Operating Environment

The weak economic climate and the digitisation of media were reflected in Alma Media’s operations in the Finnish market. The focus of media consumption is shifting to digital channels, and mobile channels in particular. The changes in media consumption saw marketers reduce their investments in newspaper advertising and shift to digital channels.

The difficult economic climate complicated Alma Media’s business operations in Finland in 2015. Economic growth has been subdued for several consecutive years. GDP growth was close to zero in 2015. Consumer confidence as well as confidence in the business sector was at a low level throughout the year. The general economic climate was reflected strongly in the retail sector, where the economic situation and outlook were weak all through the year.

In Alma Media’s international operating countries in Eastern Europe, the national economies showed good growth in 2015. Positive economic growth in the region contributed to the strong performance and result of Alma Media’s recruitment portals. The growth prospects for the national economies in Eastern Europe remain positive in 2016.

The outlook for 2016 in Finland continues to deviate from the outlook of the rest of Europe. Economic forecasts predict that growth in Finland will remain slow in the coming years. The long-term outlook continues to be weakened by structural problems in the economy and a decline in productivity.

Media advertising volume continued to decline

According to TNS Media Intelligence, media advertising volume, which is closely linked to GDP growth, decreased in Finland by 2.1 percent in 2015 compared to the previous year, totalling MEUR 1,155.1. The media advertising share of GDP was at a historical low.

The digitisation of advertising continued

The digitisation of advertising continued in 2015. Driven by the shift in consumer behaviour, advertising investments in online advertising - mobile advertising in particular - and video advertising increased.

Factors such as the difficult economic climate, changes in marketing and advertising and the weak situation of the retail trade contributed to a decline of 6.2 percent in advertising in town papers and newspapers. Alma Media estimates that its market share is approximately 20 percent of all newspaper advertising in Finland.

Digital advertising spending in Finland amounted to MEUR 286.1 in 2015, up 6.8 percent from the previous year. Online advertising now constitutes nearly one quarter of the total investment in media advertising. The volume of online advertising exceeded television advertising in 2014, and it is approaching the volume of newspaper advertising.

All areas of digital advertising grew, with the exception of directory advertising. Growth was fastest in Facebook advertising (+26.2%), instream video advertising (+15.9%) and mobile advertising (+35.5%). (IAB Finland).

The rapid development of mobile devices has shifted consumer behaviour towards mobile.  According to IAB Finland, mobile advertising spending reached MEUR 18.7 in 2015, up 35.4 percent from the previous year. Compared to consumers, the shift to mobile has been slightly delayed among advertisers, as mobile marketing requires new development resources and competencies.

The increased popularity of mobile devices has led to growth in the use of video, particularly on social media, as consumers have become active in sharing video content. Advertisers are also increasingly utilising video in advertising, both in connection with video content and as part of ordinary advertising material.

Instream advertising spending amounted to MEUR 15.3 in 2015, up 15.7 percent from the previous year. 

Alma Media’s share of the Finnish market for classified and display advertising online is approximately 23 percent.

Significant development in the digital advertising market

In the digital world, more and more information is becoming available regarding consumer behaviour. The role of data and analytics in business development is growing in content production, service development and advertising. Advertisers seek efficiency in advertising and analytical tools are used in measuring the impact of advertising. Data is utilised in the targeting of advertising. In line with this development, Alma Media introduced even better data-driven advertising analytics to advertisers in 2015, as well as more versatile targeted advertising solutions. The increased utilisation of audience data in all services supports the design of marketing and advertising. Alma Media’s advertisers have access to analyses on all campaigns, including information on factors such as online visitors’ age, gender, household income, education, housing type, occupation and areas of interest. Specific analysis data regarding untargeted campaigns allows the advertiser to better analyse the audience a media package has reached and the results of the campaign, which later helps in tailoring and implementing targeted campaigns more efficiently.

Technology is playing an increasingly significant role in advertising buying processes. Media buying and selling processes are becoming digitised, and the programmatic buying of advertising is set to grow substantially in future. Based on a survey of media agencies and programmatic buying agencies, IAB Finland estimates that programmatic buying accounted for 15.0 percent of display advertising in Finland in 2015. The growth in programmatic buying has been rapid, as its share of display advertising was estimated to be 6–7 percent in 2014 and only 1.5 percent in 2013. The share of programmatic buying has also increased rapidly at Alma Media, and developing programmatic buying is one of the company’s focus areas for 2016. 

The competitive landscape in the advertising market has become internationalised as international players have made a strong push into the Finnish market. The use of social media services is growing, which makes the advertising solutions provided by social media platforms increasingly attractive to advertisers. In Finland, advertising growth was fastest in Facebook advertising at 26.2 percent, with the volume for the year reaching MEUR 31.8. The increased use of social media services also leads to fragmentation, as new services see rapid growth and consumers quickly switch from one social media platform to another.

The increased use of adblocking software was also a topic of discussion in the advertising market in 2015. According to a report by Adobe and Pagefair some 200 million people used adblockers in 2015. Adblockers allow users to prevent websites from showing advertisements. Media companies and industry organisations have responded to the emergence of the adblocking phenomenon. In Finland, Alma Media has joined other industry operators and IAB Finland to draft guidelines and quality standards as well as evaluate the impact of advertisements on page loading speeds as well as the impact of data collection on the use of adblockers.

Consumers are increasingly shifting to mobile

The media industry is moving towards digitality due to a change in consumer habits. In spite of digitisation, the printed format remains by far the most popular choice for reading newspaper content. Some 83 percent of Finns read printed newspapers on a weekly basis. Slightly more than half of all Finns read newspapers on the computer. Reading newspaper content on mobile devices, however, is seeing rapid growth. The number of people who read newspaper content on mobile devices has grown more than fivefold in four years, particularly among the 15–24 age group. Among this group, the mobile phone is a more popular interface for reading newspapers and magazines than the printed publication. Some 74 percent of the members of this age group read newspapers and magazines on a mobile phone on a weekly basis. The use of tablet devices for reading newspaper and magazine content is highest in the 35–39 age group (41%), and the growth rate of tablet use was the highest among all reading devices in spring 2015. (KMT spring 2015, TNS Gallup Oy).

Consumers in Finland have increasingly shifted to using TV services via a broadband connection.  According to a report by the Finnish Communications Regulatory Authority, over 60 percent of Finns watch online videos. For many Internet users, television has been partly or entirely replaced by online videos. Young people, in particular, are major consumers of online content. Among Alma Media’s services, Aamulehti’s video service Klippi was launched in summer 2015 and received a good response in the second half of the year. Meanwhile, IL-TV was one of Finland’s first online video services when it was launched in 2007. In 2015, the online video service received more than three million video views per week on average.

Domestic media remains important to Finns 

According to a survey conducted by the Federation of the Finnish Media Industry in 2015, domestic media production has become increasingly highly valued among young age groups. Among the survey’s respondents in the 15–24 age group, 78 percent indicated they value Finnish media content. This represents a five-percentage-point  increase from the previous year. 

Among the young people who participated in the survey, 29 percent indicated they value Finnish media content very highly, while the corresponding figure in the previous year was 16 percent. Furthermore, nine out of ten Finns considered it very important that Finland continues to have a strong and diverse offering of Finnish media content. The survey assessed the views of Finns regarding newspapers, magazines, books, TV channels and learning materials.

Not all news is equally true, say Finns 

In summer 2015, Alma Media surveyed the attitudes and opinions of Finnish media consumers on the reliability of media channels and the credibility of the news. Nine out of ten Finns do not believe all the news they read. Media literacy learnt at school makes Finns critical but, according to the survey, the greatest reason for distrust is the growing concern over the quality of the news. Less than six per cent of respondents say that they trust all the news.

In addition to healthy criticism, worrying themes were highlighted in the answers of those respondents with a negative attitude. The themes include, for instance, the increase of entertainment in the media, the lack of objectivity, possible factual errors resulting from the ever-accelerating speed of publishing, and the tightening of competition for readers. Most respondents felt that one factor increasing distrust was that the competition between different media has led to so-called clickbait and click journalism, in which the importance and success of the news is measured by the number of clicks. Even though most news is offered in electronic channels through the Internet, all age groups regard TV news and newspapers as the most credible sources of news. The least credible is news content shared in social media.

Read more on Alma Media’s survey here.

Two working groups studying the Finnish media sector

Finnish Minister of Transport and Communications Anne Berner appointed a working group in 2015 to examine and assess the operating conditions and competitive positioning of the Finnish media market and any obstacles to the market.In the working group’s report published in December 2015, the statements most relevant to Alma Media included a proposal to achieve technologically neutral competition by dismantling device-specific marketing regulations and applying the same value-added tax to digital and physical media. With regard to the Finnish National Broadcasting Company, the working group proposed that its tasks and duties be specified so that its operations would better promote the functioning of Finland’s overall media market. The working group’s proposal for Finland’s national postal service Posti was to promote innovative postal delivery models. The working group would also invest in centralised digital news services, which could specifically support the digital journalism of regional and local newspapers. The working group also proposed a cut to media sector schooling and the remodelling of some starting places to further education places. The sector’s education should also meet with the requirements of a world that is becoming increasingly digital. The working group’s report is available in full on the Finnish Ministry of Transport and Communications website.

The term of the separate parliamentary working group tasked with reviewing the position of the Finnish Broadcasting Company will end in May 2016. 

Sound economic growth in Eastern Central Europe

Recruitment business operations constitute a major part of Alma Media’s international operations. Most of the Group’s companies focusing on recruitment business operations are market leaders in online recruitment in their respective areas. Alma Media is involved in recruitment business operations in nine countries.

In its most rapidly growing market areas in Eastern Central Europe, the economic development in Germany and its engine-like effect on nearby countries have played a highly significant role in recent years. There is a large number of subcontracting industries in the area that serve the German electronics and automotive industries. In addition, international companies have established service centres in Eastern Central Europe. Of the countries in which Alma Media operates, the Czech Republic has one of the most rapidly growing economies in Europe. Its GDP increased by 4.3% in 2015. Slovakia also recorded a strong growth rate: 2.6%.  Economic development was favourable in Poland and Croatia as well.

In 2015, recruitment advertising was stronger in Eastern Central Europe than it was in Finland, Alma Media’s home market. In Finland, the recruitment advertising market decreased by 4%, and its value is estimated nearly at EUR 29 million. In the Czech Republic, supported by strong economic development, the recruitment advertising market grew by 24% in 2015, and its total value is estimated at EUR 32.8 million.