Uncertainty in the global economy continued, and the Finnish economy remained in a downward economic cycle in 2014. The weakness of the eurozone and the deterioration of the economic situation in Russia due to the Ukrainian crisis had an impact on Finland in the form of lower exports and decreased domestic demand. The productivity and competitiveness of the Finnish economy has diminished, and there are no clear signs of a turn for the better.
According to economic forecasts, Finnish GDP growth for the full year 2014 is estimated to be negative. Negative growth has now continued for three years. Both consumers’ and businesses’ confidence in the economy was weak through the whole year.
The economies of Eastern Central Europe have developed favorably and the GDP growth in Alma Media’s main market areas there has supported the company’s recruitment business. According to economic forecasts, the GDP is estimated to grow 2.5 percent in the Czech Republic and 2.4 percent in Slovakia in 2014 (European Economic Forecast 11/14).
Media advertising volume continued to decline
Media advertising volume, which is closely linked to GDP growth, decreased in Finland in 2014 according to TNS Media Intelligence by 3.5 percent compared to the previous year, totalling MEUR 1,175.8. The media advertising share of GDP was at a historical low.
In 2014, print media represented 46.1 percent of all media advertising. The volume of city paper and newspaper advertising fell by 8.3 percent from the previous year. The contributing factors included difficult economic situation, changes in marketing and advertising and the weak situation of the retail trade, among others. Alma Media estimates that its market share is approximately 20 percent of all newspaper advertising in Finland.
Online advertising has been more resilient to macroeconomic changes than other media advertising. According to a forecast published by eMarketer (July 2014), global spending on digital advertising grew by 16.7 percent in 2014, and its share of total advertising spending exceeded 25 percent for the first time. Online advertising spending exceeded TV advertising spending for the first time in the United States as well as in Finland (TNS Ad Intelligence, IAB Finland).
In online advertising, growth is fastest in mobile advertising. According to eMarketer, mobile advertising grew by 84.7 percent globally, to USD 32.71 billion. Mobile advertising represented approximately 23 percent of total digital advertising in 2014, according to eMarketer’s estimate. In Finland, total spending on mobile marketing in 2014 is estimated at approximately MEUR 12.4. At Alma Media, the mobile ad views grew by 100 percent year-on-year.
Mobile advertising is forecasted to account for 58 percent of total digital advertising by 2018.
The growth in online advertising is supported by increased social media advertising and video advertising, as well as technological development, such as new tools for targeting campaigns and measuring their effectiveness.
Much untapped potential remains in digital growth. In Finland, the share of online advertising is still lower than in the other Nordic countries at 22.5 percent of all media advertising. The total volume of online advertising amounted to MEUR 264.8, up 10.8 percent from the previous year. Display advertising, which also includes Facebook advertising, grew by 15.5 percent. Classified advertising declined by 1.2 percent. Spending on search engine advertising and advertising in online directories grew by approximately 9 percent from the previous year.
Alma Media’s share of the Finnish market for classified and display advertising online is slightly below one third and its share of all online advertising (including, in addition to the aforementioned, search engine advertising and online directories) is approximately one seventh.
Consumers are shifting to mobile
The media industry is inevitably moving towards digitality due to a change in consumer habits. Media consumption is becoming increasingly fragmented between different media and the use of time, and the diversity of devices is increasing as supply grows. For media companies, this calls for building an around-the-clock media consumption experience and comprehensively analysing customer preferences and media use. Content must be flexibly created for different devices, and the consumer must be followed from screen to screen.
The operating environment of Finnish media companies in 2014 was affected by customers increasingly shifting to the Internet, and mobile content in particular. According to an international study conducted last year, online media is now the number one source of news for Finns, even exceeding TV news in reach. The same study reveals that one out of five Finns now reads the news primarily on their smartphones. The same trend can be seen in Alma Media’s services, with an increase in mobile traffic of 109 percent over the past 18 months.
Improved economic situation speeds up the growth of recruitment markets in Eastern Central Europe
Recruitment services constitute the majority of Alma Media’s international operations. Most of Alma Media’s recruitment service companies are the leaders in online recruitment in their respective markets. At the beginning of 2014, the geographical scope of our recruitment operations expanded to Hungary and Poland after Alma Media acquired Monster Worldwide Inc.’s companies in Poland, Hungary and the Czech Republic. In conjunction with the acquisition, Alma Media sold a 15% share of all recruitment companies it owns to Monster Worldwide Inc.
In Alma Media’s fastest-growing market area, Eastern Central Europe, the recruitment advertising situation in 2014 was more stable than in the company’s home market in Finland. In Finland, the recruitment advertising market declined by almost 11 percent and the market value in 2014 is estimated at MEUR 30. The Czech market for recruitment advertising grew by 13 percent in 2014, reaching an estimated total value of approximately MEUR 27. There were approximately 33,000 job openings every month, of which approximately 65% were advertised on the recruitment portals owned by Alma Media.
As in Finland and the rest of the EU, high unemployment presented a challenge to the markets in Eastern Central Europe. In October 2014, the unemployment rate was 8.9 percent in Finland, 5.7 percent in the Czech Republic and 12.9 percent in Slovakia (Eurostat). The unemployment rate in the Czech Republic was the fourth-lowest in the EU after Germany (4.9 percent), Austria (5.1 percent) and Malta (5.6 percent). The average unemployment rate in the EU was 11.5 percent in October 2014.
Youth unemployment in particular has been a challenge across the EU for a long time. In October 2014, the youth unemployment rate was 20.2 percent in Finland and 14.2 percent in the Czech Republic. In Slovakia, youth unemployment is as high as 29.5 percent.
Winds of change in the world of media: big data and new pilot projects
In 2014, the major emerging topics in the media industry included data utilisation and native advertising. New pilot projects and experimentation in the industry was particularly focused on the upcoming changes to people’s daily lives brought about by the Internet of Things.
Use of big data becoming an essential part of daily life for media companies
The rise of big data is a trend that has a strong impact on the media industry. According to an international study carried out in autumn 2014, in Western Europe alone, businesses intend to nearly triple their technology and service investments related to big data over the next few years. The term “big data” generally refers to massive amounts of heterogeneous and unorganised digital data created by consumers on the Internet as well as various devices connected to the Internet.
The rise of big data has also been noticed by media companies. According to a report released by the Reuters Institute at Oxford University in late 2014, the strategic leveraging of big data is the next big change in media companies. Media companies can utilise big data in areas such as product development and the targeting of content and advertising.
Growth in native advertising
Last year native advertising broke through into the mainstream of marketing. Native advertising refers to marketing that is integrated seamlessly into the environment of its publication platform, making consumers perceive it more as high-quality content than traditional advertising.
Native advertisements are often designed primarily for mobile consumption. Native advertising is expected to grow rapidly in the next few years as mobile content consumption increases.
The Internet of Things is coming
In 2014, media companies also carried out their first content pilots and experiments related to the Internet of Things. The research company Gartner estimates that, by 2020, there will be 25 billion devices or things connected to the Internet worldwide. Having many of the things in our daily environment constantly connected to the Internet will enable the production of content and advertising specifically designed for them. While developments in this area are still in their early stages, some international media companies already began content pilots and experiments related to the Internet of Things in 2014. Media companies offered content applications for new consumer products in the area of wearable technology, such as the smartwatch launched by Samsung.