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16 Dec, 2008 04:09

Russian advertising industry braces for slowdown

The world's biggest advertising agency Dentsu is buying its Russian counterpart. Video International Group is selling its creative arm Smart Communications – but will keep its sales department, while the Russian advertising industry braces for

Russia's advertising market was expected to become the 6th largest in the world in 2 years.  That’s why Japan’s Dentsu was so interested in a foothold in the country.
But the financial crisis has caused the firm to doubt prospects for growth according to Tomaharu Tsuruda, Senior Managing Director of Dentsu.

“This forecast was formed several weeks ago when the effect of the financial crisis wasn’t that obvious as it is now. Russia’s opportunity to achieve that growth is now becoming less certain. Our company will make everything possible for the development of the sector in Russia.”

The country’s advertising market is now 13th largest in the world, and Aleksandr Romanov, Managing Director of Dentsu-Smart says it is likely to stay that way,

“Most of the clients  are watching carefully their sales , they are very cautious, they are even cutting their budgets. It will be first year of a slight decrease, maybe 10-20% on average.”

Experts say the leading advertising platform TV may increase its market share by up to 65%. Radio will suffer the most.

Aleksandr Mitroshenkov from the Russian Association of Communication Agencies says the advertising industry is one of the main drivers of the economy and also needs the help from the state.

“Last year the government cut time for advertising on TV. As a result, ads became more expensive. Our calculations showed, it eventually added 1% to the general inflation rate. We want the government to increase the timeblocks for TV  advertising to at least the same level as it is in Europe.”

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