Disguised Commercials Riddle Russian TV

When people in Russia switch on their televisions today, chances are high the programs they watch will disguise advertisements as objective programming, blurring the line between information and infomercials in Russia's fledgling television industry, analysts say.

In Russia's new market conditions, advertising has unsurprisingly come to serve as a major source of revenue for television companies. In the frenzied effort of the last few years by Russian and Western companies to display their products to a largely untapped market, many have been taking advantage of a poorly developed system of control to buy air time both directly and covertly.

More than any other media form, television has become the key arena in which to advertise. Unlike newspapers or journals, television has preserved a wide audience. A survey conducted by the Russian Public Relations Group in 1995 showed that 71 percent of Moscow residents watch television almost every day, while 27 percent watch one to four times a week, and only 2 percent view television "hardly ever."

Advertising on television has become big business. The Rosmedia Monitoring company estimates the four largest advertisers spend more than $10 million a month in Russia. Procter & Gamble holds the record for the most money spent in one month -- $4 million in February. The Mars company took second, spending $3.1 million in the same month, followed by Wrigley and Unilever.

"Our country is television oriented," said Andrei Fedotov, acting director of the Russian Public Relations Group. Russians gained trust in their television programs under communism, said Fedotov, and this trust has remained largely intact. As a result, companies wishing to increase their sales can achieve big results through television advertising.

"To make a conclusion about the effectiveness of television advertising, it's enough to compare the $20 million AO MMM spent on commercials in 1994 to the profit it took in," said Andrei Beryozkin, director of the Analytic Ltd. marketing agency.

Advertising on Russian television is not cheap. Rosmedia Monitoring reports that to advertise on ORT, the only channel that broadcasts throughout Russia, costs from $4,500 for a one-minute slot during non-peak hours to as much as $30,000 for a slot during the "Field of Wonders" program, one of the station's most popular programs. NTV charges $14,000 for a minute of advertising during its news program "Segodnya."

Direct advertising has lost some of its effectiveness, said Fedotov, as Russian viewers no longer run out to the store to buy the products they see on television at the same rate they did before. "Direct advertising just doesn't have the same effect as before," he said.

That trend, plus the high cost of ad slots, has made companies look for cheaper and sometimes more effective methods to advertise their products, said one industry observer. "Many companies are moving from direct advertising to smoother methods," said Olga Gilyarovicha, public relations manager at Ogilvy & Mather.

Companies can purchase the right to sponsor programs, which can sometimes be cheaper than commercials and can give the company the opportunity to have their name, or their product, in view of cameras for the duration of the program. This practice is often outlawed in Western Europe, said Susan Prance, press officer at the Independent Television Commission in London, a government regulatory body.

AO Benitex, producer of Kremlovskaya vodka, chose to sponsor 854 television programs in 1995, with evident results. "In the last year purchases of Kremlovskaya increased two-fold. The effect is obvious -- sponsorship certainly pays for itself," said Sergei Pismenov, a Benitex representative.

In Russia there are no regulations that prohibit this practice. Alcohol and tobacco companies have used this loophole after they were banned from the airwaves last year.

In one of the biggest sponsorship deals, two years ago the international sports promotion company International Management Group and the National Sports Fund of Russia signed a three-year, $3 million contract with the Russian Soccer Union and the Professional Soccer League to sponsor the Russia's Cup and the Russian Soccer Championships. IMG then sold its right to sponsorship of the Russian Championships to Stimorol, and of the Cup to the American cigarette company R.J. Reynolds, which made its Magna cigarettes the tournament's sponsor.

"We're not allowed to advertise on television, but can sponsor," said Andrei Benoit, director of public relations in Russia and the Baltics for R.J. Reynolds. "It's an excellent opportunity to display our trademark to a large audience."

"Sponsoring sporting events is one of the most effective methods of advertising," said Alexander Weinstein, the general director of AO "Team," IMG's representative in Russia.

"Unfortunately, large Russian companies don't understand this," he said. "They waste huge amounts of money on direct advertising and do not consider that indirect methods, like sponsoring sporting events, are sometimes just as effective."

"When you're watching a hockey match, for example, a logo is absorbed unconsciously," added Fedotov.

As sponsorship can so obviously lead to abuse of advertising restrictions, in Europe this practice is highly regulated, said Prance of the ITC. "The company has to ensure that stationary billboards advertising tobacco products are not within proximity of scoreboards or sidelines where they can be picked up by television cameras for prolonged or uninterrupted periods of time," she said. Tobacco company logos cannot be displayed on team uniforms or equipment.

There is another, more covert, means of getting a product name on television. Some television journalists and producers accept cash in exchange for devoting air time to a product in the guise of regular reporting. Television analysts said the practice is widespread.

"There is no program that isn't willing to make a deal," said Marina, the manager of a large public relations firm, who declined to give her last name. "It usually happens like this: We send a press release to a news program, for instance, and they call us back and say how much it will cost." Marina says that these "hidden commercials" on ORT go for $25,000 to $30,000. They're less costly on RTR Russian Television and on MTK Moscow Television Station, she said.

This practice may be on the wane. Fedotov of the Russian Public Relations Group explained that these abuses were more common two years ago, but there have been fewer "hidden commercials" this year on television than last. Television bosses have started to follow the development rather closely, and some levy fines against any abuses made by journalists.