Knowledge Bridge

//Kevin Anderson /November 14 / 2012

Ad agencies urge Serbian local media to focus on direct ad sales

A few years ago, Radio 21 in Serbia decided to upgrade the website that it had launched in 1999, Slobodan Krajnovic, the editor-in-chief of Radio 21 and its web portal, told attendees at a recent conference in Belgrade.

When they launched the portal more than a decade ago, there were very few websites in Serbia, but Krajnovic said it was primitive. Now, he said that 90 percent of local media in Serbia see their survival online.

That might explain why in the past four years, “we have invested serious funds in our website,” he said. The investment paid off in traffic, allowing them to overtake the daily newspaper in Novi Sad, and the portal now has 20,000 daily visits and 200,000 monthly unique users, he added. With 92 percent of their traffic from the region, there was the assumption that this would be an easy sell to advertisers and that the rise in traffic would translate into rising revenue.

“We thought that money would be raining down, but today we are unable to make any money online,” Krajnovic said. It has left him very disillusioned. “Local media should ask themselves whether going online, whether investing in that, is the way to go.”

His comments reflected the challenges that local outlets are facing in making money online and in traditional media in Serbia. Some issues are unique to the Serbian market, such as an extremely crowded broadcast market, with more than 400 broadcasters for a country of 7.2 m inhabitants. Some attendees of the USAID/IREX conference speculated that the government allowed so many broadcasters to keep them weak financially and editorially, unable to afford to do hard-hitting journalism and allowing them to be easily intimidated. Whether true or not, some of the issues facing local media in Serbia as they try to expand digitally will be familiar to local news businesses in other markets.

Growing but small digital ad market

The last 10 years have brought a lot of changes to the Serbian advertising market. Since 2002, it grew rapidly, increasing fourfold. But it peaked in 2008 and has not returned to the levels seen before the global financial crisis, especially now with the economic headwinds of the Eurozone crisis blowing across southern Europe.

During the last decade there have been other structural changes to the Serbian advertising market, Jovan Stojanović, Director, Direct Media, told the conference. Now, some 30 percent of advertisers in Serbia are foreign clients.

As for the rise of digital media and advertising, developments are progressing in Serbia in ways similar to many other markets. Internet use is growing rapidly. According to UK research group GfK, 55 percent of Serbians now have internet access, up 35 percent from the year before, Marko Jevtić, Business Development Director of the Httpool advertising agency said.

Although internet use is growing rapidly, internet advertising remains a relatively small part of the total advertising spend in Serbia. With 2.7 m internet users, Ivan Dimitrijević, with the Fastbridge advertising agency, said that this is just enough to attract national advertisers to internet advertising. Of the €172 m mass media ad budget in Serbia, €95 m was spent on TV, €40 m was spent on print, €20 m was spent in out of home advertising, with 5 percent being spent on radio and and another 5 percent spent on internet advertising, Darko Broćić, Managing Director, Nielsen Audience Measurement, told the conference.

Research firm Gemius estimates that €6.4 m was spent on banner advertising in Serbia in 2011. It was the lowest amongst five other countries in the region. Display advertising was more than three times that, at €21 m in Croatia, and it was four times or more in Bulgaria and Slovenia, at €24 m and €26 m respectively.

However, most advertising buys by agencies are in national media, not local or regional outlets. The only time advertisers buy, or agencies recommend them to buy, local media is when a bank is opening a local branch or a developer opens a mall, both Jevtić and Dimitrijević said. This is true in print, broadcast and digital. Meanwhile, much of that growing online advertising spend is going to large national media players, such as B92, and also to international internet giants including Google, Facebook and Amazon.

Digital advertising education

With only 5 percent of advertising spending going to the internet in Serbia, it is clear that the market is still developing. Banner ad rates are increasing at 30 percent a year, but that is from a very low base. Jevtić said that even national media are struggling to make money online. “I can count on two fingers media that are profitable online,” he said.

Low advertising spending online is partly due to a lack of understanding about internet advertising both in terms of advertisers and also media outlets. Dimitrijević said that his agency and others have to do a lot of client education around internet advertising, and he added:

TV has been around for years, so has radio. Facebook has only been around 5. People aren’t used to this. They don’t know what they can measure, what they can achieve.

One key difference between internet advertising and other forms of advertising is measurement, Dimitrijević said, adding,

We can measure everything online. We can measure how many views, how many clicks. We can measure how many purchases were made from a campaign.

It was clear at the conference that advertising agency representatives also were trying to educate local media owners about advertising in general and digital advertising specifically.

Agency representatives repeatedly stressed that their first responsibility was to their clients, to advertisers trying to reach customers for their products or services. “It is not our responsibility to make local websites profitable,” Jevtić said bluntly, adding: “It is our job to get the best for our client. There is lots of (online advertising) inventory.” He repeated how national advertising was best for their clients in all but a few cases.

To improve their advertising revenue, Dimitrijević urged local and regional media to focus their efforts on direct advertising sales.

Krajnovic responded that his website attracted just as many visitors in his region as national player B92, and that he produced high quality content.

But Jevtić said that advertisers focused on numbers and on CPM, the cost per thousand, rather than the quality of content.

To help local media, Dejan Miladinović, the president of Local Press, a local media organisation in Serbia, said that they were seeking funding, possible donor assistance, to create a portal that aggregated news from local media websites. The portal would be similar to the Serbian news agency, Beta. Local Press is also looking at paid content, either micro payments or a system similar to the national paywall in Slovakia operated by Piano Media.

It’s clear that Serbian local media face many challenges as they develop digitally, but the digital media market is at an early stage. In this early phase of digital development, it was said at the conference that local media owners need to make sure to keep costs low so that the investment doesn’t outstrip the current market potential.

The discussion holds a lot of lessons, not just for Serbian local media, but for local media everywhere. Local news organisations need to develop their understanding of digital advertising. If they do, they can help educate local advertisers about digital advertising, and news organisations that establish themselves as leaders in digital advertising and digital marketing find that they not only are able to attract more advertisers but are also able to provide digital marketing services, giving them a new revenue stream.

As was said by ad agencies at the conference in Belgrade, local news organisations probably will not be able to compete with national players for national or international clients, but they should add to their direct sales efforts. Many markets, even digitally advanced markets, are finding a lot of local advertising opportunities, but it takes education and direct stales efforts to develop them. There is money to be made in the local market through digital advertising, but it will take some time and effort by local news outlets to develop that market.

Article by Kevin Anderson