New challenge for Latvian ad market

RIGA - With price-quality ratios changing in some sectors of the media and some players operating dumping policies, future predictions for the Latvian advertising market are very optimistic.

Kaspars Ulsts, director of the research company BMF Gallup Media, reported on Sept. 18 that in the first six months of 2001 the Latvian advertising market experienced a 13 percent increase compared with the same period last year, generating 15.6 million lats ($25.57 million) in sales.

According to the Latvian Advertising Association, economic growth has resulted in a more stable advertising market. The amount of advertising on television screens and in the print media increased 24 percent in the first half of 2001 compared with a 16 percent increase in the same period last year. But this increase was surpassed by Internet advertising, which jumped 387 percent. "If there was no Internet advertising market last year, today we can say it has been established," Ulsts said.

Still, the Internet has only an 0.8 percent share of the total advertising market. All in all, advertising in newspapers accounted for the bulk of advertising turnover in the first half of the year, at 36.5 percent. It was followed by television at 34.1 percent and radio at 12.7 percent.

Advertising in magazines made up 9.9 percent of the total advertising market turnover, outdoor advertisements 5.5 percent and movies 0.5 percent.

Advertisement rates in Diena, one of the largest Latvian daily newspapers, rose by 55 percent compared with last year. The newspaper still enjoys significant popularity among advertisers, said Edmunds Apsalons, head of Diena's advertising department.

The rising number of want ads in the newspaper was another sign of improvements in Latvia's economy, said Apsalons.

The only media sector in which advertising revenues fell was radio broadcasting. With ad-space prices constantly rising in the press and on TV (state-owned television excluded), radio companies have had to cut rates to attract new customers and hang on to existing ones.

Zigmars Liepins, president of Radio SWH, said cheap, low quality advertisements now available on TV were to blame for the losses. He said the national Latvian Television and the TEM Art Group, which sells ad space on Russian TV channels broadcasting to the Baltics, were operating dumping polices.

Latvian Advertising Association President Andris Blaka said that while the total amount of money spent on advertising is rising, the amount of quality advertisements is decreasing. Cheaper ad time and lower ad-production costs mean airwaves are being flooded with low quality advertisements, he said.

The largest advertiser on television in the first half of 2001 was Colgate-Palmolive, which increased its advertising volume fivefold. Next in line was Procter and Gamble, and Coca-Cola Dzerieni. The largest advertisers in the press were the electronic appliances trading company Elcor, Nordea Bank and mobile communications operator Tele2.