Three Russian market-research groups – Comcon Media, GfK media and The monitoring.ru Group – disseminated a letter last week to advocate the creation of a media committee, comprising government and industry officials, that would control TV ratings. They also called for the end of Russian company Gallup Media’s monopoly. (Gallup Media is not affiliated with Gallup International.)
Andrei Milekhin, general director of the The monitoring.ru Group, talked to The Russia Journal about problems in Russia’s media research market. The company was founded in 1993; two years later it initiated Russia’s first "TV-metering" system, used to rate viewer preferences.
The Russia Journal: What proportion of monitoring.ru activities accounts for media research?
Andrei Milekhin: About 5 percent. The rest is political research and market research.
RJ: What’s the reason for that? Insufficient demand?
AM: Demand for media research is really low. There is no media market in Russia. The total expenditures of Russia’s major TV channels stood at $2.5 billion last year, while their advertising revenues were only $1 billion. Is this a market system? Also, it’s absurd that advertising agencies cook up commercials, put them on TV with the money they get from advertisers, and then report to them about how effectively the money has been spent. It should be vice-versa. Advertisers should choose media based on ratings produced by independent agencies – and assess the effectiveness of their ad campaigns by using independent data.
RJ: But you started as purely a media-research group, didn’t you?
AM: Yes. And it was interesting at the beginning. The first media research project conducted in Russia was by Comcon in 1992. I first got involved with media research in 1993. By the end of 1993, most TV channels were my clients. In 1995, The monitoring.ru Group was the first to introduce TV-metering in Moscow.
RJ: Who devised your system for TV-metering?
AM: We formed a tech department that designed it. It’s nothing sophisticated. Since then, we’ve produced a report on TV audiences in Moscow every morning. At that time, I was naive enough to think we were doing a good thing for this country.
At first, the mass media were excited about the information we provided, but it’s not the media that actually control the market. It’s advertising agencies. Most of them emerged during the era of financial pyramids, and when the pyramids collapsed, some people who used to work for local advertising agencies joined multinational ad groups, but the others, who were craftier, began to call themselves "media buyers." At that time, there were two of them, Premier SV and Video International. Now there is only Video International. When we launched the TV-metering system, the media buyers said they didn’t need it and the situation still remains the same.
RJ: But what about major foreign advertisers? Aren’t they interested in obtaining accurate data?
AM: A Western advertiser, like Procter & Gamble, has a $30 million monthly advertising budget here – roughly one percent of its international budget. But why should Procter & Gamble try to start a revolution here? They don’t care. Their advertising agency tells them that some commercials have been on the air, and they are happy. The biggest problem in the Russian media market is that it is controlled by advertising agencies. And it is monopolized.
RJ: By whom?
AM: Video International controls 85 percent of the TV advertising market. Can you imagine that in a market economy? In fact, I regret that I introduced TV-metering. By that, I provoked them to play the game they’re playing now. We don’t need TV-metering here because the market is too small and the system is too expensive. But back then, we gave the media buyers an idea of how to manipulate the market using TV-metering. So, the media buyers made a decision to form their own research group. They found the beautiful American name "Gallup," which they used to form their own company, and installed some TV-metering equipment. But who cares what equipment that actually is?
RJ: What happened next?
AM: That was around 1998. Back then, the [media] market was becoming transparent. There were several media-research companies that used different methods. Comcon and the British company, Russian Research, used diaries. We used TV-metering and Gallup Media also began using this research technique. The Federal Center for Studies of Public Opinion (FCSPO) and the Public Opinion Fund used opinion polls as a research method.
It was a good situation. True, there was no standard research method but there was an opportunity to look at the market from different angles and avoid falsification – it was impossible to bribe all the researchers.
But in 1998, Video International conducted a PR campaign claiming all existing researchers were greedy and unclean. That’s when it introduced its Gallup Media and played it as a reliable alternative. At that time, Video International, which already controlled about 50 percent of the market, told all its clients to subscribe to Gallup Media’s rating reports. But Gallup Media produced no ratings and no research at that time, so it bought Russian Research. Comcon stopped its TV media research program the same year and so did FCSPO and the Public Opinion Fund.
RJ: What about you? How did you manage to survive?
AM: We had a TV-metering system in Moscow and we cut our prices by seven times. That way, we were able to sell subscriptions to many smaller and medium-size companies Gallup Media didn’t really care about. We have about 100 small clients who pay $50 or $100, with the highest package at $500. Currently, there are no other players left, and Gallup Media controls the upper end, while we control the lower end. Income from our media research may be no more than 5 percent of Gallup Media’s, but it will be impossible for them to put us out of business.
RJ: Do the data you collect differ from those collected by Gallup Media?
AM: Of course they do, because we’re doing research and they’re doing business. Their data depend upon who the clients of Video International are at the moment. Isn’t it cynical to announce that RTR’s ratings have surpassed those of NTV? If NTV became its client [again], the figures would revert to the way they were. When NTV was Video International’s client, its ratings [as produced by Gallup Media] were twice as high as those we produced.
RJ: How is it possible to falsify ratings?
AM: There are many ways to do it. For example, we will install our equipment in any kind of household, regardless of whether it has a telephone or not. But Gallup Media never mentions that its equipment is installed only in households with telephones. In Moscow, that’s 80 percent of all households, but in Russia overall, it’s only 50 percent. Another example: When Gallup Media installed their TV-metering equipment, they picked 16 Russian cities – all of which could pick up NTV. But NTV can only be received on 70 percent of Russian territory. This proportion should have been observed.
And I also want to add a few words about the so-called national rating. It is impossible to calculate the national rating the way it is calculated now because we have 11 time zones, which means the same show is on the air at different times in all of these time zones. Also, in some regions, shows aired on national TV channels are replaced by local programs – a fact not taken into account by Gallup Media. There is no control over running commercials in the regions. Two years ago, research was conducted in Novosibirsk, which showed that 70 percent of commercials on national channels were cut by local stations. The situation has somewhat improved now, but it is still a problem.
(Officials with Video International and Gallup Media were unable to provide comments to specific items in this article by deadline but said they were preparing detailed comments for later release.)
Gallup Media statement on media committee
"The organization of the media committee is part of a natural and civilized process seeking to regulate and control development of TV audience measurement. This kind of regulation is practiced throughout the world. People who pay money for TV audience measurement have to be sure that the methods used are the right ones. This gives them increased confidence in the results.
Setting up a consolidated budget for payments for research will bring down the financial burden for some market participants. At the same time, we hope that this single source of financing will guarantee the research company a stable resource base with which to further develop measurement systems. As for carrying out external audits and holding tenders, Gallup Media views this positively." – Vladimir Grodsky, general director.