Another strike of the crisis: the advertising market might fall by 50%

Today it is difficult to assess the possible fall of the Russian advertising market due to the crisis, caused by the depreciation of the national currency and the coronavirus pandemic. However, many experts agree that the advertising industry will be in a worse state than the travel agencies and airlines, which the state is trying to protect.

Last week, several professional associations, uniting about 600 broadcasting organizations, turned to the head of the Russian Government with a proposal to include the media in the list of the industries that need the state support.

The appeal of the Union of Journalists of Russia (JJR) and the National Association of Broadcasters (NAT) contains an indication of the socially-oriented nature of the media industry, which is on the brink of survival. The operating of many television and radio channels, as we know, is sponsored by the advertising budget.

The entrepreneurs, forced to save on the advertising during the crisis, are faced with the dilemma of liquidation or bankruptcy. This situation deprives many media of hope of getting out of the crisis.

The most acute problem was formed in the field of radio activity. According to Vladimir Solovyov, the head of the SJR, the advertising market risks to fall by 30-50% in 2020. This will be a tragedy for numerous television and radio channels, as well as for the print media. It is known that the proposal to reduce the fee for distributing the signal at frequencies of the FM band from the RAR (Russian Academy of Radio) was sent to the CEO of RTRS, Andrei Romanchenko. According to the RAR leadership, this will save local broadcasting points. We should note that that this line in the expenses of radio companies is the second after the salary expenses.

The RAR experts believe that a drop in advertising revenue on radio can be expected at a rate of 30-40% per year.

It is worth noting that the cost reductions from traditional advertising channels were recorded even before the crisis. In particular, according to ACAR (Association of Communication Agencies of Russia), advertising budgets for the radio decreased by 5% last year. The only advertising channel that showed significant growth during the last year was digital advertising.

The experts of the advertising market noted that the current crisis will certainly inflict the most significant blow on the regional advertising operators.

Travel agencies, airlines, the automotive industry, and the public events organizers will begin to actively cut their advertising costs.

While food retail and banking institutions are still actively conducting marketing campaigns and the pharmaceutical market is experiencing its finest hour, the advertising market is waiting for next changes, and the crisis may hasten the disappearance from the market of those structures that are not ready to go online or apply more flexible forms of work.