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The TV Advertising Market in Bosnia and Herzegovina:

Research Summary[1]

Tarik Jusic

In late 2000 Media Plan Institute conducted a research on TV advertising market in Bosnia-Herzegovina, intending to provide useful data for the ongoing debate over the advertising quotas for public service broadcasters and to shed some light on the market position of private broadcasters within dual broadcasting system of the country. The data acquired in this research may be useful in assessing and directing overall media policy in the country, and this can also be helpful for identifying overall marketing and commercial strategies of individual TV stations.

According to Independent Media Commission (IMC) data, 71 TV stations were registered in Bosnia-Herzegovina in the year 2000. Forty-two of these were registered in the Federation of B-H, and 29 in the Republic of Srpska. It would seem that 71 television stations is far too many for the actual conditions and capacity of the country’s TV market. Hence, we tried to answer the following question: What is the size of the TV advertising market in Bosnia-Herzegovina, and how does it correspond to the actual number of operating TV stations in the country? In other words, what would be an appropriate size for the B-H television landscape, considering the available advertising revenues from the TV market?

Apart from harsh market conditions, private broadcasters are hobbled by a dual broadcasting system that allows national and regional public (state) broadcasters to get money both from commercial activities (sponsorship and advertising) and from the mandatory monthly subscription fee paid by citizens. IMC is trying to level the playing field for the competing private and public media sectors by imposing advertising standards and quotas for public broadcasters. Public TV stations, for instance, may now air a maximum of only four minutes of commercials per hour. IMC hopes regulations like this will improve the quality of public broadcasting while at the same time giving private television stations a chance to gain a foothold in the market. The ultimate question, though, is how such a large number of TV stations will survive in such a small country—a country that already has two strong public national/entity broadcasters (RTVBH and RTRS) and a state-level PBS in the works.

We may find at least a partial answer by looking at data on the nature and size of the TV advertising market in Bosnia and Herzegovina. We therefore focused on the following eight TV stations: RTVBiH, OBN, HAYAT, STUDIO 99, RTRS, ATV, NTV BL, and BEL TV. After acquiring data on where these stations stand in the TV advertising market, we assessed the size of the entire market based on Bosnian TV stations’ ratings data.

Our method was fairly straightforward: we analysed the amount and nature of advertisements by monitoring the aforementioned eight TV stations during May 2000. The research methodology was based primarily on content analysis of three weeks of programming. We registered all the advertisements from May 1 to May 21 and divided them into three categories: International, Domestic Major, and Domestic Local advertisements. The classification criteria were based on each advertiser’s scale of activity: (1) all non-Bosnian companies were registered as International (Proctor & Gamble, Coca Cola, etc.); (2) Domestic Major advertisers are all those present at the entity and state levels; and (3) a Domestic Local advertiser is any advertiser active only in a small region. This method gave us information on who is advertising and how significant they are (i.e., who the major advertisers are). We also measured how much advertising each station airs. Using this data and the information on TV ratings share, we estimated the approximate size of the TV advertising market in B-H. Finally, we assessed the average amount of advertising available to TV stations in B-H. [2][2]

• HOW BIG IS THE TV ADVERTISING MARKET?

The results show that our eight TV stations broadcast 16,186 commercials, with a total duration of 542,520 seconds over the three weeks monitored. We used official TV station price lists to estimate the total undiscounted value of advertisements. This amount reached 3.34 million DM for the given period. The weekly average was 1.12 million DM, which amounts to an annual undiscounted revenue of 58 million DM.

Table 1: Advertising Structure and Undiscounted Revenues on Eight Monitored TV Stations

The question is whether we can assess of the overall size of the advertising market based on our data from these eight stations. One possible route would be to use the data on the stations’ ratings market share to assess the overall advertising market size. The total ratings market share from the eight stations was 52.80 percent for June and 49.73 percent for September, making an average ratings share of 51.26 percent for the period June-September 2000. We can therefore conclude that the stations’ 58 million DM of annual advertising revenues make up 51 percent of the total annual advertising market in the country. But a significant ratings share (approximately 16 percent) belongs to the Serbian national network Radio Television of Serbia (RTS) and to the Croatian national broadcaster Croatian Radio and Television (HRT), neither of which participates in Bosnia’s advertising market. This ‘spillover’ effect has to be eliminated by subtracting the HRT and RTS ratings market share if we want to assess the real market size and share of Bosnian TV stations. The total real ratings market share of the eight TV stations, therefore, is approximately 60.8 percent. This means that the remaining 63 television stations have 39.2 percent of the ratings market share.

In terms of revenues, 58 million DM in undiscounted revenues comprises approximately 61 percent of the total available advertising market. Hence, we assess that the total undiscounted TV advertising market value for Bosnia-Herzegovina is around 95 million DM. But this is undiscounted value. To assess the real size of the advertising market, we need to take deflation into account, which would involve calculating for regular discounts, bartered deals, and irretrievable debts (normal for contemporary B-H). This is a tall order, since stations treat this information as classified. Our only option is to estimate the overall discounted and bartered amount of advertisements. Our rough guess, based on unofficial information from stations and consultants, is that the real generated advertising revenue makes up around 30 to 40 percent of undiscounted revenue, and is actually closer to 30 percent. The real advertising market thus reaches an approximate annual value of only 30-35 million DM. Keeping in mind that our eight stations take up some 61 percent of that amount, or 18 to 21 million DM, only 12 to 14 million DM is left for the other 63 TV stations. This means each of these has about 200,000 DEM of annual advertising revenues at its disposal.

The state’s paternalistic attitude toward the state/public media only aggravates the problem. We can see this mindset in the way state-owned companies relate to public broadcasters. The single largest domestic advertiser is PTT BiH, which spends about 0.48 million DM annually on the eight stations we analysed. PTT BiH ran 94.65 percent of its ads on RTVBiH during the given three-week period, a fact that by itself raises some interesting political questions. This means that RTVBiH receives some 90 percent of PTTBIH’s annual advertising investment, amounting to about 0.43 million DM of real advertising revenues from PTT BiH alone. This is 7.25 percent of the total advertising revenues RTVBiH collects annually (around 6 million DM). If we include advertising revenues collected from the other two state companies (Lutrija BiH and BiH Osiguranje), the total real annual advertising revenues from state-owned companies make up 10 percent of all RTVBiH’s advertising revenues. This suggests that privileges for state/public broadcasters may auger doom for private TV stations, particularly as they are combined with harsh market conditions.

According to our data, only a handful of TV stations will be able to attract enough advertising to survive. But the imbalance between the size of the advertising market and the number of TV stations in operation will right itself. One corrective mechanism is the market. The other is the current IMC licensing policy, which will radically alter broadcasting in Bosnia-Herzegovina, as we can see from the example of the Tuzla Canton: IMC reassessed broadcasting licences in the Tuzla region in February 2001, and granted permanent licences to only 23 out of 63 broadcasters. From this we can expect to see only a third of current Bosnia-Herzegovinan broadcasters—that is, about 25-30 TV stations—to stay on the air once the licensing process is complete.

The upshot of this is that on average, each station should have about 1 million DM in advertising revenues per year at its disposal. Nevertheless, the most powerful 8-10 stations control some 60-70 percent of the advertising market, or 18 to 21 million DM of the total 30-35 million DM available annually. We can therefore expect that in the future the remaining 15-20 TV stations will have to share about 10 to 15 million DM in annual advertising revenues. Only such downsized TV scene will be able to survive within limited advertising market of Bosnia-Herzegovina.

Tarik Jusic is research & analysis editor of Media Online and a PhD candidate in mass media and communication studies at the University of Vienna (Austria). ©Media Online 2001. All rights reserved.

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