Media advertising volume falls while online advertising continues to grow
Media advertising volume in Finland declined by 2.9% in 2012, totalling MEUR 1,353. Relative to the Finnish GDP, media advertising is currently at a historical low of 0.73%. Also when compared to international markets, total advertising volume in Finland was clearly below the levels seen in the United States and the UK. With the exception of the first quarter, media advertising in Finland fell throughout the year compared to 2011.
Print media represented 54.1% of media advertising, compared to 42.7% for electronic media. The year-on-year decline was most notable in newspaper advertising, which fell by 8.1%. The contributing factors include a very low volume of recruitment advertising (-18.5% from previous year) due to the uncertain economic conditions and a slowing down of automotive advertising (-9.0%) in the spring due to a change in car taxation. However, advertising for housing increased 3.0% from the previous year. Activity in the housing market was supported by low interest rates. Alma Media estimates that its market share is approximately 20% of all newspaper advertising in Finland. An increase in unaddressed direct mail advertising also contributed to a lower advertising volume for print newspapers. Unaddressed direct mail advertising grew by 13.2% in Finland compared to 2011.
The total volume of online advertising was MEUR 240.4, or 17.8% of all media advertising. Online advertising increased by 10.0% from the previous year. Display advertising grew by 14.8% and classified advertising decreased by 2.2%. Spending on search engine advertising was around 25% higher than in 2011, but advertising spending in online directory services was down 19%.
Alma Media’s share of the Finnish display and classified online advertising market is slightly below one third and its share of all online advertising (including, in addition to the aforementioned, search engine advertising and online directories) approximately one seventh.
In Alma Media’s other key markets, the Czech Republic and Slovakia, the recruitment services market grew by 2% and 7% respectively. The total value of the Czech market for recruitment advertising in 2012 is estimated at approximately MEUR 28 and the Slovakian market at MEUR 8.
Substantial growth in the use of mobile devices in Finland in 2012
The use of various mobile terminal devices grew considerably in 2012. According to a survey and forecast by TNS Gallup, 55% of Finns in the 15–69 age group had a smartphone in November 2012. The corresponding figure was 50% in June and 44% in January.
In November 2012, some 13% of Finns owned a tablet device, compared to 8% in June and 6% in January. Tablet use has more than doubled over the course of the year. Finnish market analysis company Idean predicts that the number of smartphone users will surpass that of basic mobile phone users in early 2013, with strong continued growth expected in both smartphone and tablet use.
The growing popularity of smartphones has also seen mobile Internet use increase rapidly over the past couple of years. On average, visitor figures for mobile websites have grown fivefold within this period. Idean predicts that mobile Internet use will surpass desktop internet use in a few years’ time. In a survey by TNS Gallup, the percentage of respondents who read a magazine and/or newspaper on a mobile phone at least once per week was 15% (compared to 11% a year earlier), while the corresponding figure for other electronic reading devices was 5% (2% a year earlier).
The rapid growth in the use of terminal devices also supports the development of mobile marketing. In 2012, total spending on mobile marketing in Finland was estimated at MEUR 16-17.
Changed competitive situation in housing advertising called for quick decisions
The Finnish market situation in housing advertising changed considerably in late 2011 with the launch of a new housing portal jointly owned by Finland’s largest real estate agencies, the Central Federation of Finnish Real Estate Agencies and MTV3 Media. As the advertising of properties and homes is relatively concentrated in Finland, the entry into the market of the new operator had a notable effect on the number of visitors and advertising volume of Etuovi.com in the spring.
Alma Media responded to the change in the competitive landscape by adjusting its pricing and launching a listing service for professional advertisers. As Etuovi.com enjoys a strong market position and is perceived as a reliable and well-known brand among consumers, the majority of its real estate agent customers returned to the service by autumn. Etuovi.com also opened its advertising service to consumers and quickly became the market leader in that category.
Moving towards paid online media content
In Finland, new steps were taken towards paywalls for digital media content in 2012. Kauppalehti, which has a history of making pioneering moves in the area of paid online content, launched a subscription model renewal in May, restricting free access to online news services to 25 news items per visitor per month. In conjunction with the changes, Kauppalehti also differentiated its print and digital content. The implementation of the soft paywall did not have a significant impact on the number of visitors to KL.fi. The move towards paid digital content and consumer services will extend to Alma Media’s regional and local newspapers in 2013.
Circulation figures hit by the imposition of value added tax on subscription newspapers
In December 2011, the Finnish parliament approved a law that imposes value added tax of 9 per cent on subscription newspapers, effective from the beginning of 2012. Subscriptions were previously exempt from value added tax. Alma Media added the tax to the subscription prices charged to consumers. According to the company’s own estimate, the increase in consumer prices caused by the value added tax resulted in an average decline in the circulation figures of regional and local newspapers of approximately three per cent compared to the previous year. The effect of the tax was less pronounced for Kauppalehti, as corporate customers are able to deduct the value added taxes they pay for their purchases. The value added tax on newspaper subscriptions rose to 10% in the beginning of 2013.