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The Russian TV revolution

TV is about to change in Russia. In contrast to the UK, France and Spain where media owners are being allowed to tighten their grip on the ad market, Russia is entering a more competitive era.

The opportunity for advertisers is enormous. Instead of having to deal with a dominant sales house – Video International (VI) currently controls 75% plus of the TV market – there will be up to four competing groups. These could be either direct sales by key TV channels or newly created sales houses representing multiple media owners.

The changes will give advertisers unparalleled power not only to negotiate better financial deals but also to ensure their ads appear during the programmes where they really want them to appear.

The big media holding companies are expected to move from negotiating prices on an advertiser-by-advertiser basis to group deals. Omnicom and Group M, for example, will for the first time be bigger than any single media owner.

In essence Russia is moving from a sellers’ market to a buyers’ market. The transformation has happened with incredible speed. The catalyst for change appears to be last year’s deal that VI would add REN TV and Channel 5 to its portfolio, further increasing its share of the market.

Within weeks, new rules and regulations – restricting each sales point to a maximum 35% share – had been rushed through parliament.

There is now a scramble to set up new sales houses, with new company management, IT systems and sales policies. It all has to be in place before 2011 negotiations start in October.

The commercial restructuring will be massive but despite the uncertainty, the advantages for brands are enormous in a market that has grown 1,260% since 1999. Under the new regime brand owners such as Unilever and P&G can expect to have more choice, pay less to appear on smaller channels and much more flexible payment terms.

Advertisers need to take a tactical approach to negotiations in 2010. Russian market experts Joined Up Media advise brands to adopt a planning-led approach for 2011.

By working with several sales points, brands can take advantage of the new sellers’ need to attract revenue quickly while use of their media agency’s advantage in optimization software will help get the best inventory for their brands at the best prices.

Advertisers need to engage with the 2011 negotiation process early. By optimizing their TV needs before the new sellers are up and running, they can ensure they are the winners in Russia’s TV revolution.

A longer version of this article appears at www.billetts.com/response

Martin Sambrook, managing partner, Billetts