04 July, 2013
Georgian advertising sector became stagnated but depoliticized and more competitive after the power shift, - this is the message Transparency International-Georgia, an non-governmental watchdog sent through its report “The Georgian Advertising Market – Competition at Last?”
After the October Parliamentary elections of 2012 that brought the power shift in Georgia politics no longer plays a major role in companies’ marketing policy. However, due to perceived political uncertainty, a decline in domestic and foreign investments, as well as changes of ownership
and management of several television stations and advertising companies, private sector advertising spending in Georgia did not grow, a new report by Transparency International Georgia (TI Georgia) finds. According to the report aired on June 28, 2013, shortly after the change of government, the structure of the advertising market saw significant changes: General Media, the company that previously held a monopoly on selling advertising on national TV no longer exists; TV stations now compete against each other for advertising clients using different sales teams. Politics no longer plays a significant role in the allocation of advertising budgets. Companies at this point do not appear to practice self-censorship when planning marketing budgets.
The total advertising spending in 2012 was around USD 54 million out of which at least USD 8 million came on spending by political parties. Television remains the ad market leader by covering approximately 72% of all advertising spending with close to 95% of this money going to Tbilisi-based stations. Approximately 11% of advertising spending goes to outdoor advertising, 10% on radio, 5% - on print media and 2% comes with the internet advertising.
While both Rustavi 2 and Imedi [imputed to the ex-power control] saw a decline in advertising revenues, Maestro, Kavkasia and TV9 [acknowledged as opposition channels] saw a strong revenue increase in 2012, with strong growth ahead and shortly after the elections. After the last December, their monthly revenues took a sharp decline. Market stakeholders believe that such growth in ad revenues was partly an emotional response to political developments, rather than a decision based on marketing assessments, broadcasters’ content, and ratings. Investors continue to remain careful and concerned about perceived political instability and coming presidential elections in autumn 2013. A decline of private sector advertising spending this year appears highly likely, due to a strong decline in spending in the first three months of this year after companies’ tightened advertising budgets and economic growth slowed down. Now, much depends on when local and international investors regain their confidence in the country’s stable business environment.
“Many media outlets, especially those located outside Tbilisi, continue to lack qualified staff that would be able to engage companies and generate advertising revenues”, Mathias Huter, a Senior Media Analyst with TI Georgia, said. “As politics is no longer a major factor in businesses’ allocation of marketing budgets, media outlets that provide serious reporting really need to increase their efforts to become financially sustainable. These efforts should include the building of new partnerships with advertisers and other outlets in their sector in order to improve available audience data and encourage more advertising spending by highlighting its positive impact for businesses.”
TI Georgia recommends Parliament to consider reversing an amendment to the Law on Broadcasting made in 2011 that extended the maximum time a TV station is allowed to air advertising per hour. Limiting the prime time for ads and stricter rules would help to stabilize and sustainably grow the rates of national TV stations and encourage more diversification businesses’ advertising spending. Donors should support media outlets, especially smaller outlets based outside Tbilisi, with training opportunities in management, distribution and advertising sales, while encouraging and supporting stronger cooperation between media outlets and innovative approaches to generate more income.
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