Lidl will reactivate the Estonian advertising market
Interview with Saulius Šukaitis, CEO of Lithuanian Association of Communication Agencies (KOMAA).
If you look at Lithuanian market from the viewpoint of media agencies, what are the main trends and challenges at the moment?
I would say that media agencies experience some concentration – multiple hubs across the Baltics and full service concentration: putting together all kind of media-creative-digital agencies under one umbrella.
But this trend is going up and down. This type concentration trends is a reflection of very competitive and active market with a great level of positive hopes in terms of business developments. But it is not so easy to earn money in the market because of big fragmentation.
What about the clients – are they spending more or less on media and marketing?
We have a full ban on alcohol advertising from 2018 in all channels and all forms, it means that one important sector is not spending on media any more.
Global brands– some are increasing, others are cutting. But this depends on corporate level decisions and those decisions are made very differently. You always have both vectors: up and down, but spending increases especially when new brands come to market and they bring some extra money which creates growth. Like it was when Lidl or IKEA entered Lithuanian market.
As a media agency – where is your focus now for the growth and what sectors are growing in terms of marketing spend?
As a media agency we have three pillars of focus: 1) media planning –traditional and digital; 2) intelligence – modelling and data services; 3) content.
For the time being media planning is still the biggest business, but we see nice developments in other segments as well. Clients are increasingly requesting integrated solutions.
I would say that the media agencies are becoming more like business consulting agencies.
New brands are coming mainly from start-up community, but they are more cautious with their marketing budgets. In recent years big investments came through consolidations, like Telia and Luminor with big rebranding and campaigns.
Gut feeling is that the retail sector spend is going up, mainly because Lidl.
You mentioned Lidl – they are also coming to Estonia. Can we expect that they will rock the boat and disrupt the market here as well?
I don’t think they will do anything differently in Estonia, so my advice would be to keep an eye on what they are doing in other Eastern European countries and expect the same. I would say that it will activate the marketing spend in the retail segment.
What’s your wild guess how much money Google and Facebook are taking away from the market?
I would say 50%, maybe even 60-70% of total Internet advertising spend goes to them. It’ s about 10-15% of total marketing spend in Lithuania.
But local players like Delfi and 15 minutes are taking it very seriously and offer good alternatives to Google and Facebook.