Market Insight

Polsat holds second place in Poland as ad market growth slows

March 20, 2017  | Subscribers Only

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Polsat reported full year results with Net Advertising Revenues (NAR) of PLN 1,093 million in 2016, 5.6% higher than the previous year. The main increase came from multichannel NAR which grew in all quarters but Q2, and with peak growth rate in Q3 associated with sports events. According to IHS Markit research Polsat has 29.2% of the total TV ad market (8.8 percentage points behind TVN) in a slow Polish TV ad market in 2016. 

Our analysis

This year Polsat is the leader in audience ratings in Poland with a group total audience of 24.9% ahead of TVN (1.9%) and TVP (2.9%). Polsat has managed to steal the top audience position from TVP - last year's market leader - helped by its investments in programming (sports, movies and news). It also has made investments beyond TV in online video so that it can cross-sell its inventory over TV and online channels. The GO platform was launched to catch the significant YouTube and Facebook consumption of video in Poland. In addition, its video strategy has been expanded with IPLA - the online television platform - that in 2016 reached 3.8 million unique users per month, an increase from last year of 11.8%. The IPLA monetisation plan is strongly geared towards an ad revenue model; it generates 75% of its total revenue from advertising, while the rest is acquired from OTT content purchases. This highlights the advertising strategy of the group online and on TV.

The multichannel share of Polsat’s total NAR, according to IHS Markit research, reached 42.1% for 2016. The thematic channel offering of the groups has been benefited by the TV fragmentation in the Polish TV market. Emphasis is given to the strong sports content channels; it has secured the 2018 FIFA World Cup Russia qualifiers, and Bundesliga games and it broadcasted the UEFA EURO games last year. The broadcasting of UEFA EURO 2016 was a boost to the ad revenues for the group, accounting alone for 28.3% of total Q3 NAR, according to IHS Markit research.

Polsat sold its inventory around the UEFA games at a much higher rate to TVP (the national broadcaster, also showing some games). IHS Markit estimates that due to better bargaining for the ad slots, it oversold its inventory by 160% (in NAR) compared to TVP. The impact of the UEFA sports campaigns in Q3 raised the multichannel NAR by 70.1%, compensating for the decline in the FTA sector by 21.6% in the same quarter. Advertisers diverted the majority of their budgets around the broadcasting of the games as they took advantage of the scale of the audience. The ad campaigns though did not come with a total increase of the budgets as the advertisers just shifted their ad allocation spending adjusted around the sports events.

According to IHS Markit research household demand in Poland has shown a buoyant growth so far in 2017 and the real GDP is projected to grow at a rate of 3.1%. In effect, these factors will increase the market confidence leading to larger spending in ad campaigns from which TV will benefit being the largest ad media with 46% of the total ad market. Another factor, the regulatory changes in Poland, could also influence the total ad market dynamics. TVP is currently restrained by law to only sell ad slots that do not interrupt its broadcasting programmes. This regulation is limiting TVN’s ad inventory over which it can monetise programmes. A deregulation of the ad timings for TVN will have a direct impact in its ad market share which will affect the leading groups and primarily Polsat. 

Cyfrowy Polsat Polsat
Research by Market
Media & Advertising
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