Moscow is looking for ways to raise revenue from outdoor advertising

Moscow is looking for ways to raise revenue from outdoor advertising, which fell three times below the planned level. Some of the outdoor advertising operators are ready to leave the market.
The city administration received from the outdoor advertising operators only 3.3 billion rubles. for the next year of exploitation of advertising spaces. This is three times less than the city planned to earn, starting auctions in 2013. The winners of the trades experienced difficulties with payments every year, and this year the TRK company once again risks to leave the market.

In December, outdoor advertising operators paid the city 3.3 billion rubles. for the next year of operation of billboards played at auctions of 2013-2014, Kommersant Gorokhov, a spokesman for the Moscow department of advertising and media, told Kommersant. Under contracts concluded after the second auction in 2014, only the operator "Olympus" was paid, and the company TRK did not pay the required 1.4 billion rubles. and if he does not pay until January 16 inclusive, then the contracts with her will be terminated, the representative of the department warned. Formally, termination takes place on the 11th working day after receipt of the TRC notice of the need for payment, that is, on January 23.

Revenues from outdoor advertising were three times below the plan set by the city in 2013. Then Moscow cardinally revised the policy in the field of outdoor advertising: at times reduced its volume, and the rest began to be distributed through auctions. In 2013, the advertising and media department played for most of the advertising spots for ten years, and seven operators Russ Outdoor, Gallery, Nike, Rasvaro, Olymp, TRK and Rouen pledged to pay in aggregate 7.5 billion rubles . in year; while "Rouen" contributed 1.45 billion rubles. at once for five years. The remaining advertising space Moscow played in 2014, expecting to receive for them another 2.18 billion rubles. per year, with most of the inventory bought TRK. Commenting on the outcome of the second series of trades, Mayor Sergei Sobyanin expressed satisfaction that the advertising space brought the capital 100 billion rubles., Which it will receive within ten years.

But these expectations did not come true. Operators fully paid advertising space only in the first year after the auctions, and then some of the billboards were excluded from the contracts in connection with the town-planning situation, when they could not be installed, so the payments went down, explains Mr. Gorokhov. One of the largest operators - "Nike" could not pay 1.3 billion rubles. in 2014, when there was a crisis in the advertising market, and the mayor's office terminated agreements with him; the company went bankrupt. Problems with payment arose from the "Olympus", who sued the city for about a year, but eventually restored the contracts. Finally, TRK, one of the largest participants in the Moscow outdoor advertising market, did not pay 1.9 billion rubles in time last year. The City Hall dissolved all eight contracts with it, but when in February the TRC still transferred to the budget 1.33 billion rubles, the city restored five of the eight contracts. The main owner of the TRC, Alexander Geller, was also the only seller of advertising in the Moscow metro. But the contracts with his companies were broken twice already because of delays with payment.

"The city received what all predicted: as a result of auctions, the economic conditions of the market turned outdoor advertising into an industry where profitability turned out to be a big question," recalls Andrei Berezkin, general director of ESPAR Analytic.

In December, the mayor's office also made discounts to operators. As reported in the mayor's office, Russ Outdoor paid 1.8 billion rubles, although it won the shields by 2.5 billion rubles., Gallery - 0.7 billion rubles., While the base payment involved the payment of 1.4 billion rubles. In these companies, they were not able to determine which part of the advertised seats were involved.

With the departure of "Nike" and the possible departure of the TRC, about a fifth of the inventory will disappear from the Moscow market, but this is uncritical for the construction of advertising campaigns, Andrei Berezkin believes. However, for the remaining players, such a situation is a serious help, he notes: "If the TRC leaves, it will redistribute demand, and its customers will continue to deploy on other billboards." In recent years, digital advertising media with several surfaces have developed well, this has increased the amount of inventory, Mr. Berezkin reminds. Interlocutors of "Kommersant" in advertising agencies do not agree: in the event of the TRC's departure, it will be difficult to provide the necessary coverage.