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The efficiency of advertising in a local market
Polenkov V.

The efficiency of advertising in a local market (abstract)

The problem of advertisements and advertising market is widely discussed in many publications in Russia and abroad. But in this article it is suggested to consider this field of marketing applying a new approach. The specificity of Russian advertising market is supposed to be explained on the basis of a city advertising market. All theoretical hypotheses had been checked at the advertising market of Obninsk (Obninsk lies 100 km from Moscow with a population of about 100,000 people).

1. Russian advertising market: volume and structure

Russian advertising market shows tremendous growth lately (since the crisis in 1998) both on the level of the country and on the regional and local levels. The structure of the market, however, changes to reflect differences between central and local advertising carriers. As for a whole Russian advertising market, the data obtained has shown the following picture for 2003 year: TV advertising – 45%, radio advertising – 5%, newspapers and magazines advertising – 30%, outdoors – 20%. Investigations of a local advertising market in Obninsk performed in 2003 produced rather different results: TV advertising – 11%, radio advertising – 13%, newspapers and magazines advertising – 67%, outdoors – 9%.

2. Models of relationship at the advertising market

In order to explain such inconsistency between the structures two models of relationship at an advertising market were designed. Each model includes three economic groups that take part in a business activity concerned with advertising. The first group consists of businessmen, who pay money to advertise just to increase an efficiency of their business. The second group consists of every kind of advertising carrier, and the greatest role in this group is played by mass media. Mass media transmits multiple sorts of information, and advertising messages as well. The third group is the most numerous because it includes people (and firms) as consumers of information. This group is assumed to perform a wide range of actions as to reflect the information they got.

The first model of relationship between these three groups tends to be some sort of ideal model, which is desirable but hardly achievable. In this model all kinds of mass media behave as absolutely independent firms and focus their attention on the third group to satisfy information needs of people. And people, in their turn, spend money to get information they are interested in. The income from advertising is not of great importance to mass media, consequently, businesses have possibilities: 1) to pay less for advertising; 2) to reach their prospects with high efficiency, as “ideal” mass media is distributed based on the interests of people.

The second model is called “the propaganda model”, because the main role at the advertising market belongs to propaganda initiated by businesses (in the form of “white” and “black” PR) or a government (usually local government). Mass media in this model loses their orientation to consumers of information and prefers to make money by airing (or publishing) messages that are not interesting for people but have huge influence on their behavior. Businesses in such situations have to pay mass media much to be published and they have no confidence for their messages to reach potentials. Therefore, the net effect of advertising decreases.

3. The advertising market of Obninsk

The research made in 2003 proved advertising market of Obninsk to be closer to the second model of relationship. Interviews with the representatives of local mass media demonstrated that some of local newspapers have a practice of even a kind of blackmail for certain businesses. Newspapers try to find some negative information about a firm and threaten this firm to publish this information unless this business pays money and orders an advertisement or an article in that newspaper. It is widely accepted that many local mass media actors take money from businesses for PR-publications, but get that money in cash without paying any taxes. The municipality also has enough power to make mass media publish “right” things about local authorities, and not publish things that might do them any harm.

The main problem is to find the best way out of this situation. Of course mass media is fond of publishing and transmitting nothing but advertisements and PR-papers, and business has already got used to the way of making deals with local media. But we must not forget about the third group. Nowadays, citizens are supplied with sheets of paper and radio or TV programs (all free of charge!), that are not in line with personal interests of people. They get everything for free, but they don’t have what they want.

To change something is very difficult but without necessary changes we are in danger of becoming a city (a region, a country, etc.) with a critical problem of starvation.

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