Advertising in CEE: How Will AI Affect the Market and Other Trends in the Region
It is indeed hard to speak of the CEE region as a single “body” due to the big differences characterizing the markets from one country to another. Still there are dominating trends that prevail across all of them and the main difference is the pace of their introduction and ensuing fast or slow development. Thus, we have markets where Digital is already the biggest segment in the media mix, and those where TV still holds about two-thirds of the ad spend. For years, the weCAN agency has been tracing the development and trends on the CEE markets, and this year for the first time at their annual conference its experts and guest analysts looked into the arrival of AI and its impact on the advertising and marketing business.
In this interview with Yako Molhov, Dóra Pethő, Communications Manager at weCAN, shares some of the main takeaways from the conference, and also talks about trends like the domination of digital, and the arrival of ad tiers on the international streamers and the growth potential of FAST channels in the region.
In this interview with Yako Molhov, Dóra Pethő, Communications Manager at weCAN, shares some of the main takeaways from the conference, and also talks about trends like the domination of digital, and the arrival of ad tiers on the international streamers and the growth potential of FAST channels in the region.
Dóra Pethő
Dora, last month you held your annual we_CAN Conference in Prague. What were the main takeaways from the event, what are the major issues that marketing, communication agencies and media are facing in the CEE region?
AI is a buzzword that has been approached in many ways and with our conference titled Can_I? Marketing in the Age of Uncertainty we wanted to create an event that reflects to questions, struggles specific to the CEE region. The challenges we face, especially with AI are quite universal, but we give different answers and sometimes have extremely different circumstances, such as our colleagues in Ukraine in the time of war, as Andrew Andruschenko, Chief Media Investment Officer of Razom Ukraine, showed in his presentation. We were lucky to welcome our 12 speakers from different sectors: keynotes from global enterprises, experts from local agencies and speakers from tertiary education, who all provided a new aspect, different approach, broadening our knowledge and helping deeper understand moral and technical dilemmas.
Artificial intelligence (AI) was under the spotlight at the event. Is the technology widely used by industry players in the region already and what are the main threats and opportunities, based on your discussions? What are the main ethical concerns?
The technology is widely used from copywriting and creating visuals to planning and measurement, and it has already started to transform the whole digital marketing value chain. we_can agencies showed through their work the various opportunities: replacing landing pages with personal AI assistants (Razom, Ukraine), the discovery process of creating a new platform with AI (Pink Moon, Croatia) and helping blind people to transform their personal memories into visual interpretations (Café Communications, Hungary).
However as Eva Lihotzky, General Manager of the Serviceplan AI Lab pointed out, various threats concern content integrity, data security and reliability, thus us as advertising agencies must ask the critical questions and apply ethical values when approaching new technologies. Lotár Schin, AI CoE Lead at OTP Group, explained their approach to deploying AI in the bank-client relationship: AI complements existing company ecosystems, but it’s human responsibility to use it right and in a fair way through awareness and governance.
Each fall weCan publishes extensive data about the CEE media market. What do your latest findings indicate? What are the forecasts?
We don’t have final numbers from 2023 yet, the full report will be published in September on our content platform, we_know.
TV is still strong in the media mix: interestingly, when looking at the ad spendings of 14 countries in the region individually, digital has the biggest share in only five countries, everywhere else television dominates. However, these are some of the biggest markets which account for the fact that when looking at the total amount spent for advertising in CEE, and digital has been leading since 2019. The share of television continues to slowly decrease to digital; Croatia could be the next country in our region where digital takes the lead from TV (without the IAB Europe AdEx Benchmark digital spending numbers, we’re yet unable to determine the exact percentages of advertising spending). Slovenia and Estonia could be next to undergo this change, but traditionally Balkan countries are stable, with VOD platforms becoming increasingly popular.
What are the latest consumer behavior trends in the region?
Everything is going digital, and the video format, especially the short form is shaping content creation and consumption. In terms of television, local content is extremely important for all countries, for linear broadcasters and VOD platforms as well. Last year, at NATPE Budapest we presented the programs with the highest AMR% in each country, and it proved that local movies, series, talent and reality shows are leading the charts along with sports broadcasts. The high ATV numbers usually go hand in hand with the high TV share in advertising, and the Southeastern countries of the region have traditionally high ATV with high spending on television. The only exception is Hungary, which has a relatively high average time viewing number, while having strong digital spending with only half of that spent on TV.
What are the most-successful communication channels in CEE? Is digital replacing traditional media as the preferred choice of advertisers or is TV still the king?
This is very country-specific in the CEE: the Balkans are still a safe haven for TV. Romania and Bosnia and Herzegovina have their TV ad spending over 2/3 in their ad spending, and especially in these countries change is happening slowly. As mentioned above, TV is gradually losing its share to online in general, however the digital shift is happening in all segments from podcasts to DOOH, and VOD platforms now have the power to shape how ad spending will be channelled there.
Major international streamers have started producing local content in some CEE territories; local streamers like Voyo also invest a lot in original content. How will this affect the ad market and do you see advertisers moving in flocks to such services (some of which offer ad-tiers)?
Local content has proved to be key in this region, as we have seen in all our partner agencies data from 14 countries, both on traditional broadcast and VOD platforms as well. In some countries, such as the Baltics and Ukraine, local platforms are more popular than the international ones. However, at the moment this aspect of content creation doesn’t seem to affect the advertisers much, due to the fact that most of these platforms are subscription-based and ad-free. Their impact are nonetheless noticeable: as these platforms gain popularity, traditional TV viewership might continue to decline, leading to decreasing TV advertising budgets. Additionally, investing in local content means more appeal more local audiences and this shift could prompt advertisers to seek alternative ways of reaching these audiences – sponsored content and product placement are existing tools for this. And let’s not forget: some of these platforms are experimenting with ad-supported tiers, which could create new advertising opportunities, but also potentially limit the reach of ads to just a segment of users.
How about the emergence of the FAST segment?
In most countries in the CEE region the FAST segment is still in its infancy, but they are gaining traction and there are examples where services using this model are even more popular than major international players – the key is their offer of a huge portion of local content and lower subscription fees. In Ukraine, local platforms like MEGOGO, Sweet.tv, Divan.tv and Kyivstar TV are more popular than international ones, these services combine free and paid model with competitive prices and also offers a free tier that includes ad-supported content.
How would you rate the influencer market in CEE and the social media ad market in general? What will be the impact of AI in this respect?
The influencer market is well established in the CEE markets and still has potential to grow. TikTok hasn’t launched their advertising platform in all countries yet, which will definitely drive more funds to this channel in the future. Most advertisers are using influencers to do scale endorsement and reinforce value, and to promote new products. It’s also a key platform in targeting Gen Z who otherwise proved to be hardly reachable over traditional media channels.
AI will have an immense effect on this field as well: from content creation to measurement, it has the potential to transform advertising even in short term. AI is already widely used in content production and adaptation, and we already have examples of AI-made personas as influencers, e.g. in Croatia. The importance of using AI in social media analytics and directly in advertising mechanisms (e.g. A/B tests or targeting tools Advantage +) is also growing, we are expecting that AI will be able to help brands identify the most relevant influencers for their campaigns. The eventual end of the cookie era poses challenges in data collection and audience targeting, where AI can play a crucial role.
Do you expect more international players to infiltrate the market in the future and “threaten” the domination of the local companies?
In terms of social media, big platforms are not only present, but they also already swallow most of the advertising budgets hindering local advertisers. The newcomer in this sense is TikTok, which hasn’t rolled out its advertising feature in all CEE countries yet, as mentioned above, this will channel even more of the advertising budgets. When looking at streaming platforms, markets are expecting more international players to enter, but they have to offer new, previously unavailable content or attractive deals such as FAST platforms. The Ukrainian market in this sense: “a significant portion of the content is dedicated to military topics, thus local content dominates. After the war ends and the audience’s interest in other topics increases, the role of international players may strengthen.”
AI is a buzzword that has been approached in many ways and with our conference titled Can_I? Marketing in the Age of Uncertainty we wanted to create an event that reflects to questions, struggles specific to the CEE region. The challenges we face, especially with AI are quite universal, but we give different answers and sometimes have extremely different circumstances, such as our colleagues in Ukraine in the time of war, as Andrew Andruschenko, Chief Media Investment Officer of Razom Ukraine, showed in his presentation. We were lucky to welcome our 12 speakers from different sectors: keynotes from global enterprises, experts from local agencies and speakers from tertiary education, who all provided a new aspect, different approach, broadening our knowledge and helping deeper understand moral and technical dilemmas.
Artificial intelligence (AI) was under the spotlight at the event. Is the technology widely used by industry players in the region already and what are the main threats and opportunities, based on your discussions? What are the main ethical concerns?
The technology is widely used from copywriting and creating visuals to planning and measurement, and it has already started to transform the whole digital marketing value chain. we_can agencies showed through their work the various opportunities: replacing landing pages with personal AI assistants (Razom, Ukraine), the discovery process of creating a new platform with AI (Pink Moon, Croatia) and helping blind people to transform their personal memories into visual interpretations (Café Communications, Hungary).
However as Eva Lihotzky, General Manager of the Serviceplan AI Lab pointed out, various threats concern content integrity, data security and reliability, thus us as advertising agencies must ask the critical questions and apply ethical values when approaching new technologies. Lotár Schin, AI CoE Lead at OTP Group, explained their approach to deploying AI in the bank-client relationship: AI complements existing company ecosystems, but it’s human responsibility to use it right and in a fair way through awareness and governance.
Each fall weCan publishes extensive data about the CEE media market. What do your latest findings indicate? What are the forecasts?
We don’t have final numbers from 2023 yet, the full report will be published in September on our content platform, we_know.
TV is still strong in the media mix: interestingly, when looking at the ad spendings of 14 countries in the region individually, digital has the biggest share in only five countries, everywhere else television dominates. However, these are some of the biggest markets which account for the fact that when looking at the total amount spent for advertising in CEE, and digital has been leading since 2019. The share of television continues to slowly decrease to digital; Croatia could be the next country in our region where digital takes the lead from TV (without the IAB Europe AdEx Benchmark digital spending numbers, we’re yet unable to determine the exact percentages of advertising spending). Slovenia and Estonia could be next to undergo this change, but traditionally Balkan countries are stable, with VOD platforms becoming increasingly popular.
What are the latest consumer behavior trends in the region?
Everything is going digital, and the video format, especially the short form is shaping content creation and consumption. In terms of television, local content is extremely important for all countries, for linear broadcasters and VOD platforms as well. Last year, at NATPE Budapest we presented the programs with the highest AMR% in each country, and it proved that local movies, series, talent and reality shows are leading the charts along with sports broadcasts. The high ATV numbers usually go hand in hand with the high TV share in advertising, and the Southeastern countries of the region have traditionally high ATV with high spending on television. The only exception is Hungary, which has a relatively high average time viewing number, while having strong digital spending with only half of that spent on TV.
What are the most-successful communication channels in CEE? Is digital replacing traditional media as the preferred choice of advertisers or is TV still the king?
This is very country-specific in the CEE: the Balkans are still a safe haven for TV. Romania and Bosnia and Herzegovina have their TV ad spending over 2/3 in their ad spending, and especially in these countries change is happening slowly. As mentioned above, TV is gradually losing its share to online in general, however the digital shift is happening in all segments from podcasts to DOOH, and VOD platforms now have the power to shape how ad spending will be channelled there.
Major international streamers have started producing local content in some CEE territories; local streamers like Voyo also invest a lot in original content. How will this affect the ad market and do you see advertisers moving in flocks to such services (some of which offer ad-tiers)?
Local content has proved to be key in this region, as we have seen in all our partner agencies data from 14 countries, both on traditional broadcast and VOD platforms as well. In some countries, such as the Baltics and Ukraine, local platforms are more popular than the international ones. However, at the moment this aspect of content creation doesn’t seem to affect the advertisers much, due to the fact that most of these platforms are subscription-based and ad-free. Their impact are nonetheless noticeable: as these platforms gain popularity, traditional TV viewership might continue to decline, leading to decreasing TV advertising budgets. Additionally, investing in local content means more appeal more local audiences and this shift could prompt advertisers to seek alternative ways of reaching these audiences – sponsored content and product placement are existing tools for this. And let’s not forget: some of these platforms are experimenting with ad-supported tiers, which could create new advertising opportunities, but also potentially limit the reach of ads to just a segment of users.
How about the emergence of the FAST segment?
In most countries in the CEE region the FAST segment is still in its infancy, but they are gaining traction and there are examples where services using this model are even more popular than major international players – the key is their offer of a huge portion of local content and lower subscription fees. In Ukraine, local platforms like MEGOGO, Sweet.tv, Divan.tv and Kyivstar TV are more popular than international ones, these services combine free and paid model with competitive prices and also offers a free tier that includes ad-supported content.
How would you rate the influencer market in CEE and the social media ad market in general? What will be the impact of AI in this respect?
The influencer market is well established in the CEE markets and still has potential to grow. TikTok hasn’t launched their advertising platform in all countries yet, which will definitely drive more funds to this channel in the future. Most advertisers are using influencers to do scale endorsement and reinforce value, and to promote new products. It’s also a key platform in targeting Gen Z who otherwise proved to be hardly reachable over traditional media channels.
AI will have an immense effect on this field as well: from content creation to measurement, it has the potential to transform advertising even in short term. AI is already widely used in content production and adaptation, and we already have examples of AI-made personas as influencers, e.g. in Croatia. The importance of using AI in social media analytics and directly in advertising mechanisms (e.g. A/B tests or targeting tools Advantage +) is also growing, we are expecting that AI will be able to help brands identify the most relevant influencers for their campaigns. The eventual end of the cookie era poses challenges in data collection and audience targeting, where AI can play a crucial role.
Do you expect more international players to infiltrate the market in the future and “threaten” the domination of the local companies?
In terms of social media, big platforms are not only present, but they also already swallow most of the advertising budgets hindering local advertisers. The newcomer in this sense is TikTok, which hasn’t rolled out its advertising feature in all CEE countries yet, as mentioned above, this will channel even more of the advertising budgets. When looking at streaming platforms, markets are expecting more international players to enter, but they have to offer new, previously unavailable content or attractive deals such as FAST platforms. The Ukrainian market in this sense: “a significant portion of the content is dedicated to military topics, thus local content dominates. After the war ends and the audience’s interest in other topics increases, the role of international players may strengthen.”
