Ads market set for regulatory shake-up

Issue Number: 
472
Author: 
Martin Ritchie
Published: 
2003-01-24


It used to be called the department for outdoor advertising of the Moscow government. Now it's going to be called a committee, but it's not just the name that's being changed.

The transformation from a department into a committee heightens the status and broadens the scope of the body within Moscow's administrative hierarchy. The mayor's office is trying not only to bring order to what is a chaotic market, but also to assert its authority as chief regulator.

"There has been immense growth in the market and we need more adequate measures to deal with it," said Vladimir Kismereshkin, who as vice-president of the Moscow Chamber of Commerce and president of the Russian Advertising Council is actively involved in discussions over regulating the industry.

Outdoor advertising continues to be one of the liveliest sectors in Russian advertising. Various estimates put last year's market at between $220 and $275 million, at least double the previous year's sum.

Kismereshkin said the committee will also take on responsibility for regulating advertisements on public transport ($6 to $8 million per year) and the metro ($20 million), adding that one of the key tasks would be to set up a more unified approach to advertising in the city.

"The committee will put together a proper complex of information and planning, and deal to some extent with the fragmentation of the market," he said. "At the moment in every part of Moscow there are different rules for putting up adverts."

F A C T B O X AGENCYMARKET SHARE 1 ATOR20.17%2 NEWS OUTDOOR13.88%3 XXII VEK7.22% 4 V.E.R.A.-OLIMP5.81% 5 NIKE CP5.15% 6 MAXIMA-   SONAR+BIGBOARD4.83% 7 ANKO5.08% 8 REKLAMA-SERVIS4.14% 9 RASVERO3.44% 10 TSAR-KOLOKOL2.46% Source: ESPAR-Analitik That time has come for change is hard to dispute. The sector has experienced massive growth, but with side effects much more serious than mere confusion.

In February of last year the leading "outdoor" agency, Ator, was thrown into terminal disarray by the murder of its general director, Vladimir Kanevsky. In April, the general director of Metros Media, state monopolist on metro advertising, was sentenced to prison for seven years for embezzlement and extortion. And in June, the founder of another leading agency, News Outdoor's Maxim Tkachev, survived an assassination attempt.

The new committee will provide greater transparency and reduce the potential for intrigue and abuse, says Vladimir Pantyukhin, chairman of the outdoor advertising committee of the Russian Association of Advertising Agencies.

"There will be a more collegiate form of tackling the issues which there wasn't before. There will now be a commission on dismantling advertisements, a commission for granting new advertising space, and there could well be more," he said.

But despite this upbeat prognosis, there are political as well as commercial issues involved. The Moscow administration has fought a prolonged battle with the city's territorial adminstrations for control over regulation of outdoor advertising. In one case, the Krasnopresnenskaya region – led by a seasoned opponent of Mayor Luzhkov – began issuing its own licenses for advertising space.

Bearing in mind that in 2001 the now renamed department received about $30 million in revenue from such licensing, this was a serious problem.

Andrei Berezkin, general director of leading "outdoor" market researchers ESPAR-Analitik, told news Web site RosBusinessConsulting that such moves put the market on the dangerous path to fragmentation and chaos, but also threatened the city authorities with loss of income, and perhaps more significantly, "loss of face."

On Wednesday, the new head of the committee was announced as Igor Presnyakov, currently deputy prefect of the southern district. He replaces Vladimir Kotov, who served as head of the department since 1998 and had stood for renewal as head of the committee.

The new man takes on the task of bringing a semblance of order to a burgeoning market.

Those close to the committee say Presnyakov is a fresh face who will bring an independent approach, but one market observer told The Russia Journal before the announcement: "It was well known that Kotov [head of the Department from 1998] was closely associated with News Outdoor. If anyone else wins we will soon see where their loyalties lie."

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