Long-term growth points and new meanings in the advertising industry

The media and communications industry has adapted to social and economic transformations in its own way. Speakers and participants of the National Advertising Forum (NAF’8, 18+) gave their expert assessment of the trends and impact of the economic environment on the preservation and development of the national advertising system.

The most notable trend in 2023 was the flourishing of small and medium-sized enterprises: in December, the SME Corporation presented statistics showing that the number of entities had reached 6.3 million.

Aleksandr Sirovatsky, Vice President of Strategy at Media Instinct Group (a partnership of operationally independent and self-managed companies), reports that according to estimates by advertising market players, the share of SMEs in the structure of the media and communications industry will reach 37% this year, with over 90% of that share accounted for by digital.

“Such popularity is easy to explain: online advertising is the most accessible and flexible tool that allows experimentation with less risk and potential losses compared to large offline media, where the cost of error is too high in terms of the ability to manage withdrawals and budget shifts,” says Irina Mikheeva, Executive Director of NMi Group (advertising group).

Alina Efimova, Deputy CEO of Sales and Business Development at GPM Ads, confirms that SME representatives are rapidly adapting to new solutions and effectively implementing the performance tools they are accustomed to.

Alina Efimova

Deputy CEO of Sales and Business Development at GPM Ads

The only way to sustainably grow sales is to expand your audience and build a strong brand. TV and radio allow businesses to reach a multi-million audience, and thanks to the synergy with digital platforms, they also drive purchases through giveaways, QR codes, and other interactive features. In this way, SMEs can not only increase sales, but also build brand knowledge, which will have a positive effect in the long run.

According to Irina Mikheeva, companies that rely solely on Internet promotion will quickly reach saturation, or the point at which they will have exhausted the available inventory capacity to reach the right audience. Unfortunately, this severely limits their organic reach and prevents them from achieving results above a certain level. “The optimal combination of online promotion tools and offline channels allows for a significantly higher growth rate in terms of media parameters, with reach being one of the most important,” highlights the expert.

Alina Efimova notes that one of the key tasks of GPM Ads Sales House is to overcome the lack of awareness and facilitate the experience of SMEs dealing with reach media, as this is a crucial factor in nurturing domestic brands.

The Sales House has recently implemented a 360° project (TASS’s note: a format for engaging a broad audience via digital and traditional media) for a real estate company using licensing as a key tool to attract an audience. An association was created between the brand and the sitcom “SashaTanya,” and the campaign featured members of the cast, a radio integration, outdoor advertising, and digital assets. This project serves as an illustration of how a small business can leverage diverse media channels in a single mix and launch campaigns on a national scale.

According to NMi Group, 48% of consumers have become more accepting of domestic brands over the past year, and 70% are purposefully buying Russian-made products. Price and quality are key incentives for consumers. Russian brands are heavily focused on quality and pricing, which contributes to their growing popularity.

SMEs require the support of advertising agencies to gain market share against large companies. Irina Mikheeva concludes that in order to scale effectively, it is crucial for such businesses to take advantage of the broader capabilities most commonly offered by these agencies.

The formation of national Russian marketing: special aspects and prospects

The advertising market ecosystem in Russia is undergoing a deep transformation. Previously employed Western approaches are being supplanted by a new media landscape.

According to Vladimir Korovin, Chief Strategy Officer of OMD OM Group (an international network communications agency), only eight Russian brands were among the 30 leading investors in 2013. Advertising was dominated by global manufacturers of FMCG (TASS’s note: Fast-Moving Consumer

Goods), beauty products, pharmaceuticals, and cars. In 2023, the top 30 advertisers are left with only three nominally international brands (all of them have been localized). The current leaders are Russian companies offering digital services: ecosystems, banks, marketplaces, telecommunications, and retail.

Consumers in Russia have also changed. According to Nielsen (TASS’s note: a company that conducts marketing measurements in the FMCG

industry), the consumer sentiment index reached 112 points. Russian companies such as Yandex, Sber, Ozon, O’stin and Gloria Jeans appeared among customers’ favorite brands. At the same time, the NAA survey showed that 70% of customers strive to purchase Russian goods.

“The Russian market, with its well-developed data economy and capacity for data analysis, is becoming a ground for testing and subsequent adaptation of new marketing practices, both Western and Eastern,” claims Vladimir Korovin.

Sergey Efimov, Director of Strategic and Product Development at OMD Resolution (part of the OMD OM Group), claims that there is currently no problem in Russia due to the lack of foreign technological solutions in the field of AdTech and MarTech. Russian media have replaced international players. In the area of online video, the supply of inventory remains limited, while the demand is high. Telegram and VK have compensated for the departure of Meta* (Facebook and Instagram), and marketplaces offer a substantial volume of advertising inventory.

As Vladimir Korovin explains, platforms simplify the work of providers of goods and services in communicating with target audience segments and provide access to an additional set of marketing tools: loyalty programs, feedback, promotional mechanics, and greater control over prices and the effectiveness of discounts.

There is an excellent opportunity to optimize the launch of non-standard projects, believes Yana Selezneva, Account Director at OMD OM Fuse (part of the OMD OM Group): “It is too early to rely on technology to create well-rounded content, but the use of neural networks to test, inspire, and illustrate ideas or fun mechanics in projects has already found its way into the lives of both creative and more traditional media teams. However, advertisers have not been able to take full advantage of such products generated by neural networks due to their underdevelopment and intricacies of legal registration.”

The key to the quality in the industry: talented advertisers and competent management

According to the All-Russian Scientific Research Institute of Labor, Russia’s unemployment rate reached 3.2% in 2023. However, the labor market is facing a shortage of talent, especially in sectors with mass hiring. Advertising, being a derivative of the economy, is highly dependent on the intellectual capacity of human resources.

HR specialists from RMSA member agencies have identified a number of reasons for the personnel shortage, which extend beyond the consequences of the demographic crisis of the 1990s. These include the brain drain to other sectors, changes in labor and tax legislation, and a lack of specialized skills in a rapidly developing market. Nadezhda Kozlova, HR Director of SberMarketing, elaborates on the viewpoint of her peers: “Technology and professional relevance have come to the fore in the last few turbulent years: the market of advertising products and technologies is not the same, as many companies have left Russia, and Russian developers are launching new advertising tools every day. The industry is changing rapidly and it’s easy to fall behind.”

Many experts say that the advertising industry is in fierce competition for talent with a host of other industries, from IT and FinTech to interactive entertainment.

According to a survey by SberMarketing, only 11% of Russians consider marketing to be an in-demand career field, while almost half of the marketers surveyed (43%) are willing to recommend the profession to their children. The agency believes that in order to overcome public perception barriers, major market players need to make the industry attractive at a conceptual level: talk about the industry, engage job seekers, and, if necessary, train them from scratch.

“The advertising industry has always faced a shortage of qualified professionals. This is primarily due to the fact that our market is quite narrow, resources for sourcing candidates are limited, and the industry requires a unique set of professional competencies, such as highly developed communication, strategic, and analytical skills. There are not many such specialists in the market, and the situation is becoming more serious with each passing year. In addition, for the last 2–3 years we have been competing for candidates not only with other advertising groups, but also with IT and telecom companies,” says Yulia Tokareva, HR Director of ADV Communications Group commenting on the specific nature of this talent shortage.

Nadezhda Kozlova explains that in advertising employees can unfold their creativity and quickly see the results of their work, which motivates them and promotes growth. IT product development takes more time to evoke such emotions.

A positive scenario for businesses is possible if they learn to operate flexibly in the new reality and meet their needs in non-standard ways: attracting new audiences and maximizing efficiency through technology and process automation.

The flourishing of small and medium-sized enterprises, the substitution of technology imports, the shift of consumer interests to domestic products, and the development of the talent pool therefore indicate that the formation of national marketing is entering its active phase. This is due to the fact that the players in the advertising market focus primarily on Russian realities rather than global practices.

Every day, brands, content creators, vendors, and agencies make important decisions that shape the future of the Russian advertising market. At the eighth National Advertising Forum (NAF’8) in November, you can gain insight into the techniques and practices influencing the creation of an identity for the modern media and communications industry.

*The company is banned in Russia and/or recognized as extremist.

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