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RAPID GROWTH IN INTERNET ACCESS CREATES NEW OPPORTUNITIES

Slovak advertisers advancing online

AFTER a dip in online advertising revenues in 2009 due to the economic crisis in Slovakia, the market grew once again in 2010 and prospects for 2011 are quite positive. Advertisers, advertising agencies and media outlets are shedding their previous caution and are now discovering new opportunities within the medium of internet-based advertising. Online advertising is responding quickly to the rapid development of high-speed internet connections within Slovakia, even though the country still lags behind other parts of the world in this area as well as in access to the newest and most sophisticated electronic devices.

AFTER a dip in online advertising revenues in 2009 due to the economic crisis in Slovakia, the market grew once again in 2010 and prospects for 2011 are quite positive. Advertisers, advertising agencies and media outlets are shedding their previous caution and are now discovering new opportunities within the medium of internet-based advertising. Online advertising is responding quickly to the rapid development of high-speed internet connections within Slovakia, even though the country still lags behind other parts of the world in this area as well as in access to the newest and most sophisticated electronic devices.

Expenditure on internet-based advertising hosted on servers owned by members of Slovakia’s Association of Internet Media (AIM) declined by 5.4 percent over the course of 2009 but then increased by 7.7 percent, to €25.1 million, in 2010. The last quarter of 2010 contributed significantly to the positive trend as internet advertising posted a year-on-year increase of 31 percent in that quarter.

“This is very positive news for advertising in Slovakia,” Milan Csaplár, chief of the executive board of AIM, wrote in a press release. “Advertisers more and more trust in internet advertising. When we also take into consideration investments by Slovak advertisers in servers owned by non-members [of AIM] and in international social networks and search engines, the sum amounts to as much as €40.9 million.”

AIM views the recent development of the Slovak online advertising market as being very similar to that of the global market or in other countries’ markets even though there is a moderate lag in the arrival in Slovakia of some services that are popular in other parts of the world.

“Probably deal-of-the-day websites are the best examples [of this lag] at the current time,” Veronika Pizano, the executive manager at AIM, told The Slovak Spectator. “The Groupon website [a Chicago-based daily deals company] became popular in the USA and has emerged in Slovakia after a delay of about six months to a year. Here in Slovakia deal-of-the-day websites are also registering success.”

Petra Holéczyová, the managing director of a full-service digital advertising agency, digita.sk, who also teaches digital marketing at the Faculty of Media at The Pan European University in Bratislava, thinks the development of the Slovak online advertising market depends on its stakeholders, such as internet-based media, advertising agencies and advertisers themselves.

“While in the past we were all discovering the opportunities online and many things were new to us, we now have the basic knowledge on which we can build,” Holéczyová told The Slovak Spectator, adding that this has brought more courage to clients to experiment with non-traditional methods as well as a growing number of clients present in the online environment. “Nevertheless, when compared with abroad, we still have much to learn and the development itself [in Slovakia], like in other sectors, is lagging behind by some years.”



Most common online ads



Banner advertising remains the most popular kind of online advertising in Slovakia. Of all spending on internet-based advertising on AIM members’ servers it accounted for 52 percent, or €13.1 million. Classifieds ads followed with 20 percent (€5 million) and so-called search ads were close behind with 16 percent (€4 million). Compared with the previous year, lead-generation advertising registered the most significant increase, up by 439 percent, according to AIM.


Pizano sees the popularity of these first two types of internet-based advertising as stemming from their similarity to formats used by other types of media, while the third category is popular because an internet search is one of the basic things that an internet user does when finding something on the internet.

With regards to determining which type of internet advertising is most popular in Slovakia Holéczyová notes that there is a problem with how online advertising is monitored here, raising questions about how representative the collected data are. She said that AIM only monitors Slovak servers and misses some of the important search and context advertising based on other servers as well as various types of advertising embedded in communications via fast-growing social networks such as Facebook.

AIM started monitoring online advertising viewed in Slovakia on non-member servers, including Google and Facebook, at the beginning of 2011 so future statistics should provide a more accurate picture of online advertising here.

Holéczyová attributes the popularity of banner advertising to its longer history as well as to the fact that it is the most classical form of internet advertisement, the one that is most similar to traditional advertisements in other media. Advertisers can provably hit much of the internet population through banner campaigns and from the viewpoint of the ratio of price to performance it is very often one of the most effective ways to advertise, even though its success often depends on the aims of the ad campaign, Holéczyová said.



More opportunities available



Some business sectors discovered the internet as a means for advertising several years ago and now heavily use online advertising. Last year the telecommunications sector spent the most on online advertising (21 percent of the total), while the financial and automotive industries used the internet intensively for promotion, accounting for 18 percent and 14 percent of internet-based advertising respectively. Various kinds of services, which included real estate, educational and political advertising followed in fourth position, with a 10-percent share. Online advertising of food products was fifth, with 8 percent.

Both Pizano and Holéczyová see more opportunities for online advertising to grow.

“The situation has been improving each year and more and more companies have been gradually discovering the advertising opportunities the internet has to offer them,” said Holéczyová, adding that it is difficult to say whether companies are currently using all the available advertising opportunities that the internet offers. “A company’s use of the internet [for advertising] stems from its preparedness to enter this environment as well as the preparedness of the internet market itself. Here I have in mind internet media, [advertising] agencies as well as the marketing departments of the advertisers. The internet offers innumerable opportunities. Many [companies] are aware of them and they are beginning to take measures so that they are able to promptly respond to these opportunities.”

Pizano sees a great opportunity for further growth in online advertising, specifically for advertising via video, so-called rich media.

“Companies will gradually move their [advertising] investments from print to the internet,” said Pizano. “Print has to cope with this in various ways, for example via use of new devices, for example tablets [e.g. Apple iPad, Motorola Xoom, etc.]. This trend is very fast in the world; in Slovakia it is a bit slower but it is visible. It is questionable when Slovakia will reach this breaking point. This will likely happen only when tablets became more widely affordable.”

The potential for more internet-based advertising is very good, Pizano said, because of the constantly-growing number of Slovaks who are regularly accessing the internet.

“Each business sector has space for growth, but especially the financial and automotive industries, tourism and leisure-time activities,” said Pizano. “This stems from the financial possibilities of the population but as well from the movement of some services to the internet.”



Optimistic outlook for 2011



The internet market has been growing dynamically and media, advertisers and advertising agencies are responding quite quickly to that development.



“We are uncovering new opportunities for the internet, new types of communications, social networks, possibilities for measurement and so forth,” said Holéczyová. “Thanks to this many specialised companies as well as many experts, who were missing here some years ago, have emerged. This means that while a few years ago we only guessed how things should be done, we have now gained some experience. And based on this experience the trust and enthusiasm of clients has been growing.”

Holéczyová expects that developments in 2011 will be about increases in investment into online advertising as well as discovering new types of communications, experimenting with social networks and more stringent requirements in terms of assessing the effectiveness of individual ad campaigns. The driving force behind this is the growing maturity of the Slovak market, more sophisticated clients and inspiration coming from abroad, she added.

AIM estimated that online advertising revenues would grow by about 15 percent during the course of 2011.

“Such an increase would demonstrate the stability of the online market,” said Pizano. “But we do not expect any significant changes in the individual types of advertising. We also do not expect any revolutions. Slovak media will try new devices more and more; a certain advance may come when the iPad officially arrives in Slovakia.”


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