Robust economic growth, fuelled by the recent spike in domestic credit and consumer activity, makes for heady days for the local advertising industry. That this growth is occurring as neighbouring European markets continue to be mired in difficulties further highlights the potential of Turkey’s economy going forward.
GROWTH TREND: According to global consultancy PwC’s “Global Entertainment and Media Outlook 2011-15”, Turkey’s advertising spend increased to $2.34bn from $1.98bn during the 2006-10 period, while Western Europe saw advertising spend decline from $108.2bn to around $104.5bn in the same period. PwC estimates that advertising spend in Turkey will increase to $3.9bn by 2015, and the country’s compound annual growth rate (CAGR) is expected to reach 10.6% by that year – substantially higher than the 3.9% CAGR predicted for Western Europe as a whole.
The key to such positive indicators has been the country’s GDP growth, which at 11% was the highest in the world in the first quarter of 2011. The figure for the whole year is estimated to be around 9%. Per-capita income rose from $2905 to $10,576 between 2001 and 2011, with significantly higher rises in urban centres like Istanbul, Izmir and Ankara. Consumer credit, meanwhile, has skyrocketed. According to the central bank, credit grew 40% in 2010 and 42% in 2011. This has been a welcome move for the advertising segment, which benefits from increased consumer spending, despite efforts to curb lending (see Economy chapter).
SOPHISTICATION & RANGE: The Turkish advertising market is growing in size, sophistication and range. Given the levels of online activity, digital marketing and web-based ad ventures have become increasingly important to the industry and its beneficiaries.
The use of social networking sites as advertising platforms is also a growing trend, and many online start-ups seek to monetise their ventures by securing ad revenue. With more platforms, consumers ready to spend and a clutch of international awards, this uptick is attracting multinational brands to local ad agencies.
MARKET INDICATORS: Figures released in March 2012 by the Turkish Association of Advertising Agencies (TAAA) show that ad spend rose roughly 20% between 2010 and 2011. This valued the market at about TL4.3bn (€1.8bn) in 2011, up from TL3.6bn (€1.5bn) the previous year. There were some signs of a slowdown in the later part of 2011, however. The TAAA had earlier announced, in December 2011, that the first half of the year had seen a 24% increase in ad spend over the first six months of 2010 – the highest rise in Europe.
Some TL2.2bn (€935m) was in the first half of 2011, according to the earlier TAAA figures.
Regarding platforms, the TAAA’s data showed that TV continued to dominate in 2011, capturing 56.7% of all ad spend. Print was second, with 24.3%, followed by the internet, with 8%; outdoor advertising took 7.1%, radio had a 2.8% share, and cinema ads garnered 1.3%.
These rankings were similar to the previous year, according to Doğan Yay›n Holding (DYH) Ad Research.
DYH’s 2010 figures showed a total ad spend of TL3.86bn (€1.6bn), slightly higher than the TAAA total, with TL2bn (€850m) going to TV, TL920m (€391m) to newspapers, TL410m (€174.2m) to internet and TL263m (€111.8m) to outdoor advertising. The rest was divided between magazines, radio and cinema at TL111m (€47.2m), TL107m (€45.5m) and TL51m (€21.7m), respectively.
Looked at in comparison to 2009, when DYH showed total spend at TL2.96bn (€1.3bn), the market expanded substantially – 2009 was, after all, a year of economic shrinkage, following the global downturn. All platforms demonstrated substantial gains between 2009 and 2010, with TV up about 40%, and newspaper up 13%. Internet ad revenues rose 32%, growing from 10.5% to 10.6% of the total. The top three sectors by ad spend in both years were food, telecommunications and finance. Each saw growth of around a third between 2009 and 2010. Excluding online adverts, food saw TL367m (€156m) of ad spend in 2010, telecommunications TL364m (€154.7m) and finance TL336m (€142.8m). Another sector to spend heavily was construction and decoration, which registered 65% growth at TL227m (€96.5m).
SECTOR BODIES: The TAAA and its related organisation, the Turkish Foundation of Advertising (TFA), represent about 85% of the advertising industry. The TAAA established the TFA in 1998 to work on improving professional standards, while the TAAA continues to focus on industry representation and data collection.
The TAAA is also a member of the Brussels-based European Association of Communications Agencies (EACA), which represents the sector on a continent-wide basis. The EACA has been instrumental in setting professional standards for the industry, and these practices have been incorporated by the TAAA’s members.
Another important sector body is the Turkish branch of the global Interactive Advertising Bureau (IAB). IAB Turkey opened in 2007 to coordinate internet measurement research and aid the growth of the interactive industry. Finally, many major cities have their own sector organisations. These include advertising chambers in Ankara, Antalya, Bursa, and Izmir.
On the government side, the Ministry of Science, Industry and Technology’s (formerly Ministry of Industry and Trade) Board of Advertisement and the Radio and Television Supreme Council (RTÜK) are concerned with consumer protection and industry standards, while the Advertising Self-Regulatory Board (RÖK), composed of market players, also monitors the sector’s output.
The TAAA claims that there are around 100 fully developed advertising agencies in Turkey – firms that include customer relations, creative and media departments and are in line with European Union standards. Most of these are among the association’s members.
HIGH PRAISE: TAAA agencies have been winning numerous international industry awards, with both global and local firms receiving recognition. Awards have been handed for both independent and collaborative campaigns as nearly a quarter of TAAA members have agreements with foreign partners.
In the past, international brands turned to global outfits like McCann Erickson or Ogilvy & Mather – or those with local partners, like Manajans Thompson, Medina Turgul DDB, or Güzel Sanatlar/Saatchi & Saatchi – for advertising campaigns. This dynamic is changing, however, and major firms are partnering with leading local agencies, like Çözüm – a Silver Pen award winner – which lists Unilever and 3M among its clients. Other leading local independents include Alametifarika and its digital agency, Rabarba, both of which won EFFIE awards for outstanding marketing communications in 2011. Indeed, Turkish advertising agencies are beginning to be regularly featured at international advertising awards. In 2011, for example, 11 advertising works from Turkish agencies reached the finals of the New York Festival Advertising Awards, with a campaign from Grey Istanbul winning silver and bronze awards.
In 2007 41?29!, Turkey’s first digital marketing company, set up shop in Istanbul, and several others soon followed. These digital ad agencies offer complete packages, from strategy and design to shooting videos, a model that represents an important departure from previous digital outfits that concentrated mostly on website hosting, design and development.
OUTLOOK: The digital-advertising revolution has brought waves of change and progress to the sector, translated into exciting growth in ad spend. Still, traditional TV and newspaper advertising continue to enjoy the largest advertising shares and will likely to continue to do so for some time to come.
Expectations for 2012 are high, with the TAAA predicting a further 15% hike in ad spend. First quarter figures for 2012 showed Turkish buyers continuing to spend – in fact, the consumer confidence index increased in February 2012 – despite rising inflation and a general economic growth slowdown.
However, the wider economic health of the nation may be a reason for caution, as the impact of higher fuel and food prices affects consumer behaviour. Thus, the second half of 2012 may witness a slowdown in advertising revenues as companies tighten their belts.
The ability of agencies to sustain high levels of growth depends on how fast they develop and secure the kind of multi-platform agility that captivates the country’s young population. To successfully engage Turkey’s most active online audience, continued effort will be needed to harness and keep pace with the multiple devices and mobile platforms that are changing as rapidly as the people who use them and the industry itself.
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