The old familiar

The advertising market has preserved the status quo

A recently finished tender, which had been put on hold since 2013, has made no significant change in the balance of power in Saint Petersburg outdoor advertising market.

Less advertisement, the same players. A competitive tender for the right for outdoor advertisement installation for a 10 years period has been held four years past the originally set date. The contracts for using of 14,500 structures expired in 2013, but the tender has been postponed several times due to discussion of introduction of an outdoor advertisement state standard (GOST, effective from March 2016), and due to litigation between the city and the operators. The results of the tender that will boost the city budget by 1.13 billion rubles are hardly unexpected: the market leaders have kept their position. However, the largest operators, namely Russ Outdoor, Poster and Reklama-Center, will have to pay 80% more for placement, but the amount of advertisement is to reduce by 40%: advertising above the roadways will disappear, and its amount in the historical center of the city will plummet. The number of tender’s competitors totaled 17.

The last stand. An order of the Federal Antimonopoly Service (FAS) to set the tender aside was the result of complaints of several companies against the terms and conditions of the tender. It may become the only obstacle for contracts conclusion following the tender’s results. City authorities have refused to follow the FAS’s order, so the parties are to meet at court, the first hearing is to be held at the end of September. However, St. Petersburg authorities are not going to wait for the court’s decision, and intend to execute contracts with the operators before the hearings. For that purpose, the tender winners will transfer to the treasury 100% of the annual payment and a 5% payment security for every subsequent year.

A refreshed market. The most of experts agree that the tender was successful both for the operators in the advertising market and for St. Petersburg in general. The status quo preserved in the market provides vast opportunities for business development, and the Northern Capital becomes one of the most attractive advertising spaces in the country. At the same time, the city has managed to save jobs and, despite the reduction of the amount of structures, to get a substantial growth in the treasury’s revenue. Nevertheless, if the litigation between the Smolny and the FAS caused by the unsuccessful operators’ discontent drags on, the process may involve other operators that have concluded contracts, and their interests will be violated if the tender is cancelled. The annulment of tender results may become devastating for the market, and analysts suppose this scenario to be unlikely. However, we are about to find out the look of the refreshed outdoor advertisement market of St. Petersburg.

A well-known idea that advertising drives sales has never been so relevant. When you enter into a contract for advertising services, make sure that the operator you have chosen is credible, is not a fraudster or a fly-by-night company. You will get help in the Information and Analytical system Globas® of the Information Agency Credinform, that contains data concerning over 24 mln legal entities and individual entrepreneurs of Russia and all over the world, and a wide range of analytical tools that help to find the best-performing business partners promptly and efficiently.