Blog

Sostav.ua

MEDIA / RESEARCH 

Foreword

In Ukraine, an anomalous amount of "eye-watering" money is being invested into outdoor advertising. I’ve shared these calculations on Sostav before. In 2019, 20% of the country’s advertising budget was directed to traditional Outdoor formats, including printing costs. This is a true "media phenomenon" for the European region. Even globally, these figures are unique, with averages typically around 5-6%.

What’s even more surprising is that the share of investments in Indoor (Place-Based) advertising within the Out-of-Home structure, for example, in the United States, is three times higher than in Ukraine. In percentage terms, it’s 11.6% versus 3.6%. It’s disappointing that many of our marketers and specialised agencies fail to see (or choose to ignore) the clear advantages of Digital Indoor advertising in their media mix. Many international colleagues already understand that Outdoor is mass marketing, lacking any targeting capabilities apart from geography and requiring massive investments to achieve reach. I agree, outdoor advertising “hits” all layers of the population. However, not many people realise that in Ukraine, only 1-4% of citizens own a phone worth more than $700, and just 0.6% of the 18+ audience buys a new car each year. Most Ukrainian marketers and agencies justify such massive outdoor budgets by claiming there are no alternative OOH formats backed by representative research.

For over a decade, outdoor players in Ukraine have worked exclusively with a single contractor—DOORs Consulting. A close review of their website shows that this company is solely focused on outdoor advertising research and does not engage in any other activities. As a result, Outdoor operators and the agencies buying outdoor advertising are not only the main sources of the contractor’s income but also the primary beneficiaries of its research findings... According to their methodology, DOORs specialists conduct biannual monitoring of "human" traffic near advertising structures and produce OTS (Opportunity to See) and GRP (Gross Rating Point) indicators. That’s the full extent of their research.

Of course, the data is highly averaged since it’s impossible to track how many people were inside vehicles or account for all the changes that could occur on the streets over six months, fundamentally altering traffic patterns. How many people actually saw the advertisement? Who are they? Is the structure even visible to a driver in the left lane (within the advertising impact zone)? Can all passengers on a bus clearly see the ad?

For now, there are no answers to these questions. But this seems to fully satisfy our media market, allowing 1/5 of the country’s advertising budget to be channelled into a single communication medium.

And one more important note...

The CPT (Cost Per Thousand Impressions) for each advertising space is calculated based on DOORS data. However, I’ve never seen a single presentation from operators, agencies, or marketers (those heavily investing in outdoor advertising) that includes printing costs in the CPT calculation. Meanwhile, in print media, everything is included! Aren’t we all for market transparency and accurate calculations? Arguments about different paper densities, film types, or mesh quality don’t hold up for me personally—they’re not a valid reason. The fact is, placing static outdoor ads requires printing the creatives, and there’s no way around that.

To compare the real CPT of outdoor advertising with other media channels, all associated placement costs must be taken into account. It would be fair to other market players if the CPT for structures included an average cost of printing. Did you know that for some Outdoor formats, the cost of printing and installing a creative can exceed two months’ worth of placement fees?

The real CPT might surprise many!

What should businesses do when the "entry ticket" for a modest advertising campaign in large cities costs over 1.5 million UAH, and reaching 20-25 cities comes with a price tag of 2-3 million UAH!? Are there any OOH formats that provide longer visual engagement with drivers than just 1-2 seconds!? And is it reasonable in the 21st century to direct an entire OOH budget to a single format, leaving behind tons of waste in the form of paper, film, and mesh at landfills? 

These are tough questions—some even uncomfortable.

Let’s hope the provided analysis helps the Ukrainian media market find a worthy addition to the OOH media mix or discover an affordable alternative to traditional Outdoor.

Epicentr K Shopping Centre

There’s no need for a detailed introduction to Epicentr K—it’s the undisputed leader in Ukraine’s home improvement and construction retail sector. Unfortunately, our NDA restricts us from disclosing certain figures, so I’m only sharing information available in public and approved materials.

Here are some key facts that marketers and their agencies should know:

• As of December 2019, Epicentr K Shopping Centres (+Nova Linia) operate in 47 cities across Ukraine, covering all regional centres except Zhytomyr (set to open in the first half of 2020).

• The 70 shopping centres span more than 1.5 million square metres of retail space. On average, each shopping centre covers 21,000 square metres, with the largest being 105,000 square metres and the smallest 4,000 square metres.

• Over 500,000 Ukrainians visit Epicentr K and Nova Linia daily.

• The total turnover of Epicentr K and Nova Linia in 2017 amounted to 42 billion UAH, achieved with just 59 shopping centres at the time. On average, one shopping centre recorded an annual turnover of 0.71 billion UAH(!!!), even though the number of visitors is comparable to the leaders in grocery retail. Like most retailers, Epicentr K’s turnover grows year by year, and its average receipt is significantly higher than that of typical retail stores.

• In early 2018, the Vyhoda loyalty programme was launched, distributing 1 million cards. By January 2019, membership had grown to 3.6 million participants. How many Ukrainians are using the loyalty card in January 2020? I’m sure Epicentr K will release the figures soon. Even if the growth rate is only half of what it was in 2018-2019, it’s reasonable to estimate that 50% of Ukrainian adults aged 25 to 64 are regular customers of the network (based on Dubilet’s latest census data).

FYI: Identity Invest owns and operates 845 video screens located in waiting areas across all Epicentr K and Nova Linia shopping centres. Additionally, it manages the internal radio network, integrated with the video screens into a single media network. The cost of placement across all 70 shopping centres (audio + video) starts at 220,000 UAH per month excluding VAT.

1. Sample, geography, methodology

The uniqueness of this study lies in the participation of various shopping centre formats, cities, and regions across Ukraine. This diversity enabled the creation of a high-quality sample for the research.

2. Customer Profile

The core of our audience (58%) consists of customers aged 31-45 years—the most economically active demographic and likely the best representation in Ukrainian retail. 72% of our audience are families with children, over half of whom are school-aged (6-18 years). Epicentr K is a retailer for car owners! An impressive 80% of our audience are families who own a car, which came as a surprising discovery for us.

The average household income exceeds 39,000 UAH, with 65% of our audience made up of families with 

3-4 members. Furthermore, 15% of Epicentr K customers have a per capita income of over 20,000 UAH, although wealthier audiences tend to be less inclined to participate in surveys.

3. Behavioural analysis, preferences, and shopping experience

One key finding from this study is that 43% of customers visit Epicentr K weekly, and 46% spend 90 minutes or more at the shopping centre during a single visit. On average, a typical customer spends nearly 5 hours per month at Epicentr. Furthermore, 64% of shoppers are responsive to advertising.

For any advertising medium, it’s essential to transform into a source of relevant, timely content and avoid provoking negative reactions from its audience. Our daily playlist includes:

50% –  music broadcast;

30% –  commercial content from the Epicentr K retail network;

20% –  advertisements from external partners.

In addition, Identity Invest’s media projects are strictly a politics-free zone! This rule has been a solid foundation of our broadcasts for over 10 years. The primary focus of the commercial content is on news and promotional offers, which enhances the shopping experience and avoids causing rejection or irritation among visitors. As a result, every 5th respondent expressed a desire to receive more advertising messages, while 15% of car owners said they would like to learn about car promotions and new products through the “Epicentr Media Service” broadcasts. 

4. Visibility of advertising displays (+ EYE-Tracker)

In this section, I want to highlight the difference between the conscious assessment of video screen visibility in survey responses (19%) and unconscious engagement with video content (63%) tracked via eye-tracker technology. The gap between survey results and actual interaction with screens is remarkable—video content instinctively captures visitors' attention.

Here’s another interesting insight: on video screens located in the returns department and near travelators, only advertising content is displayed, yet 66% of the audience focuses their attention on these screens. The average gaze duration is nearly 7 seconds, which is significantly higher than the engagement time for video ads on social media. The queue at the returns desk increases this figure to 19 seconds!

5. Recall of advertising content

At the time of the survey (September 2019), the commercial broadcast schedule had a 100% fill rate, featuring 28 advertising campaigns throughout the day. Of these, only 12 campaigns were unrelated to the Epicentr brand. As shown in the data below, most visitors were able to recall the names of brands from the advertising campaigns they heard and saw within the shopping centres.

A decline in recall rates was observed for campaigns by Nissan, Opel, and KIA. This was due to the promotions being limited to Kyiv and its region, which impacted their recall levels in the nationwide survey. The survey included 280 respondents in Kyiv and 803 respondents from other regions.

Ukrainian businesses, in general, need an economically active audience (aged 25+) with a broad consumer basket and solvent households that own cars. Considering the uneven income distribution across the population and gaps in purchasing power, media investments in domestic Digital Indoor will not only prove effective but also stand out as a cost-efficient media solution.

Be effective at a lower cost!

CEO, Identity Invest

Dmytro Smolanov

P.S. The next publication will explore the audience profile, behavioural analysis, and the effectiveness of advertising media at WOG and OKKO gas stations.