ALBANIAN GAP

1. ALBANIAN GAP 10th SEMPL CONFERENCE PRESENTATIONNovember 2007, Portorož, Slovenia

2. CONTENT AD AGENCIES in ALBANIA • Status & Future Trends • The Media Market • Creatives & Creativity • Integrated Agencies • Media Agencies • Media & Market Research • New Business Developments • Conclusions

3. AD AGENCIES in ALBANIA BRIEF BACKGROUND & HISTORY Early & Mid-1990s The very first Albanian advertising agencies have sprung up in the mid 1990s. In fact, most of them started as small sole propietary shops, owned & operated for the most part by practitioners with virtually no advertising experience at all or any marketing-related education or insights. With most of them starting originally as graphic design studios, soon they discovered a brokerage role of media space, by buying pages in newspapers, periodicals and television and selling them to advertisers. The first ad shops were rarely staffed by more than a couple of people and their motivation was not to help companies attract customers or sell more goods, but to maximize profit on their own transactions.

4. AD AGENCIES in ALBANIA BACKGROUND Late-1990s Still, the market was dominated by the small ‘boutiques’ focusing mainly on the creative product, rather than managing long-term accounts or continuous integrated campaigns. Some of the incumbents, however, were contracted mostly on ad-hoc basis, by regional or other international full-service shops catering to local needs of major advertisers, typically in offering assistance of media placement and simple media-buying execution. This is also the time when the first media agencies specializing in planning & buying came along, albeit in lack of continuous media measurement data or any ratings service at all. Additionally, there was not (and, still there is not) any serious or systematic move in joining their purchasing power, for being able to command lower rates from TV networks or press publishers and pass the savings on to the clients. After all, till early 2000s, independently-conducted reports (HRW, 2003) found that government & state advertising accounted for accounted for a disproportionately large share of total media advertising in Albania.

5. AD AGENCIES in ALBANIA TODAY Early 2000s Beginning of 2000 saw growing competition and new specialized group of agencies offering the classic range of services, graphic design, sales promotion, PR and to a lesser extent, direct marketing. With the increased range of media and communication disciplines available to advertisers in Albania, a clear trend guided by the concept of integrated communications encouraged attempts towards developing advertising groups aiming to provide integrated marketing services. 2007 and on Today, the market is getting increasingly bigger & certainly, more professional from a tripartite perspective, that of the advertisers, the media, and of course the ad agencies themselves. The growth in usage and importance of other types of communications, more recently internet and other digital media, appears to demand a different set of skills both creatively and analytically. Additionally, new players are coming to town, such as, Ogilvy Kosovo & Albania, an affiliate of Imelda Ogilvy, New Moment, as part of a wider Balkan group, McCann?

6. ECONOMY & AD MARKET Nominal GDP (€ Billion) Economy Indicators. Nominal GDP per Capita still low compared to Slovenia, or Croatia, however comparable to Serbia, BiH, Macedonia, Montenegro & Kosovo. Ad Market Estimations based on non-publicly available figures & internal ad agencies reports believe to the total ad market for the first half of 2007 to be around 23-25m Euros. A significant increase compared to 2005’s 6m Euros. Nominal GDP per Capita (€) Source: “SME Policy Index, 2007,”OECD Competitive Index 2007

7. MEDIA LANDSCAPE MEDIA MARKET SITUATION At the time of writing this presentation (Nov 07) Albania’s reported number of media outlets totals more than 260 (outdoors not included). • Few of them, especially print, have a strong reach of a significant audience, with the biggest-selling daily having an estimated circulation of less than 20,000 in a country of a little bit more than 3 million. Still the number of dailies continues to increase. • Accurate, continuous and comprehensive data, especially concerning the circulation of print media is still lacking. • TV broadcasting has changed significantly by a dramatic increase of the number of channels offered and new business models, such as: free-over-the-air, DTH, cable, satellite, and recently Mobile & HDTV. • The business of outdoor advertising is managed by three-four major domestic companies with a network of billboards concentrated mainly in Tirana and other central urban areas, and more scarcely in border-crossing points, airports and highways. A rough estimate of outdoor ad space levels it to 650-700 billboard postings throughout Albania, with an ad area not more than 13,000m². Source: Albanian Media Institute, October, 2007 | Albanian Media Monitoring Center, 2006.

8. MEDIA LANDSCAPE PRINT MEDIA ELECTRONIC MEDIA • DAILY NEWSPAPERS • Local ? • National 27 • WEEKLIES • Local ? • National 3 • MAGAZINES 12, and growing • RADIO STATIONS • Local 46 • National 3 • International 5 • FREE-OVER-THE-AIR TV • Local 67 • National 3 • International 2 • Satellite 1 • CABLE TV PLATFORMS 47 • DTH PLATFORM 1 • MOBILE TV PLATFORM 1 Source: Albanian Media Institute, October, 2007. Source: National Council on Radio & Television, October, 2007.

9. MEDIA LANDSCAPE PRINT MEDIA ELECTRONIC MEDIA MORE THAN 100 TITLES! • MORE • THAN • 160 • ELECTRONIC OUTLETS! Source: Albanian Media Institute, October, 2007. Source: National Council on Radio & Television, October, 2007.

10. MEDIA LANDSCAPE MEDIA MARKET & TRENDS • Come early 200s, the trend in terms of ad revenues seemed to be reversing, with ad spends originating from privately-owned companies surpassing substantially state & gov. advertising. This is mostly due to increased competition among FCMG & retail brands, as well as heavy marketing expenditures by newly-established banking organizations & mobile telecommunication operators. • The launch of new television channels, as well as new broadcasting platforms, including DTH, satellite & proliferation of regional/local cable TV services. • Also, an increase in the number of print press & other periodic publications, though circulation figures remaining very low (i.e., the biggest selling daily reports 20,000 to 22,000 copies sold daily). • This is the time, when most of major media groups establish their web-pages, and actively pursue audience interaction & engagement through on-line forums, surveys, prize competitions, etc.

11. AD MEDIA SPEND Advertising Expenditure Intelligence Reporting Top 50 Ad Spenders, January-June 2007 [8 TV Networks monitored] Ad Spend. Analysis of Top 50 major ad spenders by category, provides for an estimation of at least 23-25 million Euros spent on print, electronic & outdoors for the first half of 2007. Hence, the market is significantly growing as compared to 1 or 2 years earlier. Source: MCM Monitoring/Delta Publicity & R&T Advertising

12. AD AGENCIES in ALBANIA AD AGENCIES STRUCTURE & ORGANIZATION • Mostly, small groups dedicated to creativity and graphic/video design work • There is an ever-growing need to establish trade associations, which can provide for both professional advancement, as well as for adopting common ethical guidelines & widely-accepted best practices. • Account planning & media services underdeveloped, with some few exceptions of domestic affiliates for major international ad shops. • Very slow regarding the adoption of a continuous media measurement system or ratings. • Lack of use of any consumer insight, brand valuation or media research tools, and to our best knowledge, no proprietary tools developed so far by any of the agencies in town.

13. AD & MARKET RESEARCH RESEARCH INDUSTRY HINTS • Most of major advertisers and media are at the very best slow, or have so far not subscribed to continuous measurement of media, or any rating services, even though, the data is already in place over the last one year from Strategic Puls-ISO. • Additionally, consumer insight & other brand measurement tools are yet to be adopted by the market, and evidently in-house proprietary tools are underdeveloped, or simply, do not exist. • However, new tools are being promoted in town, such as TGI Survey Data, conducted by Mediana Slovenia and will offer 4,000 interviews/year in two waves), as well as Brand Puls, developed by Strategic Puls. • Finally, it is still very difficult to get hold of reliable data on whatever figures of market development, market share, industry indexes, media audience, since most of the interested parties are not yet subscribing or commissioning any research projects. However, there’s clear indication that the landscape is changing.

14. AD AGENCIES in ALBANIA CLIENT-AGENCY PERSPECTIVE Most of domestic major advertisers tend to rely on their in-house marketing expertise – usually, poorly or sporadically-managed, – rather than endorsing ad agencies with full responsibility for coordinating their integrated campaigns. This puts considerable stress on local ad agecies’ behaviors and structures. On the other side, most of international major advertising brands, the likes of P&G, Unilever, Henkel, Vodafone, etc., have already opted to rely on lead agencies, domestic or international, to control the process, although from a viewpoing of strategic planning, most of the work may well be done in-house. The trend is unquestionably toward some shifts in the re-organization of ad agencies and of course, re-thinking their approach towards the so far complicated client-agency relationships, by re-integrating media and creative skills. As a result, most of domestic ad agencies are currently trying to re-built their organizations around the core skills of account management, creative, strategic planning and research, and media planning.

15. AD MEDIA LANDSCAPE CONCLUSIONS • MEDIA MARKET GETTING CROWDED • Major concentration in Tirana & western coastal region, and differences across the rest of the regions. • However the ad market is significantly growing as more international advertisers have already started to invest heavily on marketing. • Stronger & more professional competition for the advertising dollar. • OWNERSHIP CONCENTRATION & PLATFORMS DIVERSIFICATION • Media ownership falling into few hands • International interest in acquiring ownership shares • New technology, including web, forums, videocasting, podcasting, etc. • NEED FOR ESTABLISHING JOINT MEDIA SERVICES OPERATIONS • NEED FOR THE MARKET PLAYERS TO ADOPT RESEARCH/RATINGS

16. MEDIA GROUPS MAJOR MEDIA GROUPS Five Groups dominate Advertising & Media Landscape in Albania • TOP MEDIA • Electronic & Print • DTH, Mobile & HD • MEDIA 6 • Electronic, Print, DTH & Sat • EDISUD, s.p.a. • Print & Electronic • 2K GROUP • Print, Publishing & Elect. • MEDIA VIZION • Electronic & Print

17. DIGITAL TRENDS TOP MEDIA The case for Innovation & New Technology Free-Over-the-Air TV Radio DTH Platform MOBILE TV Video Graphic Agency Daily Newspaper HD TV

18. DTH PLATFORM DIGITALB DTH & SATELLITE PLATFORM – Premium Tier

19. TELECOMMUNICATIONS Penetration Indicators! Considerably low if compared to neighboring countries, with exception of mobile phones.. New Developments The government has just ratified the acquisition of Albania’s sole public telecommunications provider to a Turkish-based group, Calik Enerji. It is expected that the penetration of landline telehpony will increase considerably at the beginning of next year, as well the launch of a new mobile provider & expansion of ASDL lines will trigger further developments of new technology. Tel/Mobile/PC/Internet Penetration, 2006 Market Share for Mobile Companies (Number of Subscribers) Source: “Albanian Telecommunications Regulatory Entity,” 2007

20. AND YET…! A Mobile TV Platform

21. MOBILE TV Mobile TV Chronology At the beginning…it was Top Channel Following a successful introduction to the national audience of Top Albania Radio’s new format in the late 1990s, Top Channel was originally launched on December 20, 2001. Today Top Channel broadcasts nationwide on terrestrial, as well as internationally on satellite platforms. Digitalb begins airing its DTH services on July 15, 2004, with 38 channels on the terrestrial platform and 33 on satellite, plus 3 radio stations. 17 of the channels managed & administered by in-house programming personnel, involving syndicated dubbed/translated international thematic programming targeting all audience segments. As of December 20, 2006, Digitalb launches Digitalb Mobile TV through DVB-H technology HDTV to be launched on Digitalb’s satellite broadcasting platform on December 2008! Source: Digitalb’s official website, digitalb.al,; Retrieved on Nov. 27, 2007.

22. MOBILE TV New Media & Mobile TV Opportunities for Agencies? Interactive Advertising? Well, yet very few advertisers, with the exception of major banking & telecommunications use it, and mostly in forms of banner-placement ads on some established Albanian on-line portals & media web-pages, most notably: • www.balkanweb.com, www.top-channel.tv, etc Consumer & audience interaction with new technology and digital media still remains largely unexplored neither by the agencies, nor by market research companies. Interactive Work of Ad Agencies! Initial steps in •Web content, and • Web advertising Opportunities to be explored: • Web/Interactive Media Buying, & • Search, or Direct Marketing

23. MOBILE TV Yet Unexplored Opportunities! Still low internet penetration… Expected to change after the entrance of new operators and providers earlier next year. However, some major media groups have already started to explore multimedia platforms, and on-line advertising. There will be a need for ad agencies to start exploring on-line advertising possibilities, and developing proper organizational structures and skills.

24. MOBILE TV Albanian Gap, or Albanian Paradox? Could be both?! On one hand the lowest ever landline telephony penetration, PC ownership & Internet usage…while we do have Mobile TV, and soon HDTV! Hence, the market is still unregulated, both in terms of financial sourcing for major media players, as well as lack of experience and almost no expertise at all on the part of marketing & media services departments in order to promote viable solutions. However, new major media & account planning groups & adoption of research techniques & data, will certainly help change the landscape.

25. THANK YOU FOR YOUR ATTENTION! Adlej PiciExecutive Director, ISOinsop@icc-al.org Thanas Goga Head of Analysis & Research/Partner, R&T Advertising Thanas.goga@rt-advertising.biz