View
485
Download
1
Category
Preview:
DESCRIPTION
How advertising can impact Romanian economy
Citation preview
How advertising can impact Romanian economy
Scope of this report
In 2014, Deloitte UK together with Advertising Association released a study in UK called “Advertising Pays”. It was the second edition of the study which investigates how advertising can unlock UK growth potential.
Among other conclusions, an analysis shows that 1£ spent by an SME is 8 times more efficient for them than the same amount spent by a larger business.
Romanian environment
Based on a survey, we have analysed the perception related to the advertising market in Romania.
During the past 4 months, we have conducted a series of interviews with key decision makers in medium sized to large companies in the following sectors:
FMCG, Telecom, Retail, Pharma, Financial Services, Media/ Advertising agencies, UtilitiesThe views of the main TV operators were also gathered through direct interviews.
Among others, competition and innovation are considered to be important drivers in advertising spend. Where competition is fierce, advertising budgets tend to increase in order to increase the visibility of the product.
Same way, when a new product is launched or a structural change occurs, companies allocate additional advertising budgets to promote the new product or brand (see Telekom rebranding, Orange TV, Vodafone M-pesa).
Companies views of advertising- overview
3
© 2014, for more information, contact Deloitte Romania
What are the first things you think of when you hear the word „advertising”?
© 2014, for more information, contact Deloitte Romania
4
ADVERTISING
The variety of answers proves the multiple roles that advertising plays in today’s economy and the importance that a company
attaches to it.
419
376
409427
451473
509538
581
617633
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013 2014e 2015e 2016e 2017e 2018e
In U
S$ b
illio
n
Global Advertising & Marketing revenue
Advertising & Marketing–International Overview The global Advertising & Marketing revenue growth rate is estimated to increase at a CAGR of 6.0%
during 2013-2018 driven by growth in the digital advertising segment.
Source: IBIS 2013, Bloomberg (March 2013), Global Media Report, Mc Kinsey & Company, 2013
Global Media Sector - Overview5
CAGR 2.5% CAGR 6.0%
TV continues to be the most efficient type of advertising,
followed by Online/ Digital advertising and Radio.
6
© 2014, for more information, contact Deloitte Romania
35%
23%
10%
10%
5%
Interviewers explained that television advertisings can deliver massive audiences to the advertiser. TV stations were the first choice for large national brand names.
Unlike some traditional advertising, online advertising can deliver visitors immediately — through a simple click on your advertising — and provides measurable results.
Radio continues to be a powerful way for companies and brands to engage with consumers.
Newspapers and magazines have lost share since people get their news from so many sources these days.
Outdoor advertising is media that is everywhere and that cannot be turned off or put down. Consumers spend quite a lot of time out of home and as they move through their daily lives they take note of the advertisings they see.
18%With billions of people across the world on social media, it is a great way to reach tons of people at a relatively low cost.
Top 50 spenders by industry
When analyzing top 50 spenders on TV, FMCG industry appears to be dominant
57%
17%
13%
2% 12%FMCG
Pharma
Telecom
Financialservices
What factors influence the size of advertising budgets?
8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Comparisons with other countries
Comparisons with other market players
The value of the marketing business plans
The opinion of the general manager
Changes in strategy and plan
Evolution of YTD profitability
Results of prior years' campaigns
8%
8%
36%
32%
44%
52%
16%
42%
12%
52%
60%
48%
36%
76%
46%
40%
12%
4%
8%
12%
8%
4%
36%
0%
4%
4%
High influence Influence Neutral No influence No influence at all
Based on the results of the survey, it shows that decisions are made based on short term profitability and strategy.
At the other end, comparisons with other countries and companies are least relevant.
Which investments contributes more in the success of a business
© 2014, for more information, contact Deloitte Romania
9
32%
36%
32%
48%
57%
54%
82%
57%
43%
46%
33%
36%
36%
18%
11%
18%
14%
11%
7%
11%
4%
7%
7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Training and personnel recruitment
Infrastructure
Discount campaigns
Supply chain expansion
Advertising
Operational cost reduction
Quality of the products
Very important Important Neutral Not important
The results of the study showed that the success of a business is influenced the most by:- Quality of the products. Without a quality product or service, it is difficult to maintain
profitability.
- Reduction of operational costs.
- Advertising. The purpose of advertising is to convince customers that a company's services or products are the best.
Common general conclusions emerged across the board:
The strongest results are achieved when businesses use multiple advertising channels and develop a structured campaign
Better targeting brings better results
In Romania, is not a common practice to measure the effectiveness of marketing expenditure due to complexity of the process and lack of data& resources
Success factors in advertising strategy
An industry with an impact 100x its size
3% of Romanian management population impacts a 50bn EUR turnover consumer market, 33% of the GDP
11
© 2014, for more information, contact Deloitte Romania
Sources: ARMA, BRAT, IAA, IPSOS, Deloitte calculations
3% of Managers
0.5bn EURMarketing & Communication
Budgets
50bn EURInternal consumption of BrandedConsumer Products and Services
Impact of TV advertising expense on turnover in
the last financial year (2013)
70%
% of companies that increased GRP
Source: Romanian Association for Audience Management, Amadeus
Financial Data from various sources (i.e. Amadeus, Ministry of Finance etc.)
Deloitte calculations
To cross check the findings, two case studies were performed on two advertising-
intensive industries.
61%
% of companies that increased turnover
The impact of TV exposure on the turnover was analysed for top 3 companies in FMCG industry over a 4-year period
(2010-2013).
Case study 1: significant impact of advertising in
FMCG industry
Company B:
Decrease in TV exposure
had no significant impact in
turnover. It was due to high
level of TV exposure
compared to the competition.
Company C:
Increase in TV exposure had
insignificant impact since the
company had a level of TV
exposure much lower
compared to the competition.
General remarks
TV exposure has a
significant impact on the
FMCG industry, should
expenditure exceed a certain
threshold.
In some cases the impact
becomes visible with a delay.
2010 2011 2012 2013
2010 2011 2012 2013
GRP
Turnover
Company A:
Increase in TV exposure has
driven an increase in
turnover.2010 2011 2012 2013
The impact of GRP on the turnover was analysed for top 3 companies in mass-market industry over a 4-year period
(2010-2013).
Case study 2: lower impact of advertising in a
mature mass-market industry
2010 2011 2012 2013
2010 2011 2012 2013
2010 2011 2012 2013
Company A:
Decrease of TV advertising
spending in 2011-2012 had
not resulted in a decrease in
the turnover of company.
Company B:
Minor changes in TV
exposure had no significant
impact on turnover, the latter
remaining relatively constant
Company C:
Slight increase in turnover
was not directly linked to
investment.
GRP
Turnover
General remarks
When brand awareness is
very high, small variations in
TV exposure are not
reflected in turnover .
554,500
94,909
18,567
What is the size of the workforce involved in
marketing& communication related activities?
Direct impact
Advertising, marketing
Indirect impact
Sales agents and client facing
employees
Significant influence
Total employees in retail and
wholesale trade and hospitality
industry (HoReCa)
Source: Romanian National Institute of Statistics, Deloitte calculations
Note: for each category, the numbers refer to incremental number of employees
Ipsos survey performed in Romania on perception of advertising revealed that :
• 61% of those interviewed perceive a positive impact of advertising on their lives,
both at personal and professional level.
• 36% of Romanians believe that advertising has a neutral impact on their lives,
• 3% believe that advertising has a negative impact on their lives
Positive impact of advertising on the
professional and people’s lives
61%
36%
3%
Positive
Neutral
Negative
Source: Ipsos
Note 1: total number of respondents is 1,000 (nationally representative sample)
How authorities can help
© 2014, for more information, contact Deloitte Romania
17
The national strategy for competitiveness for 2014- 2020 states that the state’s vision is:
“The development of a competitive business ecosystem, based on a stable regulatory environment, focused on entrepreneurship, innovation and creativity, which should focus on trust, efficiency and excellence and place Romania among 10 European economies”
When investigating how authorities can help, a number of suggestions have emerged:
All legislative initiatives affecting the advertising & media market should be put up for debate with industry representatives, before being enforced
Industry representative bodies should become dialogue partners of the authorities in order to grant them the chance of a proactive approach
Greater stability and predictability of the entire business ecosystem
• Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
• © 2014, for more information, contact Deloitte Romania
Recommended