Two pieces of news came as an unpleasant surprise for outdoor advertising operators at the end of the year:

The agency cited two reasons for the rating downgrade. Firstly, the increase in placement costs, which is the result of bidding for outdoor advertising, which took place in Moscow in 2013-2014. During these biddings, a significant increase in prices for the right to place advertising structures was noted; the cost of one structure also increased due to increasing the price for approval of installation from all authorities.

The second reason for the downgrade was the worsening economic situation in Russia. According to agency specialists, the influence of this factor is manifested in the fact that outdoor advertising operators will not be able to fully compensate for the increase in placement costs by increasing prices. An increase in prices for outdoor advertising was recorded already in the fall; the dismantling of old structures was completed only a year later, which deprived the Gallery company of part of the expected income from the price increase.
Prices for outdoor advertising are a sore point for the entire industry; during a crisis, the price of one design becomes an automatic item in the loss column rather than profit, since it will not be easy to find advertisers to place on each billboard, whereas in normal times such a billboard would be a source stable income due to a continuous queue of orders for advertising space.

2) Banks cut advertising costs for the first time since the last crisis

As the newspaper Izvestia reports: Izvestia studied the annual statistics of banks' advertising expenses - from October 1, 2013 to October 1, 2014. It turned out that during this period, banks reduced advertising costs for the first time since 2009 - by 12.1%, to 22.5 billion rubles. As of October 1, 2009, the drop in the indicator was 28.9% (to 9 billion rubles), after which, over the course of 4 years, progressive growth was noted, the rate of which reached 50%. This follows from the profit and loss reports of credit institutions (Form 102), which the Central Bank publishes quarterly.

Banks are one of the most attractive advertisers and in the long term you should not expect an increase in the advertising budget in this sector of the economy. The advertiser will “go online,” where advertising costs are not lower, but are offset by the ability to track and calculate user metrics.

How to advertise during a crisis?

Not all markets are experiencing a decline in activity; at a recent forum in St. Petersburg, representatives of the construction market in Russia noted not only a commitment to old conservative advertising formats with wide coverage, but also a slight growth trend:

Agencies promote specific offers, so their tool is line advertising. The developer has larger budgets, so not only in-line and contextual advertising is used, but also wide-ranging. We optimize the advertising budget, focusing not on the crisis, but on conversion

Daria Baranova, Marketing Director at O2.

We can’t say anything about the impact of the crisis on the choice of communication channels - everything is fine with us

Elena Kovalenko, Deputy Head of the Advertising Department at KBC

Crisis sentiments are dangerous not so much for companies representing the market; they can either cut costs or play with the price of structures, focusing on demand. The danger primarily threatens the advertiser, who is tempted to cut a large part of the budget spent on seemingly pointless brand development in a situation of declining demand. However, closing promotion channels means leaving without a fight, and also dooming yourself to the position of an outsider at the moment when the consumer chooses a brand that has served him faithfully in difficult times. It won't necessarily be an "economical" product, but we can say with confidence that it will achieve reliable status.

This is not the first crisis in Russia; the memory of the 2008 crisis is still fresh, when the advertising market shrank by almost a third. During this time, many professional communities have compiled not only instructions for overcoming specific crisis situations, but also analytical reports containing an “outside view” of the problems that large advertising agencies have faced and overcome in the most difficult circumstances for advertising producers. ACAR (Association of Communication Agencies of Russia) introduces us to the translation of one of the best comprehensive works on the European advertising market.
The full version of the study “How agencies can reduce the impact of a recession” is on the website Akarussia.ru

In addition to the certainly useful market research, the Association publishes its own advice, addressed primarily to community members who may report violations either from the client or from an unscrupulous competitor. The focus is on protecting intellectual property and insuring tenders. In essence, the guide to action is a good textbook for defense in a difficult situation. Instead of an aggressive policy of market capture, specific steps are proposed to control the current situation, to build competencies and increase customer loyalty through the quality of services provided.

- What would you advise Russians during the crisis that began in 2015?

- We need to have fun, spend money. The crisis is not only in Russia, but throughout the world. I don't understand why we ended up in this situation. This is a problem all over the world, and it seems paradoxical, because there is enough money in the world. You need to change your attitude towards life, your worldview.

Good advice not only for end consumers of advertising, but also for players in the advertising market

Today we will talk about such an important component for any business as advertising. For many of you, it has long been clear that the finances generated within the company are the lifeblood of the business. Just as the circulatory system is important for humans, it is also cash flow for business. If we take a school anatomy textbook, we will learn from it that a person can live for about 4 minutes without oxygen. Without water – no more than 4 days. And without food - 40 days. As world statistics show, a modern business can really survive without advertising and without contact with its target audience, without an existing customer base no more than 4 weeks. After this, a period of decline begins: the client base begins to steadily decrease. Incoming calls stop coming: phone calls, email. People no longer besiege your store. And why all? Because you are not advertised. A strange paradox arises.

During crisis, when the economic situation in the country and in the world begins to deteriorate (although I would not call it a deterioration - it’s just survival of the fittest), you have to work much more in your business. And those things that were previously sold independently and even automatically, now you have to sell with effort. Because people have more choices every day, and the desire to spend money is much less. The concept of “easy money” is leaving the market. Or money that randomly went to people as bonuses, bonuses, grants, royalties or bribes.

During a crisis, different entrepreneurs behave differently. Some reduce prices, cut staff, reduce production and save on everything, even advertising. But this, as a rule, does not help them. The paradox of the modern market is that many businesses, and this is noticeable in many Russian companies, in an era of crisis cut off the most important thing that attracts “blood” to the business. I'm talking about an important component that attracts money to business, advertising and marketing. It determines how your products, goods or services are promoted to the market and how you contact your target audience.

If we take the crisis events of 2008 as an example, we will be surprised to discover one rare feature. The largest companies on the market, which still remain leaders in their fields, during the crisis, first of all, began to reduce not the marketing component, not the advertising budgets, but what is not directly related to sales. Oddly enough, but Apple, Microsoft and similar companies have begun cut development departments. First of all, fire engineers who are developing new products and software. Break contracts with programmers who developed new software modules. At the same time, expenses for advertising, promotion and investment in new market sectors, new advertising strategies, and marketing departments only increased. Since investments in these businesses are carried out by far from stupid people, the market reacted very positively to the reduction of production personnel and personnel responsible for development. The shares of these companies continued to grow successfully even during the crisis.

Think about this now. Another one is on the doorstep wave of crisis, which comes from Europe, which inevitably affects Russia. Think about whether you are cutting back on investments in something that can and should bring you money tomorrow. Calculate whether you are reducing investments in the effective force that brings you new clients. Aren't you reducing advertising costs, which is beneficial to the sale of your products, goods and services? Weigh everything and draw the right conclusion.

Advertising is not only an “engine”. In times of economic crisis, it becomes a lifeline. However, the crisis does not “eat” everyone. As practice shows, those who advertise more than others overcome the crisis.

It will be protracted, as it is connected with internal problems of the country’s economy.

The Russian advertising market is facing a more serious crisis than in 2008-2009, say media company executives interviewed by Vedomosti. The economic crisis that erupted in Russia after the imposition of sanctions by Europe and the United States and the fall of the ruble exchange rate will be more serious and protracted than the previous one, they explain. In 2008, economists did not expect such a drop in consumer demand as now, and the ruble did not depreciate so rapidly, says BBDO Managing Director Andrei Brayovich. The economy is undergoing serious and structural changes, agrees IMHO Vi CEO Maxim Osipov.

Thus, the decline in the TV advertising market this year will be stronger than during the last financial crisis, heads of major TV channels and advertising agencies are confident. In 2009, the entire advertising market in Russia fell by 27.5% to 186.4 billion rubles, and advertisers' spending on TV promotion decreased by 18% to 96.4 billion rubles. (data from the Association of Communication Agencies of Russia, AKAR). Vedomosti's interlocutors refused to predict exactly how much the TV advertising market will fall this year. It is almost impossible to make accurate forecasts when the macroeconomic situation is changing so quickly, they say, as well as employees of other media companies - outdoor advertising operators, radio companies, Internet holdings and publishing houses.

At the moment, federal channels assume that their revenues could decline by more than 20%, said representatives of two major television companies. This applies to both channels working with Vi and those working with the Gazprom Media seller. And this situation is also noticeably different from the crisis of 2009. Celler Vi (formerly Video International) at that time worked with advertisers under multi-year contracts, while Gazprom Media had mainly annual deals. As a result, the decline in income for Gazprom Media channels was much more significant than for channels working with Vi. Vi later reported that its channels lost only 8% of their advertising budgets in 2009. This year, the channels serviced or consulted by this seller (a total of 17 channels work with it) will face a much more severe drop in income, Vedomosti’s interlocutors are confident.

A Vi representative again told Vedomosti that there is no official forecast for this seller for this year. The general director of the Gazprom Media sales house, Sergei Piskarev, did not answer Vedomosti’s call yesterday.

For the media, this year will not only be worse than 2008, but even worse than 1998, says Mikhail Berger, general director of the Rumedia radio holding. In 1998 there was a sharp drop in the exchange rate and a relatively quick recovery, in 2008 there was a smooth drop and the same recovery. “During the last crisis, it was possible to predict the future, at least a little. This year, for the first time, we don’t understand what awaits us next month,” he laments. According to him, companies that have planned a 20% reduction in revenue in this year's budget will be able to cope with the crisis. But he refused to make market forecasts for 2015. According to the founder of Kommersant FM, Dmitry Solopov, in January, radio stations recorded a drop in advertising revenue of 30-40%. The same will happen throughout the year, he suggests.

General Director of the Komsomolskaya Pravda Publishing House Vladimir Sungorkin says that there is not enough data for an accurate forecast, but the company is still proceeding from a pessimistic scenario in which newspapers will lose 30% of advertising: “If the scenario comes true, it will definitely be much worse than during the 2008-2009 crisis gg."

However, not all experts are so pessimistic. The same Goldman Sachs predicts that the entire advertising market this year will decline by 15-25%, including the income of television channels - by 20%, and print media - by 25%.

Why do companies increase their advertising budget during a crisis?

A crisis is an unpleasant phenomenon that in one way or another affects all large and small companies and organizations.

In people there is less money, as a result demand for products comes from, selling something is becoming increasingly difficult. At the same time, no one, of course, is lowering the rent for office and retail premises; employees need to be paid wages, etc. no one can cancel necessary monthly expenses.

In such conditions can't stop not for a minute, you need to constantly look for ways to reduce costs, optimize business processes, increase sales, just to maintain your position in the market, don't lose customers. The work of the formula “movement is life” has never been better demonstrated.

During a crisis, the question of reduction in advertising budget.

Some managers see this as one of the effective ways to reduce organizational costs, a way survive the crisis with minimal losses, taking advantage of old clients and not attracting new ones. And they look with disapproval at companies that, in difficult economic conditions, do the opposite are trying to invest more and more in advertising.

What is the result?

Also, in difficult economic conditions, buyers will look for more profitable opportunities for themselves, and, quite likely, they will find them and will choose another seller.

How do they find out about attractive offers from another company? Of course, with the help good timely advertising.

Sales will decline so much that over time there will simply be no way to pay salaries, rents. Working with the remaining clients and buyers due to lack of funds will become impossible. Market positions will be irreparably lost.

The organization will gradually come to its closure.

What will happen if the advertising budget is increased?

After all, this would seem to be just unnecessary expenses. Why offer something more and more actively when people simply don’t have the money?

In fact, everything is much more complicated.

So, the company, under the influence of crisis phenomena in the economy, decides increase your advertising budget.

Why?

The logic here is this. In order for the buyer to pay attention to your product in normal economic conditions, you need to spend 1 USD. And in times of crisis, when people have little money, They forced to cut their expenses, carefully plan them, in order to sell your product, you need to spend 2 USD.

Let us remember the famous phrase of Henry Ford:

“If I had 4 dollars, I would spend 3 of them on advertising.”

Why is this position relevant in difficult economic conditions?

At a time when it is incredibly difficult to keep your business afloat?

Firstly ,investing more in advertising, you will be able to maintain sales at a more or less normal level, which will allow keep your company running.

Agree, in difficult conditions, when many organizations are forced to close, even breaking even or operating with minimal losses is already good news.

Secondly, good advertising during a crisis will allow you to save, strengthen and even increase your position in the market, in conditions when competitors refuse advertising altogether, or decide not to change anything, hoping for chance.

If the buyer decides to spend his little money, he will buy the products from you.

A crisis does not arise suddenly in financial markets, but in people's minds. It is impossible to say that the country today is mired in an economic crisis, which is associated with the collapse of the economy. Most companies are at a low starting point for implementing anti-crisis measures in order to maintain business stability, and believe me, most marketing plans already have traces of “anti-crisis” programs. For example, many are planning to freeze budgets for advertising activities in the second half of 2014.

But this is not a collapse of consumer and financial markets. There is a decline in consumer activity, and there are crisis expectations among top managers. Today, everything is being done to minimize the consequences of the recession for business.

We feel a recession due to the fact that the advertising business is a derivative of any production activity. If there is a decline in consumption, then the dynamics of investment in advertising decreases - budgets are redistributed in favor of channels that have a higher conversion into subsequent sales of goods, expenses on image projects are reduced.

The general euphoria around Sochi allowed decision-makers and ordinary consumers to be distracted
from negative moods

Despite this, the first quarter of 2014 was probably the most interesting in my many years in the advertising business. There was no reduction in consumer demand for durable goods, advertising investments only continued to grow (compared to last year, the company showed an increase of more than 40%).

The general euphoria around Sochi allowed decision-makers and ordinary consumers to distract themselves from negative sentiments. Those who were unable to get distracted directed all their savings (some saved for an apartment, some for a car, some for a vacation) to purchase durable goods, and therefore from car dealers, as well as in electrical households. There were queues in retail.

At the same time, the weakening of the ruble affected almost all manufacturing sectors - from FMCG to durable goods. The final forecast for the advertising market 2014/2015 can be given closer to September. We all remember that for Russia August is the most significant month in terms of internal political and internal economic changes.

If you look at the beginning of 2014, the situation in the advertising industry has not changed much compared to last year. We can say that the level of advertising activity of clients remains at the same level: it is not growing, but it is not decreasing yet.

We haven’t felt the crisis yet, but we see that compared to previous years, the growth of the advertising market has slowed down. While TV and digital are expected to grow at around 10 percent, other media are stagnating. During a crisis, a slowdown in GDP growth provokes a slowdown in consumer activity.

The share of large FMCG advertisers is growing, consumption of durable goods is decreasing, so these manufacturers will cut budgets. Based on the experience of previous crises, we can say that the media that survive are those that are effective in terms of return on investment: TV channels, top radio stations and print publications, the most popular outdoor advertising inventory and Internet resources. The share of strong media players becomes larger, the share of weak ones becomes smaller, or they disappear altogether. Companies are more often turning to channels that are not aimed at image, but can sell products cheaply and effectively.

Now we feel the crisis only on one project. I don’t know what will happen next, but there is a feeling that globally this will only affect large network agencies and companies that work a lot with Western contractors. We cooperate with a Thai retouching studio, the amount in the contract with them is stated in dollars, and with the client - in rubles, so, of course, we are now losing money due to the fall of the ruble.

But globally nothing has changed. I have a feeling that this is more of an exaggerated crisis than a real one; it is clearly artificially created from the outside and manifests itself only in relations with Western companies. Moreover, this does not apply to companies that have their representative offices here.

Usually during crises there is a redistribution of clients - I think we will only benefit from the crisis,
if it really happens

It doesn’t affect our plans in any way, but it’s easier for us: we always try to work with a small number of large clients. We have not yet heard from any of them about reducing budgets or freezing projects. But even if something serious happens, I’m sure we won’t have any big problems. Usually during crises there is a redistribution of clients. Often, large companies, cutting their budgets, stop working with large agencies and begin to turn to small boutique agencies, because the total costs are lower, and the level of services and creativity is the same, and sometimes even higher. So, I think we will only benefit from the crisis if it really happens.

The advertising industry is no stranger to crises. Especially for those companies that work with tobacco or alcohol brands. The crisis strengthens and teaches us to do not spectacular, but effective projects, where every consumer is worth his weight in gold. Within the agency, we understand that financial instability is coming. A number of our clients have already optimized their budgets. And not in favor of digital marketing. The forecast is generally comforting: yes, during the crisis there will be fewer creative projects using non-standard approaches from phygital to transmedia, but no one has canceled the same effectiveness. We, as agencies, need to understand how we can achieve goals and solve client problems in an even tougher competition with other communication channels. The fight for the marketing budget promises to be serious, and the strongest will survive.

Any crisis is a great time to enter the market. Competitors are weakened. Clients are looking for new solutions. They are disrupting the usual course of business. In such situations, cash is the king (the main thing is cash. - Note H&F). We prepared, put aside cash so that in times of crisis we could invest in our infrastructure, so that existing clients would not feel a crisis in working with us - money and resources would help us absorb competitors and capture new niches.

My clients began to report that they were seeing a drop in the purchasing power of the population. That is, people have already begun to consume less. For example, I heard that Unilever is removing budgets for non-priority brands. This means that everyone begins to sense the problem.

Tenders appeared, which were then cancelled. We already went through this in 2008. At first he is satisfied, and then it turns out that there is no project, or they simply do not allow him to do anything. This happens when employees of large companies try to keep themselves busy so as not to be fired. We need to do a couple of tenders to show that everyone is working. There are no budgets. The content of the messages in the briefs has also changed - now there are only “sales”. Previously, the goal was both to sell and to do something for the image, now this is not even considered.