The government will allow the print media to place more advertising

On Tuesday, September 20, the government Commission on legislative activities has approved two initiatives aimed at improving the situation of the Russian publishing business, said a participant of the meeting. The essence of the proposal is to increase from 1 January 2017, the permissible amount of advertising in periodical printed publications up to 45% of the volume of the room. Now, if the number of commercial publications exceeds 40%, the publication is considered advertising and is subject to VAT at 18%. For ordinary periodical VAT is set at 10%.

Changes the approval of which the Commission was confirmed by the Deputy Minister of communications and mass communications Alexei Volin, will be issued as amendments to the law “On advertising” and in the 164-th article of the second part of the Tax code.

The proposed will attract the specified media additional funding to carry out their activities in conditions of difficult economic situation in the Russian media market”, — stated in reference to the bill, which is available.

The initiative supports the Ministry of communications as part of a strategy to liberalize the advertising market. In January 2016 the project received approval from the Federal Antimonopoly service, and in April from the Ministry of economic development.

“We see that the price is seriously going down because the advertising market is in serious stagnation, especially in the field of print media,” said Alexey Volin. Accordingly, even if the publication is going to lower prices to attract more advertising revenue, they are seriously limited by the fact that they have only 40% of the area [may be reserved for commercial publication]”. Volin said that now, the publishers will become more, and to reach a decision is “a common compromise with FAS”.

Earlier, the Ministry of communications stated the need to allow for print advertising of alcohol, biologically active additives (BAA) and prescription medicines, however these proposals did not receive support.

But the ability to use the initiative of the Ministry of communications in the near future is likely to be a bit. Advertising in publications the past few years, is recovering much slower than other segments. Thus, the total volume of the advertising market during the first half of 2016 was approximately 161-169 billion rubles, which is 17% higher than the same period in 2015, estimated the Association of communication agencies of Russia. However, only in the segment of “print media” (Newspapers, magazines, advertising publications) of advertising volume continues to show a decline between the first half of 2015 to the first half of 2016, it declined another 13%. The total volume of advertising in print, the Association assesses at 9.7–9.9 billion, of which almost half (4,9–5,1 billion roubles) generates the ads in magazines.

Unfortunately, more effective measures to support the publishing business, namely the possible extension for commercial pool of advertisers, not heard, and the measure of 45% will be able to use the unit, said the co-owner of ID Hearst Shkulev Victor Shkulev. “The market is now, there are no projects that could really benefit from such “aid” and would have operated in their business model these proportions. The portfolio of our ID has a Elle magazine with the highest percentage of occupancy by advertising on the Russian market is 35-40%, but this is the exception rather the rule,” notes Shkulev.

“We will definitely try to take advantage of this “support”, but in this logic we can now ask already to advertisers at the legislative level is ordered this is to give us,” — said the President of the media group ACMG Alexander Fedotov.