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Insider Intelligence Slashes Ad Spending Forecast for Russia and Eastern Europe Amid Conflict

Total media ad spend in Russia to drop nearly 50%

 

March 30, 2022 (New York, NY) – Insider Intelligence expects the ongoing war in Ukraine to have a significant impact on ad spending in Russia, as well as Central and Eastern Europe as a whole. As a result, we have significantly lowered our forecasts for ad spending in the region compared to our October 2021 forecast.

 

RUSSIA

By the end of 2022, we expect total media ad spending in Russia (digital and non-digital) to drop by 49.7% year –over year to $3.55 billion. This is in stark contrast to our October 2021 forecast, which predicted a 7.5% increase in ad spend to $6.89 billion. This forecast assumes Russian GDP will fall 35% quarter over quarter in Q2 and 7% for the full year, according to JP Morgan. This forecast takes into account the current currency exchange rate and the depreciation of the ruble.

“There is much uncertainty in the Russian ad market,” Insider Intelligence senior forecasting analyst Oscar Bruce Jr. “On top of economic sanctions imposed by the West, foreign companies have either limited or halted their operations as a sign of support for Ukraine. Given the unstable business environment, even players in the online advertising market are divided on how significant the impact would be on the industry.”

Unlike 2015 and 2020 when digital ad spend increased despite a drop in total media ad spend, we expect digital ad spend to contract this year. Our October 2021 forecast expected digital ad spending in Russia to grow 14.0% this year to $4.55 billion. However, we now expect a contraction of 48.2% to $2.23 billion.

“Both Facebook and Instagram have been blocked in Russia,” Bruce said. “Meanwhile, Google has suspended advertising in its platforms including YouTube. The loss of ad revenue from these platforms will contribute to the decline in digital ad spend this year. The pullout of foreign businesses will also contribute to the loss of digital advertising. The digital ad market in Russia, however, is not totally reliant on foreign players. Based on the list released by Sostav, a majority of the top 10 digital advertisers in Russia are local companies, many of which are in telecom and financial services.”

 

CENTRAL & EASTERN EUROPE ADVERTISING

Russia is dragging down the entire Central and Eastern European region. Previous estimates expected total media spend in the region to grow 7.8% in 2022 to $18.13 billion. We now expect it to contract 22.8% to $13.81 billion.

The same story goes for digital. Last October, we were expecting digital ad spending in Central and Eastern Europe to grow 15.2% to $11.85 billion. We now expect it to decrease by 19.9% to $8.61 billion.

“According to the IMF, Ukraine’s economy could contract up to 35% this year, which will in turn cause ad spend to plummet,” Bruce said. “While neighboring countries are not directly involved in the war, their ties to both Russia and Ukraine would likely put pressure on their economies in general and ad spending in particular.”

 

Please note: We do not break out Ukraine figures at this time.

 

Note: These estimates are based on data available before the forecast was finalized on March 15. Ad spending will continue to fluctuate as the situation develops. We will reevaluate the impact of the war on ad spending in Russia, CEE, and (possibly) other affected countries/regions when we update the ad spending forecast in Q3.

 

 

Methodology
Forecasts and estimates from Insider Intelligence are based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms, and public companies, as well as from interviews with top executives at publishers, ad buyers, and agencies. Data is weighted based on methodology and soundness. Each eMarketer forecast fits within the larger matrix of all its forecasts, with the same assumptions and general framework used to project figures in a variety of areas. Regular re-evaluation of available data means the forecasts reflect the latest business developments, technology trends, and economic changes. 

  

About Insider Intelligence 

Insider Intelligence aims to be the world’s leading research service focused on digital transformation. Our mission is to empower professionals with the data, insights, and analysis to make grounded decisions in a digital world. Each year, we produce nearly 300 reports, 7,000 charts, 1,500 newsletters, and 200 forecasts across the industries of Advertising, Media, and Marketing; Financial Services; Healthcare; and Retail and Ecommerce. Insider Intelligence is owned by European media giant Axel Springer S.E. and was formed in 2020 from the combination of eMarketer and Business Insider Intelligence (BII). 

Posted on March 31, 2022.