Yesterday, the city administration put 157 outdoor advertising spots up for auction. The winners of the auction have not yet been officially announced, but advertising market participants are confident that the winning agencies will be those controlled by the largest national operator NewsOutdoor Russia, which will only increase the already high level of monopolization of the local market.

According to the municipal institution "Advertising Service of the City of Nizhny Novgorod", there are more than 3,000 advertising spaces in the city, of which about 600 are large structures. The cost of renting land under the most popular structures - 3 x 6 m billboards - is 20,000 rubles per year, and a permit to install an advertising billboard is 600 rubles. Advertising agencies, in turn, rent one side of the billboard for $400 - 800 per month. The annual volume of the advertising market in Nizhny Novgorod, according to various estimates, is from $3 million to $5 million.

The largest player in the Nizhny Novgorod outdoor advertising market is the company NewsOutdoor Russia, which through OOO Rectime, OOO Rosserv, OOO ANZh, OOO Rim-NN and OOO Nizhnovreklama controls, according to the company Espar Analitik, more than 70% of advertising space in Nizhny Novgorod.

An auction was held yesterday, where the right to lease 77 places for placing outdoor advertising structures was sold. The competition planned for the same day, where 80 places were put up for bidding with a starting price of 2.3 million rubles, did not take place due to the presence of only one participant; two agencies withdrew their applications. Five lots from 10 to 20 places (banners, 2 x 3 m and 6 x 3 m boards) were put up for auction with a starting price from 200,000 to 500,000 rubles per lot. The administration intended to earn at least 1.6 million rubles. 10 Nizhny Novgorod advertising agencies took part in the bidding.

The results of the competition had not yet been announced yesterday evening. The new director of the Municipal Institution "Advertising Service of the City of Nizhny Novgorod" Dmitry Zhivulin, appointed at the end of 2003, said that the city budget would receive 13.57 million rubles from the auction, which would be transferred to the treasury over seven years. The names of the winners would be announced in two days, after the mayor had approved the results of the auction. According to him, all the largest advertising agencies took part in the competition, including "Rektime" and "Rosserv". Zhivulin noted that several more auctions would be held this year.

According to officials, budget revenues from the rental of advertising structures amount to 5 million rubles per year (excluding income from competitions). The Chairman of the Committee on Property Management, Aleksey Lyapin, believes that the budget can receive up to 50 million rubles annually from holding auctions.

However, Nizhny Novgorod advertisers complain that it is becoming increasingly difficult to break into the city's outdoor advertising market. Director of the Slovo advertising agency, Yevgeny Tikhonov, says that his agency deliberately did not participate in the bidding, since "the winner was known in advance." The manager noted that he tried to change the situation by contacting the mayor of Nizhny Novgorod. "[Nizhny Mayor Vadim] Bulavinov told me that the city needs money and monopoly agencies pay it," Tikhonov says. "As a result, small advertising agencies were thrown out of the market." The general director of one of the agencies, who wished to remain anonymous, says that the Advertising Service is simplifying its work and does not think about the interests of medium and small entrepreneurs. He believes that small agencies will not be able to break the existing monopoly even with the help of legislation, because several years ago, when they tried to do this, they "were beaten badly, and the bruises have not yet healed."

The management of the advertising agencies Rosserv, Rectime and ANZ were unavailable for comment yesterday.

Outdoor advertising market analysts believe that the monopoly that has developed in Nizhny Novgorod can only be broken if another large monopolist comes along, which is not expected at the moment. "It is difficult to find a company that can immediately create a competitive offer," says Alexander Koryagin, deputy general director of the outdoor advertising research company Espar Analyst. According to him, the monopolization of the advertising market is a feature of the Nizhny Novgorod Region. "In Nizhny, the rental prices for advertising structures are higher than in other regions of the district, since there is almost no increase in the number of advertising structures here," Koryagin believes.

MAP reported that the results of the distribution of the advertising market between agencies will be summed up only in March, when the firms present the results of their activities. NTU MAP consultant Olga Shvetsova noted that last year's inspection did not reveal any violations of antimonopoly legislation. MAP was unable to find any affiliation between the agencies Rosserv, Rectime, and ANZ.

A source close to the former management of MUCh says that the auction was "held for their own people." He notes that 2 x 3 m billboards are of no interest to large advertisers, who are now switching to the 10 x 12 m and larger format, but they may be replaced with larger advertising structures later. Therefore, agencies controlled by NewsOutdoor Russia, according to the source, will buy these places in order to maintain a monopoly on the market.

SUPERMARKET ATTACK: NewsOutdoor Russia and the Seventh Continent retail chain have signed an agreement on News Outdoor's exclusive right to place POS materials inside the chain's stores from January 1, 2004. In addition to Seventh Continent, the company's current partners include the Ramstore, Perekrestok, and Metro Cash & Carry chains. NewsOutdoor Russia plans to sign similar agreements with other large retail chains and shopping centers.

In favor of the monopolist