The Serbian market: Low prices, freebies, and high expectations

DIRECT MEDIA United Solutions

Author: Darko Jovančić, Digital Group Account Manager, DIRECT MEDIA United Solutions

This whole coronavirus situation took us by surprise, and we honestly couldn’t even get a proper thrill out of the new online spending analysis for 2019. The report kind of arrived without pomp and circumstance, quietly and in silence, because we’ve been mulling over the fastest and smoothest ways to revive the market and financial performance and wriggle out of the clutches of 2020.

But we won’t be taking the last year’s report for granted… Because this is not merely a report on online ad spending — it’s a direct insight into the country’s economic health, the market’s state of play and development status, future trends, as well as the sustainability of business models used by digital advertising stakeholders.

Let’s break this down…

With the 2019 ad spending at EUR 47.05 million and an annual growth of 27.9%, our market’s progressive growth remained quite solid. Digital is no longer lagging behind in the shadow of other media — it moved into the strategies of a slew of big companies to become a key communication channel, and one that is expected to return the investment several times over. With its 27.9% growth between 2018 and 2019, Serbia is holding the top spot among European countries. Which is fantastic! But that same number, on the other hand, speaks to a very weak starting point and our still falling behind not only Europe’s leading markets, but its mid-developed markets as well.

There is another perspective that speaks volumes, and that’s online budget spending per capita. On average, less than EUR 7 per capita is spent every year on online advertising in Serbia. And that is where our reality is at, because that parameter practically nails us to the very bottom of Europe. It would be ill-advised to compare with the UK’s EUR 320 per capita, or Sweden’s EUR 225 per capita spending. Let’s see where we are in relation to our neighbors, Croatia and Slovenia.

According to the IAB Europe’s survey, Croatia spends EUR 17 per capita (143% more than Serbia), while Slovenia spends EUR 29 (314% more than Serbia).

What does that tell us? Serbia’s low purchasing power and underdeveloped economy are keeping us from bigger online spending per person. The internet penetration is beyond doubt, the smartphone penetration is beyond doubt, the time we spend online is absolutely beyond doubt, but we are trailing behind in other things that are outside our influence. In simple terms, we are a market of low prices, freebies, and high expectations!

Why are we a low-price market? Well, because not many get charged for impressions, clicks, and views less than us. Because we are becoming a duopoly with Facebook and Google as the dominant players. Because local publishers can’t get paid for the content they produce (which is up for discussion, but even so), and so on and so forth…

Why are we a freebie market? Well, because sometimes advertisers expect — on top of the low prices — also some freebies like additional impressions or PR at no charge. Which is another shot in the foot.

Why are we a high-expectations market? Well, because we want to see multiple returns on digital ad investments right away and in real time. Which is fine on the one hand, because digital — more than any other medium — can provide insight into how much of the money invested is returned, and because the (expert) human touch paired with automation can bring about fantastic sales results. However, this also requires meeting a number of preconditions first. Our first campaign can’t be performance and we can’t expect exponential sales growth right away. We need to build awareness and brand image. The brand must learn about its customers, provide value and emotion, and build a relationship. And that can’t be done by rushing headlong into performance. We have to be tactful in sizing up the ground and getting through to people, because without strong, effective awareness there can be no strong, effective performance. The decline in the local display and the skyrocket growth in Google Search, which is a classic example of a (fantastic) performance channel, make the case for that approach. And that is not sustainable for the brand in the long run, because constantly pushing sales without systematic awareness can make the brand lose value, loyalty (which is dying out day by day across the world), and emotional connection with the consumer. Everything has come down to quick profits and instant results.

What Adex is telling us between the lines and what is obvious from the colossal growth of classifieds and directories (+71.2% compared with 2018) is that e-commerce is set to see greater investments. We defined that last year as one of this year’s trends, not knowing that the coronavirus would considerably speed things up. And that makes me incredibly happy. I think we finally realized that we won’t get a wrapped-up brick when we order a phone and that we can buy online completely safely and without hesitation. Ahead of us is a genuinely good time when it comes to e-commerce, because without a developed e-commerce branch, we remain a somewhat passive digital market.

Although we anticipated it before, we can now confirm that Serbia is becoming a mobile-oriented market. Let’s not forget that mobile exceeded its 50% share in total spending for the first time in 2018. And already a year later, it further strengthened its leading position with a total share of 64%. What doesn’t go hand in hand with this growth is same-level growth in creativity and focus on mobile through the development of interactive solutions, then website design for mobile devices (which on average make up between 60% and 70% of total website traffic), and not to mention video, which is still predominantly in the 4:3 format and as such does not provide a snippet of the experience that it would if designed primarily for mobile devices.

All this tells us that we need to reexamine the direction we are moving in. We need to determine where this direction will take us to in three years. We can feel that we are becoming a duopoly with Facebook and Google as the players taking the biggest slice of the pie. And that’s not good, is it?