Kommersant (Moscow) - January 12, 2008

The group starts selling advertising on the media holding's TV channel

Video International Group has teamed up with the media holding RBC, and now the VI Target division specializing in advertising sales on cable and satellite channels has begun to sell ad campaigns on RBC TV. Advertising agencies have all been wondering how Video International will manage to bring advertising to yet another channel, RBC TV, given the generally low demand for traditional channels.

Since January 2008, Video International has been offering advertising spots on RBC to 20 advertisers, as the newsletter sent out to advertising agencies reads (Kommersant has a copy). The group's unit dedicated to niche satellite and cable channels, VI Target (providing services to Discovery Channel, Fashion TV, VH1, among others), will be placing ads for manufacturers of foodstuffs, personal hygiene goods, household cleaning products, pharmaceuticals and audio and video products.

RBC itself is set to continue targeting advertisers from such categories as securities, oil and gas companies, mass media, telecommunications services, cars, etc., the newsletter reads. "These are exactly the kind of advertisers our sales department has been working with," General Director of RBC Media Artyom Inutin noted. According to him, the category of advertisers that VI Target is now responsible for was previously almost entirely absent on RBC TV. Deputy General Director of VI Target Dmitry Bessonov did not specify any plans for RBC TV's ad revenue for the year. The business channel RBC TV was launched in 2003. According to TNS data as of July 2008, RBC TV ranked second - after Discovery Channel - among niche channels in terms of audience reach over the past four months, with its viewership reaching 14.8 million Russians over the age of 4. A typical RBC TV viewer is an affluent man aged between 25 and 54 with a university degree, TNS data show. RBC TV's revenue under IFRS stood at USD 42m in 2007, and at USD 21.7m in the first half of 2008.

It was a reasonable move for RBC to resort to VI Target to reach advertisers of mostly basic goods, said Nina Kovalenko, head of direct sales directorate of the TV advertising sales department at Gazprom-Media (sells ad spots on such channels as NTV Plus, Jetix, Russian Extreme, etc.). "FMCG companies dominate terrestrial channels, which are the primary area of focus for Video International," she reiterated. "Therefore, the task of attracting such clients to RBC TV will be easier for the group."

Until recently, niche channels were the fastest developing media segment. According to Gazprom-Media estimates, the sector's size doubled in 2007 to USD 50m-60m (without the effect of RBC TV). The advertising revenue of National Geographic in Russia jumped at least 100 percent, as Alla Bundina, the marketing director of Telco Media, the distributor of National Geographic, confirmed. For reference, the Russian Association of Communication Agencies puts the growth of total advertising budgets for terrestrial TV channels at 25% over the first nine months of 2008, up to RUB 95.4bn (approx. USD 3.7bn). Meanwhile, market participants agree that the year was marked by the advent of FMCG producers to niche channels. Cars and car accessories (16 percent), foodstuffs (13 percent) and personal care and perfumery (10 percent) have become major advertiser categories, Gazprom-Media believes.

The global economic meltdown took its toll on the advertisers' interest in niche channels, however. "Not all advertisers have closed their advertising deals for 2009 with terrestrial channels, which means that advertising sales on niche channels will be minimal," Nina Kovalenko acknowledged. According to her, this January's results will show the direction in which the segment will be going this year. "For now, we expect the media segment to stick to the 2008 levels," Dmitry Bessonov stated. Advertising agencies doubt that their clients will still be interested in niche channels. "With their limited budgets, advertisers will focus on traditional media channels, above all terrestrial television," Managing Director of the agency Medialect Eduard Rodnyansky pointed out. "It is unclear to me how Video International will even able to sell RBC TV ad campaigns in such conditions," the media director of a network agency wondered.