Оutdoor advertising market: try to by before elections!

Оutdoor advertising market: try to purchase before elections
...to bring quite good dividends for their proprietors. A crisis, certainly, has brought some correctives in this segment of the business-activity. One of consequences was appearance of such enterprises at the operating business market with a «for sale» mark...

What is there, at the market?

As InterCredit company specialists have already marked, on the end of January, 2009, different advertisings agencies stake didn`t exceed 5-7% of incurrence operating business sale propositions, fnd just only near the one third of them had their own stationary advertising constructions.

By the end of June the number of such companies sale propositions grew up to 9,5% and the indeed complete cycle enterprises began to meet among them more frequently. Complete cycle advertising companies – i.e. those, who is able to carry out all the complex advancement of commodity (be that politician, products or different sort of service) — from advertisement development, up its producing and placing on the smart places, ideally — in the all regions of Ukraine.

According to the Ukrainian outdoor advertising Association data (ANRU), the 2008-year results were quite positive for the utdoor advertising market — in the last pre-crisis year it has grown up, both quantitative and high-quality. The general budget of this business sector in 2008 made UAH 1,035 billion, what was on 9,5% more, than in a 2007.

Simultaneously with the outdoor budget increasing, the general growth of advertising constructions proceeded in 2008, in spite of official`s actions. In the middle of the year their number exceeded 80 thousands, and up to 2008 ends, attained approximately 83 thousands. Thus their overall increasing during the past year made about 9% as compared to a 2007-th.

In a past year, composition of commodity groups, occupying the first ten places in the outdoor advertising did not change, but the places were redistributed into rating. Category «Trade» continued to lead in TOP-10; its stake grew on 0,9%. Into a The «Transport» commodity group moved from fourth to the second place, with its stake growth on 2,4%. «Connections» category has got a «bronze» in place of «silver» in 2007-th, but its stake diminishing became the most in the Top-10: –3,8%. The «Finances» group rose from eighth up to the fourth place (+1,6%).

The stakes of the «Tobacco wares» and «Alcoholic drinks» categories went down expectedly — on 1,5% and on 2,0% in the accordance. The «Mass-media» and «Social advertising» (the political advertising is included in the last category as well) groups remained on their former places, in spite of their stakes declination. And the «Real estate» and «Entertainments» changed their category places and grew in volumes.

What? Where? What`s a price?

According to the ANRU data, for the last five years the outdoor advertising an area has tripled practically if calculate for one man оа special purpose audience. The total stake of dynamic constructions (prisms, scrollers, video-boards, etc.) increasing in 2008 talks about the Ukrainian high-quality outdoor advertising growth. Thus, in a past year this growth was especially noticeable in Kiev.

So, in 2008, as compared to 2007, the dynamic constructions stake was increased more than for 1% in Kiev and for 1% in all Ukraine (including Kiev). At the end of 2008 the stake of 3x6 meters format constructions was near 60% of the general country amount, and stake of siti-format surfaces – approximately 28% . Thus in the past year, as compared to 2007, the stake of 3x6 m. format grew approximately on 1%, and 1,8x1,2 m. Format – decreased approximately so much.

Today Kiev still leads in the number of outdoor advertising constructions among the others Ukrainian cities — 28,5% of all advertising surfaces of the country. On the second place is Odessa (the stake of which, true, diminished from 18 to 16,5%), and on the third is Dnepropetrovsk (14,0%). At the same time, as early as at the end of 2008, Lugansk has abandoned the TOP-10, replaced by Sevastopol, becoming ninth with Simferopol moved to the end of list.

As for prices, in a difference from other operating business for sale segments, geography is not so much a basic forming factor – the degree of network development is far more important. Kiev here stands by oneself of course — so, today advertising agency in Kiev, operating with 10 billboards costs up to $100-120 thousand, the price of the regional company, operating with 200-300 different advertising constructions, waved between $600 thousands and $800 thousands.

Regional players, having more constructions, now prefer the strategic investor searching rather than a complete sale/

The first swallows and an autumn chickens

According to the ANRU specialists this year prognosis for the outdoor advertising market, they presented a sum of Uah766 million (25% falling). The first swallows of this falling became the sale propositions in this segment, made in January-February. The next tidal wave of such proposals was splashed out at the end May-beginning of June, when a general decreasing for advertising demand has got the additional strengthening due to the seasonal business activity declination with beginning of vacations.

Nevertheless, in spite of lazy summer moods, it is possible to suppose with the high degree of probability, that the basic redistribution of the outdoor advertising market oat to be completed at autumn beginning — i.e., before the presidential electioneering will start. It`s well known, that the outdoor advertising traditionally plays a considerable role in election process.

The affected zones redistribution (with practically instantaneous absorption of the enterprises and separate business-objects proposed for sale) is very actual, because of the small enterprises and single players stake at the market is little more than 37% — the other part of market is controlled by the big operators, which, as a rule, work under the reliable «roof» of basic political forces and rather will get grants in scanty political offseason times, than will be proposed for sale before presidential campaign will be finished.

The additional pressure factor on the small outdoor advertising agencies, operating with outside the settlements, could become realization of Ukrainian Tax service, Committee for users rights defence and Ukrainian Police joint intentions to «getting things put in order» on the motorways. Essence of it is consists in additional competence verifications (setting on advertising constructions, their accordance to the accident prevention norms, etc).

All this operation (which it is planned to complete till November) will be crowned by the passportisation of all similar objects on the Ukrainian territory. Whether it will be succeeded to complete all in the set terms – is a big question, but what is absolutely clear even now – not all the outdoor advertising market operators will survive after such cleaning.

Specialist comments:

«According to the operating business market analysis, it is possible to boldly assert, that the gold times for a wise investor came exactly now — stats Valery Zheregelya, director of InterCredit —

— if in 2007-2008 the Russian companies had appeared on the Ukrainian outdoor advertising market (Big Board, Gallery and other), which bought up our large national operators for the out-of-limit prices, now it`s possible to get two times larger market shares for same money.

A similar situation will last till the first signs of our economy convalescence will be seen, but then prices for the most attractive outdoor advertising companies will go upwards sharply».