Experts Report A 25% Drop In Advertising

Gayane Asryan


During his last press conference, Prime Minister Nikol Pashinyan touched upon the government’s intention to alleviate the financial problems of TV companies caused by the coronavirus.

He noted that the TV companies have accumulated debts related to the payments of the TV tower.

“Today, TV stations broadcast social videos on the fight against coronavirus for free. I have said that this is not the right approach, as the government is the client of those videos, it has to make payments, including to the regional TV companies. Payments for broadcasting will help TV companies meet their debt obligations.”

According to the Prime Minister, the mechanism of how much and on what grounds these payments will be made is still unclear.

It has been two months since the decline in the advertising market. Until it is clear how and when humanity will be able to overcome the catastrophe of the new coronavirus, different branches of business have switched to a new marketing strategy.

Against the background of declining sales, there is a general tendency to go for savings, spend less on advertising, and at the same time to present the product and service in a more targeted manner.

According to experts, this crisis opens a new window of opportunity for some businesses. With a small budget, they place ads on online platforms and deliver their products (mostly by delivery) to isolated citizens at home.

Fluctuations in the advertising market affect the financial independence of the media. For several months now, some Armenian media outlets have been reporting on the suspension and termination of advertising contracts.

About a month ago, Hasmik Martirosyan, director of Start Media (1in.am), told us that they have companies that have suspended their contracts indefinitely, and it is unclear how and when they will resume cooperation.

A month after this conversation, she says that the situation is uncertain, neither good nor bad.

“Companies are doing price surveys, the market seems to be taking steps to activate, but they are mainly planning to advertise for June or July. We don’t have long-term new advertisers, there are short-term collaborations in the form of publishing PR messages.”

According to her, the companies in the field of trade are mainly interested in possible advertising cooperation, as well as advertising agencies, which are considered to be the advertising mediator between the company and the media.

The media did not review the prices of advertisements, because they have always worked flexibly with the advertiser, and if there has been a problem with the budget, they have adapted.

How much advertising has the market lost?

Tanya Torosyan, director of Media Group Advertising Agency, says that compared to the first quarter of 2019, the commercial advertising market registered a decline of about 25% in the same period this year. At the same time, both large local and international brands have left the market.

According to her, in terms of loss, the exit of one well-known international brand, such as Coca-Cola, is equivalent to 50-60 local advertisers. “Loreal, Coca-Cola, Beeline and other major international advertisers, who mainly used TV commercials, have come out of the market.”

Torosyan says stabilization of the field is not conditioned only by the situation in Armenia ․ “One of our major advertisers, for example, is Ferrero. If it fails to secure production and export quantities this year, it will be useless for the company to have advertising in Armenia.”

She says that from the point of view of advertising, the restaurant industry adapted to the situation very quickly, with the help of relatively cheap media carriers it was able to organize delivery and reach the customer’s house.

“Television advertising has suffered the most, and to some extent, radio advertising. External advertising is there at first glance, but in reality it is unmounted advertising, which has remained in place thanks to inertia and isn’t generating money at the moment.”

According to her, it is difficult to expect a positive shift until October. “Advertising responds most quickly to a weakening economy. However, there are still advertisers waiting for what will happen next month in order to understand their own advertising policy. It can be said that the field is living at the expense of this inertia.”

New advertising trends

Tanya Torosyan says that the advertisements change tendencies. Small shops, delivery services, the providers of online financial services are only benefiting from the situation.

“It’s a golden age for retail, people staying at home, consuming more food, more alternative means for fun. Online sales of the game Monopoly have increased several times, women have started to buy kitchen appliances, men – tools to do the work accumulated at home for years.”

Samvel Sahakyan, head of the Prime Commercial online advertising agency, says that different directions of business have reacted to the situation in different ways.

For example, many luxury brands (cars, perfumes, etc.) have stopped advertising campaigns in the face of consumer uncertainty.

Instead, advertisements for daily use, washing and cleaning products have become more active. “There is an interesting fight going on in the advertising market, budgets have been reduced, those budgets which can allow it are pursuing an aggressive advertising policy.”

According to Sahakyan, some companies were promoting their products through various promotions in supermarkets (tasting, discounts), but now it is no longer an effective advertising tool, for example, Procter & Gamble has removed this part of their marketing.

“Organizations spend about half of their advertising budget on such actions, now the money will flow to the Internet and news sites. There used to be a downward trend in prices on these platforms, but now I think the same price will remain,” said Sahakyan.

According to him, there will be no change in the price list, but advertisers will be offered more flexible terms, will make discounts, will provide bonuses, otherwise, the sellers will not be able to fulfill the budget of the year and cooperation with famous brands will be lost.

Samvel Sahakyan thinks that now the players in the field of advertising want to keep their partners more than earn money until they are able to stand up and overcome this crisis.

Gayane Asryan

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