As I am writing this article, the industry specialized in communication is challenged to communicate on its behalf, not a client’s. The Competition Council sanctioned 11 media buying companies with an aggregated fine of EUR 3.2 million. It might not seem much, but for a market that is already suffering from the legislative actions of past years and from clients’ budget cuts, the sum is considerable. Among the 11 media buying companies that were fined with the largest amounts were: McCann Erickson, Initiative Media, Zenith Media Communications, Starcom Mediavest, Mediacom and Mindshare Media.
Let’s not forget, also, the announcement made by Goldbach Group at the beginning of autumn. They decided to retire from Romania, along with other markets in the region: Russia and The Czech Republic. Their decision was triggered, according to their statement, by the lack of legislative predictability and the overall industry evolution, hampering the growth they were expecting in the Romanian market.
These two actions are both effects of 2012 and 2013 decisions in media & advertising.
The first is a consequence of the 11 agencies’ decision not to take part in an auction in 2012, while the second was triggered by the Emergency Ordinance from April 2013, dismissing the intermediary role of the agency between clients and broadcasters. As we were approaching the end of an uneventful year, it seems that the boomerang from 2012 just hit back, marking the last quarter of 2014.
In this context, media, advertising and PR industry remained flat during 2013, estimated at around EUR 800 million, according to our calculations based on Major Companies data. The lion part of the market is media & advertising, with more than 90% of the revenues.
According to the 2014 edition of the Media Fact Book (by Initiative Media), in 2013 only the media segment reached EUR 305 million versus EUR 303 million in 2012, registering a small increase compared with 2012. The market is estimated to stagnate in 2014, according to Initiative Media projections, when the media segment is estimated to reach EUR 306 million.
Media budgets were unevenly spread between the media channels, with online the only channel on an ascending trend (+12% in 2013 versus the previous year), however with slowing growth numbers. Online keeps a well-deserved second place between the preferred channels of sponsors and advertisers, however at a huge distance from the number one channel. TV remains on the first place, with almost 2/3rds of the segment, with EUR 193 million. With this number, TV kept stable in absolute terms relative to 2013.
Top sponsors in the media during 2013 were the same as in 2012: cosmetics, hygienic and hair care took the number one place, with EUR 38 million estimated spent, from telecommunications (especially mobile operators) – that spent EUR 36 million, followed in the third place by medical, optical products & services – at EUR 31 million, while beer reached EUR 19 mil and retailers EUR 17 million.
Initiative Media estimated already during 2012 that the growth in online would reach 12% in 2013, the online media market possibly stretching to EUR 46 million. When referring to the market potential, we should keep in mind the internet users’ behavior and how it changes over the years. While the age group 14-29 registered a decrease of 8% between 2011-2012 and the group 30-49 years old stayed almost constant (+1%), the users over 50+ years old registered a spectacular growth y-o-y: +24%. This could mean that content should tend to reach a more mature and conservative audience. In the same time, Google and Facebook remain the top 2 destinations for Romanians, exceeding per day, on average, 10 pages/visitor.
Also, let’s not forget how powerful internet has become in influencing choices and buying decisions. From the 2014 EY study “The buying experience in the age of digital consumers”, it is clear that the online environment is the most used source of information by consumers of 20-35 years old to search for the product or service they want (27% regarding the services and 32% regarding the products analyzed). Following are references from acquaintances (friends, family, etc.) and direct interaction with the consultant in store - both with an average of 21%. The main conclusion is that for both products and services, manufacturers and suppliers must have an integrated strategy, omnichannel type, focusing on all interaction points with the costumer. Also, the vast majority of respondents consider that the online information is useful or very useful (61% for products and 52% for services).
On a global level, 39% of electronics and household appliances products and the same percentage of clothing are bought online, which are the highest recorded values. Cars and bank loans have the lowest rates in online purchasing, of 10% and, respectively, 14% in 2014. Compared to 2012, the evolution is in general highly favorable for online trade, with an average rise of 5%.
Two other factors that show the digitalization of Romanians, frequency of online products/services buying and online banking usage, indicate that the traditional reluctance to buy online starts to fade away: the number of users that sometimes buy online more than doubled in 2012 versus 2011, growing with 122%. In the same period, the frequent users of online banking rose by only 8%. The trend wasn’t overlooked by two very large retailers present locally: Zara and IKEA, which started selling online, while eMag continues to diversify vertically, after signing a partnership with MegaImage to sell its products online in “Supermarket directly at your home” program.
That is why it becomes increasingly important to know what is important for costumers when buying online. Respondents at the EY study mentioned above say they are mostly influenced by the online information about the product/service they want (50%), but also by promotional offers (49%), product availability (42%) and delivery conditions (40%). The website design is the least important in the buying decision.