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Adissy Shares An Insight Into The Russian Market

Alexander Pivovarov, CEO of Adissy, a Russian company that develops networks for digital advertising, recently moderated at the conference ‘Digital Signage in Russia: effectiveness and return on investments‘ and here, he shares his thoughts on the event with us…

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Alexander Pivovarov, Adissy CEO

The panel discussion organized by MIDEXPO was held in the multimedia center of Russian International News Agency (RIA) Novosti in Moscow.

Pivovarov noted that even though the subject of the meeting was ROI, the discussions circled around the state of the industry and its prospects for development, “the panel discussion turned out to be quite interesting and dynamic,” he said.

“In terms of digital signage,” Pivovarov explains “Russia is falling 10 years behind the US market. In the US, the advertisement market Digital Signage is worth 2 billion USD (26% from the  outdoor advertisement), while in Russia this market is estimated at  2 billion rubles or about 65 millions USD (this includes indoor advertisement on digital panels, advertisement on outdoor LED screens, and digital advertisement in public transportation). All participants agreed that DS in Russia is an “unplowed field” yet.”

There are about 30 thousand digital screens in Russia today that are being used for advertisement (the largest operator being VI Plasma with 12  thousand screens). Since 2005 this market has grown by 15 times. The most  developed segments are: retail (driving force of digital signage), shopping malls; there is also good development in the segments of commercial real estate. The segment of DIY stores (Leroy Merlin, OBI) is not developed , even though the   infrastructure in there is perfectly suited for digital  signage. There is a huge potential in facilities, related to maternity and childcare.  Another rapidly developing segment is telecom.

“The current coverage area for digital signage networks in Russia is not big enough to attract global advertisers,” explains Pivovarov and adds “Some companies in western countries have successfully build DS campaigns using completely different venues: fitness club (in the morning), café (during the day), store or a  restaurant (in the evening).”

Pivovarov says that a lot of attention was dedicated to content. “Content should  be chosen based on where the screens are installed and tailored to inform clients as well as sale to them.”

Trends were also a well-debated topic; in particular the growing usage of interactivity in digital signage and the increase of screen sizes. According to Ilya Alekseev, manager of new media department at Video International Group (VIG), the increase on screen size in existing networks is an evolutionary process. Video-walls and “big non-standard” (constructions with a special design customized for a specific brand or product) become more and more trendy. According to the research conducted by VIG, people look at bigger installations more often and they get more engaged by them.

Perhaps for this reason at the moment there are Digital Signage operators emerging that specialize on video-walls.

“Finally, towards the end of the panel discussion we talked a little about ROI,” says Pivovarov, “Ilya said that ROI on a screen depends a lot on its location. It can range from 50 to 400 thousand rubles a year per screen (for example, in medical facilities this number is about 100 thousand). Digital Signage depends on global advertiser. One can make 15-20% (rarely, 30%) using local advertisers, but to build a business entirely on the local advertisers is impossible today. And in order to attract the global advertisement the product should have a minimum of 30% market share.”

Viktor Leonychev from LG gave a concrete example: LG calculated that, given the effectiveness digital signage has had in car dealerships, the installation pays for itself within 1 year and after 3 years the ROI equals  280%.

“Digital signage shouldn’t be viewed only as a means of profit” concludes Pivovarov “It can be seen as a communication channel that allows companies to achieve their goals and, in some cases, making profits too.”