Advertising in Poland [see tables]

Advertising in Poland at the turn of 2001 has approached the average European standards in relation to the growing professionalism***1/, commitment of the biggest international net agencies as well as the business expectations of the main customers***2/. At the same time, the year 2000 proved to be another one of the decrease in the advertising profits. After the period of very dynamic growth (in 1993 it was 230 per cent in relation to 1992, in 1996 ż 60 per cent, in 1999 ż 26 per cent) the increase of the advertising expenses came down to only 11ś13 per cent in 2000***3/. The above tendency shows that Polish advertising market has been becoming similar to the Western European markets ż reaching selected indices of the EU countries ż and that the market is close to saturation***4/. On the other hand, however, mainly due to some unfavourable macro-economic factors as well as because of some legal restrictions aimed at advertising the possible period of future stagnation may be longer and more severe than it seems now***5/.

Television remains the main advertising medium in Poland. In 2000 television collected almost 60 per cent of all advertising revenues, which roughly amounted to 1,5ś1,9 billion US dollars (Zenith Media). Yet the television, similarly to the rest of the traditional media, has been making a minimal increase in receipts lately (slightly exceeding the inflation level). Among other media only printed press had a real growth of profits (the dailies, most of all regional and local ones, were much more profitable than magazines). The outdoor, making approx. 7 per cent out of overall advertising revenue, is about to face rather difficult times because of various legal restrictions imposed on advertising (the ban on advertising cigarettes, or the recent bill on prohibition of advertising beer on billboards).

The media holding minimal share in the advertising market so far, cinema and the Internet, are making a real good progress now. The rapid development of cinema advertising (some sources say that the yearly increase of money spent on this form of promotion reached 53 per cent in 2000) ought to be attributed to three factors: rather late start, successful premieres of new Polish cashśbox ćsuperproductionsę, and fast expansion of the nets of multiplexes (it is estimated that one hundred of such complex motion picture theatres will be built in Poland until 2007).

Also the Internet advertising is developing very quickly (its revenues in 2000 were three times as big as in 1999, reaching the level ż according to different sources ż from 10 to 45 mln PLN). A credible system of internet monitoring has not been worked out so far, so these data can still be far from the truth, however, rapid and widely observed development of the interactive agencies (eśpoint, eścommerce), as much as growing social beliefs in the effectiveness of net marketing are encouraging to careful optimism (see tables 5ś8).

Surprisingly, the recent data of the first quarter of 2001 show in comparison with the same period in 2000 more than a 50 per cent increase in public television advertising revenue (TVP 1, TVP 2). Since this tendency is totally at odds with earlier prognoses, it is difficult to say whether we witness sort of a sooner whole advertising market recovery, or just only a sign of confirmation of the firm market position of the public media sector in Poland.

Year 2002 was another difficult year for the Polish advertising market. The period of a very dynamic growth of the Polish advertising market in 1994-1999 – when the expenses on advertising were increasing by 40% annually – has already ended. The decline in the growth of Gross Domestic Product has had a visible impact on the advertising and media, and such situation lasts at least since 2000. GDP growth in Poland in the two last years reached about only 1% (4-7% in the previous years), thus advertisers had to limit their advertising budgets. 2002 was also a year of ‘war for advertisment prices’ in which tv and radio broadcasters offered special discounts. That is why monitoring the expenses on advertising which is based on estimations according to the nominal price lists of advertisements may be to some extent misleading.

Table. Media shares in advertising expenses (in mln PLN, without discounts)

Source: Expert Monitor, gross advertising expenses [in:] The National Broadcasting Council, Informacja o podstawowych problemach radiofonii i telewizji, IV. Analiza i perspektywy rozwoju rynku reklamowego, http://www.krrit.gov.pl/stronykrrit/sprawozd/4p.rtf

As seen in the following table, the outdoor advertising market decreased by 2%. The crisis on this market was additionally intensified by legal bans on outdoor tobacco and beer advertising. The ongoing process of consolidation makes some observers predict a future increase of the outdoor advertising market in 2003.

The expenses on tv advertising increased in 2002 by approximately 9%, however, not all tv broadcasters made it. In comparison to 2001, the advertising incomes of Polsat, TV4 and TVN7 decreased. On the contrary, Telewizja Polska SA retains a stable and leading position on the advertising market. Both TVP1 and especially TVP2 increased their advertising incomes. A remarkable success of the new programme strategy of regional TVP3 brought an increase of its audience (5% of audience shares), and consequently a significant growth in advertising incomes. At the same time, Polsat decreased its advertising incomes by 4%, whereas TVN gained very high – 20% – growth.

The analysts estimate that in 2002 total nett expenses on television advertising were at the same level as in 2001. The market competition brought reductions of advertising prices and increased the number of broadcast advertisements, thus television strenghtened its position as the leading and most efficient medium in advertisers’ opinions. In 2002, television reached 62,5% of total gross advertising expenses, which constitutes an increase by 1,6% in comparison to 2001.

In 2002, radio shares on the advertising market increased by 0.5%. Unfortunately, the strategy of offering discounts is used not only by tv but also by radio broadcasters. The total gross expenses on radio advertising (excluding radio autopromotion) in 2002 were 13% higher than the previous year.

Table. Radio advertising incomes in mln PLN

Source: Monitoring results covering 100 radio broadcasters /CR Media/ [in] The National Broadcasting Council, http://www.krrit.gov.pl/stronykrrit/sprawozd/4p.rtf

Table. Advertising incomes of national radio broadcasters in mln PLN

Source: The National Broadcasting Council

National radio broadcasters (RMF FM, Radio Zet, Polskie Radio Program 1 (PR1)  and Polskie Radio Program 3 (PR3) possess significant shares in total gross radio advertising incomes. An extremely high growth in the case of the public broadcaster PR1 which increased its incomes by 47,3%, is worth mentioning. National commercial radio broadcasters RMF FM and Radio Zet retained their a few years’ long leading positions on radio advertising market.

Table. Radio advertising shares on the market in 2002

Source: The National Broadcasting Council

The main local radio advertising markets are: Warszawa, Poznań, Katowice (the Silesia region), Łódź, Wrocław, Trójmiasto (the aggregate of the three neighbouring towns of Gdańsk, Gdynia and Sopot) and Kraków. Other local markets gained less than 10 mln PLN of gross income. The richest market in Warsaw is over two times bigger (74,8 mln PLN) than the next in order (Poznań region). For a few years now Radio Pogoda, which belongs to Agora group, has remained the leader among local radio broadcasters. It is important to notice that in 2002 regional stations of public radio significantly decreasees their advertising incomes. 2002 was the third year of a decrease in incomes of this group of public radio broadcasters.

Advertising in newspapers and magazines in 2002 remained at the same level as in 2001 (appr. 2.5 billion PLN). However, high discounts, especially in the case of ‘last minute’ special advertising offers (even up to 80%, also in leading press titles) caused a significant decrease of real (nett) incomes.

 Table. Shares in press advertising incomes in mln PLN (ordered according to publishers)

Source: The National Broadcasting Council

In three last years the expenses on on-line advertising increased in Poland by approximately 30% annually. However, on-line advertising still remains – in terms of market shares – far behind traditional media: on-line advertising constitutes less than 1% of the total advertising market in Poland. The specialists estimate that in 2002 advertising in the net gave approximately 33 mln PLN of the total gross income. According to the prognosis, such advertising will reach appr. 38-40 mln PLN in 2003. Branches, which use the Internet as a means of advertising most often, are telecommunication (37% of shares), as well as financial and automobile companies. Two most popular Polish Internet portals – Onet.pl and Wirtualna Polska – in 2002 had 35% and 18% on-line advertising market shares respectively. The third in the rank list was Ad.net network (14%), and then gazeta.pl, Interia, IDM.net and ARBOmedia.

The future situation of the media in Poland in 2003 to a large extent depends on the economic situation. The deteriorating financial situation of the people, which is connected with a high level of unemployment, slow pace of GDP growth and economic stagnation, may be a future reason for lack of increase of advertising expenses in 2003. Owing to current high discounts on television advertisements, advertisements nowadays can be purchased even by small entrepreneurs, who at the same time resign from press or outdoor advertising. In such a situation, the television will surely retain its dominating position, however, the nett prices of  tv advertisements will probably start to grow. Moreover, due to legal limitations there is no possibillity of a further increase of tv advertising. In the radio sector, there will probably be new changes and other mergers of stations, which may cause an increase of radio advertising nett prices. The most difficult situation will probably be on the printed press market. This sector will lose its shares in favour of television, although some publishers of women press have some reasons for moderate optimism.

Footnotes

1. The year 2000 was crucial for advertising in Poland also in that sense that for the first time the agencies loosened the explicitness in their ways to portray products, e.g., by skipping the runśofśtheśmill patterns of demonstrations in the categories of products usually treated as not attractive (viz, washing powders, toothśpastes etc.). Now the agencies are not afraid to use really unconventional strategies and forms of advertising, even winning prizes at international advertising festivals.

2. The table 1 shows the ranking scale of main brands and biggest customers in Poland. Generally, the market reflects global and European markets, including the participation of main producers and main net agencies as well as the most popular brands. As well as the agencies are concerned, in 2000 the bulk of net agencies were present in Polish market, e.g., Leo Burnett, McCannśErickson, TBWA Warszawa, Ogilvy & Mather, Hager, Saatchi & Saatchi, Corporate Profiles DDB, J. Walter Thompson/Parintex, NoS BBDO Warszawa, Grey Warszawa, Publicis, Lowe Lintas GGK, Euro RSCG Poland, McCann Communications, Upstairs Young & Rubicam Poland, Bates, DęArcy.

3. The data and estimations made by individual research institutes often are different, so the tables have to include these margins. The increase of advertising expenses in Poland was estimated in the nineties at the following levels: 1996 ż 60 per cent, 1997 ż 52 per cent, 1998 ż 51 per cent, 1999 ż 26 per cent, 2000 ż 11,3 per cent (Zenith Media) or 13 per cent (OMD Poland). Adjusting the last yearsę increases by taking into consideration the level of inflation as well as the GRP leads to ćthe realę growth rate for the year 2000, which is only 2 per cent ż not much higher than for a stagnation if we additionally deduct all sorts of discounts (not included in the tables). Moreover, the prognoses for 2001 say that advertising market will have to face another period of slowing down ż see tables 2 and 3, presenting the dicrease of advertising profits in the years 1998ś2000.

4. In fact, Polish market starts to resemble these of European Union as regards the share of advertising expenditures in the GRP (in 2000 it was: in Poland ż 1,39, in the United Kingdom ż 1,07, in the USA ż 1,42; all calculations in US dollars, rates of 2000). Also the pace of the yearly increase of expenses seems to resemble that of other European countries (in the United Kingdom it was 6,7 per cent, and in the USA ż 8,1 per cent). However, Polish market has still a long way to go to reach the level of the Western European totals spent yearly on advertising (in the United Kingdom it was in 2000: 279 US dollars per capita, in the USA: 492 US dollars per capita, and in Poland ż merelyÓ 45 US dollars per capita).