beyondbrics

If advertising is the mirror of an economy, Russia has certainly bounced back from the 2008 financial crisis.

Advertisers spent Rbs263.4bn ($8.9bn) in Russia last year, 21 per cent more than in 2010 and back above pre-crisis levels, according to the Russian Association of Communication Agencies.

“The year 2011 was very significant for the advertising market because investment finally overtook levels seen before the 2008 crisis by 4 per cent,” Raca said in a statement on its website.

International cosmetics and food makers are traditionally the biggest advertisers in Russia with Proctor & Gamble, L’Oreal and Mars leading the pack. But even these major players fled during the crisis when advertising spending slumped by more than 30 per cent.

The recovery has attracted some newcomers, says Vladimir Estafiev, vice president of Raca. Foreign auto makers that have set up car assembly ventures in Russia are stepping up advertising to ensure their runaway sales stay in the fast lane.

Television is by far the biggest platform for advertising in Russia, accounting for Rbs131bn ($4.4bn) of total sales in 2011 – almost half of the market. Comparatively new internet advertising soared by 56 per cent last year to reach $1.4m. Internet advertising is expected to continue outperforming the market as Russians hook up to the web and broadband extends its reach across the country.

Big companies plan their advertising budgets one year ahead, so last year’s investment reflects clients’ response to Russia’s economic performance in 2010 when consumer confidence began to recover from the recession, says Estafiev. Russia’s economy grew by 4.3 per cent in 2011 so unless there’s a “serious crisis” advertisers are likely to spend even more this year.

Even if the economy is sluggish, media inflation will ensure that advertising spending grows. Advertising prices are growing very fast, but still lag way behind western levels, says Estafiev. In the US a one-minute ad during the Oscar coverage costs more than $1m, about the same as a good campaign for a month on Russian TV.

Russia has a lot of catching up to do.

Related reading:
Tough guys behind a hard sell, FT
Russian TV ads on a roll, says head of Russian TV station, beyondbrics