The first signs of recovery were seen in the international economy in 2013, but the economic situation remained weak, particularly in the eurozone. The Finnish economy took a turn to modest growth in the second quarter. Nevertheless, GDP growth for the full year was negative, -1.4 per cent. Consumer confidence in the economy also remained well below the long-term average (Confederation of Finnish Industries).
Economic growth was also slow in the Eastern Central European countries that constitute Alma Media’s fastest-growing markets. In 2013, the GDP of the Czech Republic declined by 1.0 per cent. In Slovakia, GDP increased by 0.9 per cent (Eurostat forecast, January 2014).
Media advertising volume continued to decline
According to TNS Media Intelligence, media advertising volume, which is closely linked to GDP growth, decreased in Finland in 2013 by 8.5 per cent compared to the previous year, totalling MEUR 1,206.2. The share of advertising of GDP in Finland was also low by international comparison, clearly below the levels seen in countries such as the United States and the UK.
In 2013, print media represented 49.5 per cent of all media advertising. The decline in advertising volume from the previous year was the most substantial in newspaper advertising, which fell by 15.8 per cent. The contributing factors included a very low volume of recruitment advertising (-28.1 per cent year-on-year) due to the uncertain economic situation. Alma Media estimates that its market share is approximately 20 per cent 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 and Starcom MediaVest at the end of September 2013, global spending on digital advertising grew by 13 per cent in 2013, and it now represents 22.7 per cent of total advertising spending. The share of digital advertising of total advertising spending is expected to rise to 24.4 per cent in 2014.
Advertising based on measurable performance, in particular, is popular even in a time of tight advertising budgets. The growth in online advertising is supported by increased social media advertising, video advertising and mobile advertising, as well as technological development, particularly in the form of new tools for targeting campaigns and measuring their effectiveness. According to a forecast by eMarketer and Starcom MediaVest, mobile advertising is estimated to have grown 79.7 per cent in 2013.
Much untapped potential remains in digital growth. In Finland, online advertising is still at a lower level than in the other Nordic countries at 19.7 per cent of all media advertising. The total volume of online advertising amounted to MEUR 237.6, up 6.8 per cent from the previous year. Display advertising, including Facebook advertising, increased by 13.4 per cent, while classified advertising decreased by 8.3 per cent. Spending on search engine advertising grew by approximately 5.5 per cent from the previous year and advertising on online directories grew by 2.3 per cent.
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) approximately one seventh.
Strong growth in mobile media consumption
One of the biggest changes brought about by digitalisation in the Finnish media field in 2013 was the rapid growth in the use of mobile devices. As media consumption is becoming increasingly fragmented between different media and the use of time, the diversity of devices is increasing as supply grows. While the circulation numbers for printed newspapers are on the decline, online services and the mobile use of media and services are growing in line with the increase in the range of services available. Online and mobile video consumption is also seeing strong growth.
The number of mobile devices increased rapidly: tablet sales exceeded the sales of PC’s in Finland in 2013 (Idean 2013). The corresponding milestone was reached with smartphones in 2010. According to Kotek, the Finnish forum for the household appliances market, there were some 1.8 million smartphones and up to 700,000 tablets sold in Finland in 2013. Especially the amount of tablets is growing rapidly in Finnish homes and, compared to the previous year, the sales of tablets grew by some 100 000 pieces around Christmas time alone.
The growing popularity of smartphones has also seen mobile Internet use increase rapidly over the past couple of years. According to the TNS Gallup survey, the percentage of respondents who read a magazine and/or newspaper on a mobile phone at least once per week was 23 per cent (compared to 15 per cent a year earlier), while the corresponding figure for other electronic reading devices was 11 per cent (2012: 4 per cent). At the Alma Media-owned Iltalehti, the number of visitors to mobile sites grew fivefold on average in 2013.
The increase in mobile use is also reflected in the demand for media advertising. The total spending on mobile marketing in Finland in 2013 is estimated at around MEUR 10. Media outlets are aiming to provide content and advertising on a device-independent basis. The growth in mobile consumption is also making print media more interactive. The use of QR codes and the Shortcut application has become more widespread as the number of smartphones has grown.
Recruitment markets stable in Eastern Central Europe despite the weak economic situation
Over the past two years, recruitment services have become a strong arrowhead for Alma Media’s internationalisation. All of Alma Media’s recruitment service companies are the leaders in online recruitment in their respective markets.
In Alma Media’s fastest-growing market area, Eastern Central Europe, the recruitment advertising situation in 2013 was more stable than in the company’s home market in Finland. In Finland, the recruitment advertising market declined by 26 per cent and the size of the market in 2013 is estimated at MEUR 33. In the Czech Republic the recruitment services market declined by 4 per cent and the total value of the Czech market for recruitment advertising in 2013 is estimated at approximately MEUR 25. There were some 40,000 open jobs per month, of which approximately 20,000 were advertised on Jobs.cz, a recruitment portal 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 November 2013, the unemployment rate was 8.4 per cent in Finland, 6.9 per cent in the Czech Republic and 14.0 per cent in Slovakia (Eurostat). The unemployment rate in the Czech Republic remained fifth-lowest in the EU after Austria (4.8 per cent), Germany (5.2 per cent), Luxemburg (6.1 per cent) and Malta (6.4 per cent). The average unemployment rate in the EU was 10.9 per cent in November 2013.
Youth unemployment in particular has been a challenge across the EU for a long time. In November 2013, the youth unemployment rate was 19.6 per cent in Finland and 19.1 per cent in the Czech Republic. In Slovakia, youth unemployment is as high as 33.3 per cent. Since 2012, many EU countries have taken measures to reduce youth unemployment. Several EU countries introduced a youth guarantee aimed at improving the employment rate among young people. The Czech Republic, Slovakia and Finland also face the challenge of increasing long-term unemployment.
Winds of change in the world of media – paid digital journalism, data utilisation, video and digital recruitment
The year 2013 was a period of diversification, digitalisation and new service innovation in media. Media companies continue to work on the digital transformation.
Digital journalism is changing as consumers are increasingly moving online. Online publications of the future will feature more and more videos and interactive content. Content is also being adapted to different devices: media companies produce videos and more interactive journalistic content that sheds light on the background of news stories, while in smartphones the emphasis is on fresh and frequently updated content such as news.
The time of fully free online services is over. Paid content is the word of the day in digital journalism. Kauppalehti implemented a paywall in 2012, Helsingin Sanomat in 2013 and Aamulehti at the beginning of 2014. Internationally, The New York Times already has over 700,000 readers for its paid content and the social video platform YouTube is moving part of its content behind a paywall.
In digital advertising, the most important current themes include the utilisation of data and audience targeting solutions. The significance of data in analysing, developing and directing business operations is growing rapidly. Companies are using big data in an effort to better understand their customers and business operations. This has led to an increase in the demand for tools for collecting and refining data in the media sector. Internationally, the trend of digitalisation has also given rise to concerns over privacy protection online. The EU is currently preparing a Directive aimed at harmonising privacy protection legislation in Europe. Read more on Alma Media’s privacy protection here.
Online TV is an increasingly significant marketing channel thanks to continuous growth in viewers. According to a survey published by Sonera in summer 2013, some 71 per cent of Finns watch online television. Two thirds of Finns use a laptop computer, one fifth use a smartphone and nearly one out of five use a tablet device to watch online TV content. Some 29 per cent of Finns watch online TV at least once a week using a laptop computer, while the corresponding figures for smartphones and tablet devices are 8 per cent and 7 per cent respectively. There is a clear gap between generations when it comes to online TV: among young people, nearly 50 per cent watch online TV on a laptop computer at least once a week. Advertising sales in online TV remain fairly low, but the rate of growth is high. According to TNS Gallup, the size of the market for online TV services was approximately MEUR 9 in 2013. This figure is divided between Katsomo, Ruutu as well as the online TV services provided by afternoon papers.
According to e-commerce statistics published by TNS Gallup, the Finnish Commerce Federation and the Finnish Direct Marketing Association, the total volume of e-commerce reached EUR 5.1 billion in the first half of 2013. This figure includes taxes and delivery costs. Compared to the corresponding period in the previous year, consumer online purchasing volume increased by approximately six per cent. According to recent statistics, active Internet users aged over 65 years constitute the fastest-growing customer segment for online retailers. The increase in the number of online stores and growth in online shopping also creates a need for new advertising solutions and services aimed at online retailers.
The digitalisation of our world is also leading to constant changes in the playing field in recruitment services. Recruitment is increasingly moving online, with new recruitment tools such as video interviews being adopted. CV databases and social platforms such as LinkedIn are making it easier for employers to find jobseekers. Online recruitment services will launch new supplementary services on the market and increasingly push their way into the recruitment consultancy market.