenkov: I would say that the figure is unexpectedly high, as the market was rather conservative at the beginning of 2012 and the growth was forecast at about 7-8%. Bear in mind though that some changes to the measuring method were introduced, which could have affected the results. Despite the fact that the growth rate surpassed the forecast, in my opinion, it was in line with the expansion of the Russian economy in 2012 and the country’s retail market.
VOR: While the total volume of spending on advertising rose substantially over the last year, the growth rate was more modest compared with 2011. What would you say were the main reasons for that?
Ilia Rachenkov: The reasons were quite straightforward. First, the Russian economy was losing steam, especially at the end of last year; and the GDP growth forecast for this year fell to a range of 2-3%, which is lower than that seen in both 2011 and 2012. Additionally, consumer spending has been on the decline as well and has forced the biggest advertisers on the market, mostly trans-national corporations, to reconsider their strategy in Russia. Also, those companies are under increased pressure to keep their budgets tight in light of slow economic growth globally. As a result, they have become increasingly reluctant to incur any additional spending in 2013.
VOR: TV ads still constitute the largest spend in terms of total volume of advertising in Russia. Do you see Internet advertising becoming more popular in Russia than TV in the foreseeable future?
0 Of course, the Internet is TV's biggest competitor in terms of advertising spending. According to the latest data from the Association of Communication Agencies of Russia, the Internet is the second largest segment of the advertising market in the country. Growth in this segment is remarkable compared with any other segments of the market, including TV. If we look at the volume of spending on the Internet, it is certainly on the way to outpace that of TV ads. By my calculations, the former will surpass the latter in the second half of the 2020s. Currently, we are witnessing the emergence of new sub-sectors of Internet advertising, like advertising through social media; this evolution is highly likely to boost the growth rate of the segment and it may then surpass TV advertising spending by volume even earlier.