Focus On... Ukraine

Unlike neighbouring Russia, the Ukraine's PR industry was born of advertising and marketing, making the country's media highly influenced by paid-for content, although recent political events are helping to overcome this situation.

Low down

The move from a coalition government headed up by prime minister Yuliya Tymoshenko, to the presidency of Viktor Yanukovuych in February of this year following a vote of no confidence in the former prime minister has left Ukraine facing some stability issues.

This combined with the global fiscal crisis has made for a difficult environment for the country’s PR industry.

However, as the digital market picks up and global brands stamp their mark on the former Russian Republic’s market, there are great possibilities for Ukraine.

Natalia Popovych, president of Weber Shandwick affiliate PRP Group CIS, says: ‘The challenges the PR market is facing are typical of those of a growing market. The market growth until 2008 was 30-50% per year, while in 2009 it faced a significant drop in business and deflation of the local currency.

‘At the same time, 2010 shows promising signs of new growth.’

Marina Starodubska, general director, Mikhailov&Partners, affiliate to Burson-Marsteller believes that the Ukraine PR industry has struggled to develop due its roots.

She says: ‘The Ukraine PR market is in the active stage of development, which was held back by the economic crisis.

‘The industry’s history is quite unusual, in terms of it having developed from advertising and marketing rather than political PR as in Russia: most practitioners aim to ‘sell’, not ‘tell’ the story.’

 

Influence

Despite major improvements, the print and broadcast media in Ukraine are still influenced by paid-for editorial and content. However Nico de Klerk, director at Bell Pottinger Business and Brand, says the situation has got better since this year’s elections.

He says: ‘There has been an improvement in the professionalism of journalists and many media outlets provide quality reporting.

‘But paid-for story placement, especially for political purposes, remains widespread.’

The most popular print daily is Kommersant. The key weekly titles are Expert, Focus, Korrespondent, Companion, Tyzhden, Delovaya Stolitsa and Profil.

In terms of broadcast media, the most influential channel is Inter, which is owned by the Ukrainian head of state security service, Valeriy Khoroshkovskyi.

Popovych says of the channel’s ownership: ‘In the past several months, this fact has raised many concerns about the state of the freedom of the media in Ukraine.

‘Many experts and analysts believe there is a fundamental conflict of interest in the fact that the most influential media is owned by an official of such ranking and with such responsibilities.’

Other TV channels owned by major industrial groups or individuals include ICTV, 1+1 and TRK Ukraine, all of which factor highly in terms of their influence.

With only a quarter of the population using the internet and only around 5% of these users logging into social networking sites, the Ukrainian PR sector lacks audience volume when looking to the digital arena.

However, as de Klerk highlights: ‘Internet users are the most active part of the population in terms of political, economical and social issues.’

Facebook factors as the most popular social networking platform with around 4.5% of internet users signing in.

Blogging platform LiveJournal is a popular choice, ranking 5th globally by the number of accounts registered.

Twitter lags behind somewhat, with only 37,000 users throughout Ukraine. However, it should be noted that the number of users of the social media site has doubled since January, demonstrating that it is rapidly rising in popularity.

 

Bellwether brands

There is a breadth of brands with strongholds in Ukraine, split between global giants and more local success stories.

Industry is a major feeder of the Ukrainian economy, with major steel works, oil firms and mines operating in the country.

Metinvest Holding has both coal mining and steel divisions; Interpipe works predominantly in steel and Smart Holding works in construction and metal production.

The financial sector is represented by the Ukrainian Exchange and System Capital Management, while Smart Holding has a fiscal offering alongside its industrial divisions.

‘Some of Ukraine’s leading industrial companies are becoming important players in international business,’ says de Klerk.

‘These large conglomerates run effective and sustained PR campaigns and operate CSR policies.’

The consumer market sees global players such as Unilever, Johnson & Johnson, JTI and Coca-Cola taking a big market share.

Microsoft and Hewlett-Packard fly the flag for the global technology market. On a local level, Telenor Group and Kievstar are mobile leaders and popular Ukraine vodka brand Nemirov is a top selling drinks brand.

Popovych explains: ‘Key practice areas include corporate communications and lifestyle marketing.

‘Telecommunications companies and major FMCG companies continue to be some of the most significant advertisers in Ukraine.’

Globally speaking, Starodubska believes that, in terms of its PR, a Ukrainian based company has only its own reputation to rely on.

She says: ‘The main reputation challenges most Ukrainian companies are facing have to do with trust of investors, consumers, partners and even employees.

‘Ukraine as a country has no stable reputation in the world, so when the company has to promote itself and its product, it has only its own reputation to rely on.’

 

Agencies

As reflects the market in terms of brand representation, there is a similar split in how agencies operate.

Popovych says: ‘Both affiliates of global agencies and local companies are represented in the Ukrainian market. Experienced market players are given preference in time of change. ‘

These affiliates include Mikhailov&Partners and PRP Group CIS.

As digital increases in influence in the country, like other global markets, so too does the volume of smaller boutique agencies.

Larger consultancies usually sit at around 20-30 people, so still moderately small when compared to the industry on a global scale. The boutique agencies can be as small as 2-3 people.

According to de Klerk, only 30% of the market is represented by the international agencies and their affiliates.

Popovych adds: ‘Boutique agencies often represent only one sector, focusing on financial communications only or events.’

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