Delfi Latvia boss: banner advertising will not disappear!

Interview with Konstatins Kuzikovs, CEO of Delfi.lv and the speaker at Balticbest festival.

On a global level, publishers are complaining that banner advertising will go down. How is the situation in Latvia? 

It’ s a myth – banner advertising will not disappear. I was recently one WAN-IFRA conference in Copenhagen, where the biggest German news portal “Die Zeit” gave a presentation – and even in Germany banner advertising is still strong. And Facebook is selling banners – and their revenue is increasing in fantastic speed.

In Latvia, the share of all revenue Delfi gets from banners is getting smaller, but this is mainly because others forms of advertising are growing faster. There is a variety of different banner formats – programmatic banners, banners from different networks, such as Google Display Network, etc. 

Delfi has ten smaller verticals in addition to the main site and we still sell many banners on these verticals. 

Native advertising is getting increasingly popular in several markets, especially in the USA 

Yes, we see many interesting native advertising cases from the USA. But native advertising is mostly good for branding purposes. In Latvia, the advertisers are still looking for more immediate sales effect – they focus on clicks. 

But regardless of this, our native revenue has doubled this year. The fastest growing format for Delfi has been mobile – this year the growth of our revenues from mobile has been 100% 

The expression “mobile first” is really becoming the reality also here in Latvia. Till the end of this year our readers will read more news from mobile devices, then from desktop or laptop. Currently we have 17% of users who access Delfi only from mobile device. 

But the problem with mobile is that due to the small screen size it’s possible to display only one or two banners. That is why native ads also work well in a mobile screen because there are no limits for them. 

But there is a need to promote native ads – and banners are good way to drive traffic to the native ads. 

Native ads are also our competitive advantage against Google. 

Many advertisers still think that native advertising is like the good-old “advertising article”. But the idea of native ads is that they are not about aggressive sales, but more for image and branding. 

We make difference between native ads and advertising article. Native ads are not promoting a brand directly, they are more about creating an image. Advertising articles are usually promoting a product or service more aggressively. 

Advertising articles are cheap, but since the readership is not very good, they may not be very effective. 

One of the most popular formats in Delfi is the following: brands publish content on their own webpages, but put a “content widget” – a short lead - on Delfi. Readers click on that widget and go to the brand page. 

In some case brands also make a sub-section within Delfi and the “content widget” leads from the main page to that section. 

You are offering your advertisers quite sophisticated creative solutions, what is the role of advertising agencies? Are you becoming competitors? 

No, not really. If the client does not have a big budget, then it is wise to focus on one channel (like Delfi) and take the maximum out of it. Yes, the client may lose on the reach, but will gain in frequency. In that case our creative department is a good partner for such client. 

Bigger clients work with the agencies and they also use multiple media platforms. 

But we are not competing with the agencies. Agencies create more general creative concepts and we help with our technical knowledge about how to execute them in a best possible way. 

In Lithuania and Estonia, Delfi has created also an in-house creative agencies to help the clients. In Latvia, we are still on a quite early stage with that. 

How big players are Google and Facebook in Latvian advertising market? 

Nobody has exact information about that, we can only estimate. Latvian online advertising market without foreign players (Google, Facebook, others) was 19 million Euros ast year.

We estimate that Google and Facebook together took approx additional 10 million euros from this market. So, if we add this, the total volume of Latvian online ad market would be 29 million EUR and the share of Google and Facebook would be roughly 1/3 from online market. 

I think in long term, the share of foreign players will not grow. Latvian media will still dominate. 

What is the situation with video content in Delfi? In Estonia, for example, video has grown really fast. 

Not so in Latvia. There are two big differences between Estonian and Latvian markets.

Firstly, In Estonia the video projects (such as live sports) are often sponsored by the gambling companies. In Latvia, gambling cannot be advertised. 

Secondly, the TV advertising prices are very low in Latvia. Because on TV company (MTG) has 60% of the market share, the government has implied an anti-monopoly regulations, when MTG bought LNT and during couple year MTG couldn’t increase TV ad prices. 

That influences the whole market, including us. Since we have the pressure on our advertising prices, we cannot invest in video production and compete with traditional TV when it comes to sports events. 

In Estonia, people are already quite accustomed to pay for articles and video content. How is the situation in Latvia? 

In Latvia, we do not have the culture of digital subscriptions yet. But I think one day it will become a “new normal” in Latvia too. Latvians are already paying for Spotify and Netflix subscriptions and one day they will start to pay for qualitative and original content on Delfi content! 

What are the main trends in digital marketing in Latvia? 

I see three main trends: 

1.     Mobile. More and more people access content on their mobile devices. This year, our mobile inventory is already sold out;

2.     Content marketing and native ads. Latvian market is maturing and brands shift their communication from sales to image and branding.

3.     Targeting. Brands are increasingly interested in targeting the right audience. We see the growth of programmatic targeting. And the growth of our niche portals that enable to target specific audiences. 

Unlike in many other countries, video is not a trend right now in Latvia.

Author: Hando Sinisalu (Best Marketing International)