Early termination of contracts with Moscow is becoming the norm in the advertising market. As RBC learned, the capital's metro is ready to part with its advertising partner, the Auto Cell company.

Advertising at the Profsoyuznaya metro station (Photo: TASS)

Metro is temporarily without advertising

From August 1, 2015, Auto Cell LLC will temporarily suspend accepting applications for advertising in the Moscow metro, Auto Cell CEO Gulya Kogan notified her partners in writing. RBC has a copy of this letter, dated July 14. This message was received by official dealers of Auto Sella and advertising agencies cooperating with the company.

The contract between Auto Sella and the State Unitary Enterprise Moscow Metro has not yet been terminated, but it is only a matter of time, say managers of two advertising agencies. They cite the debt of Auto Sella as the reason. The advertising contractor must pay the metro quarterly, as follows from the draft agreement published in the auction documentation. The next payment to Auto Cell was due in early July.

Kogan told RBC that “according to her information,” the company has no debt to the metro. But she knows that the State Unitary Enterprise can terminate the contract with Auto Cell, so the company, in order not to let customers down, stops accepting applications.

“Auto Sella” has a debt to the State Unitary Enterprise, the press service of the Moscow Metro insists, without, however, specifying the amount. It was the debt that became the main reason why the State Unitary Enterprise decided to terminate the contract with Auto Cell, the press service of the metro told RBC.

In June 2011, Auto Cell LLC won the Moscow Metro auction to select an advertising contractor for 2011–2016. The starting cost of the five-year contract was determined at 1.587 billion rubles. in the first year of operation, followed by an annual increase in the amount for inflation, but not less than 8.3%. Unknown to anyone in the advertising market, “Auto Cell”, a structure of the auto holding “Gema” of Alexander Geller, according to the results of the auction, agreed to pay the metro almost 2.38 billion rubles in the first year. Thus, over five years the company promised to transfer more than 14 billion rubles to the State Unitary Enterprise.

Doubts that the Auto Cell business would be successful were expressed from the very beginning, but both the company’s management and the capital’s officials always maintained that Auto Cell regularly pays the metro. The SPARK database shows the financial results of Auto Cell LLC for 2012 only: with revenue of 2.385 billion rubles. sales profit amounted to 198.2 million rubles, net profit - 107 million rubles.

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How much does Moscow earn from outdoor advertising?

2–2.5 billion rubles . — Moscow’s annual income from outdoor advertising in 2010–2012

15.9 billion rubles . listed the winners of the 2013 auctions in December of that year

Since 2011, open auctions for advertising in Moscow have been held

7.3 thousand places for outdoor advertising were awarded at auctions in 2013 for the next ten years

75.2 billion rubles . — the final value of all contracts awarded in 2013. Their starting cost was 22 billion rubles.

470 million rub . — debt to Mosgortrans of the Boulevard Ring agency, which won the auction for advertising on ground transport in 2011

250 million rub . — this should be the minimum annual income from advertising for a participant in the Mosgortrans auction, scheduled for August 5

839 million rub . The city authorities plan to earn money from advertising on ground transport in the next five years

Spending on outdoor advertising in Russia fell by 27% in the first quarter of 2015 compared to the same period of the previous year.

Source: Moscow Department of Media and Advertising

Raising games

Open advertising auctions in Moscow began to be held after Sergei Sobyanin became the capital's mayor in 2010. The initiator of such bidding was the Department of Media and Advertising, which was created in December 2010 as a result of the merger of the Committee on Telecommunications and Media with the Committee on Advertising, Information and Design. The new department was headed by Vladimir Chernikov.

The first auction for the Department of Media and Advertising was the selection of the advertising contractor State Unitary Enterprise Mosgortrans, which manages all public ground transport in the capital. Those auctions were won by the unknown real estate agency “Boulevard Ring” in the advertising market. With a starting cost of a five-year contract of 442 million rubles. Boulevard Ring promised to pay Mosgortrans almost 2.2 billion rubles. In January of this year, the State Unitary Enterprise terminated the contract with its advertising contractor “due to dishonest fulfillment of conditions and obligations,” and then through the court unsuccessfully tried to recover almost 470 million rubles from the Boulevard Ring. debt. Now Mosgortrans is looking for a new advertising partner .

The second auction was the Moscow Metro auction, when Gema entered the advertising market.

And in August 2013, at three auctions, the Department of Media and Advertising won for the next ten years more than 7.3 thousand places for billboards, small-format structures (so-called street furniture) and poster stands. “Gema” also participated in those trades, actively playing for growth. As a result, with the starting price of all lots being almost 22 billion rubles. officials gained more than 75.2 billion rubles. But the structure of Gema, the TV and radio company, then received only 160 places for a total of 2.17 billion rubles.

But at the last auction, when in September 2014 another 1.4 thousand places for advertising billboards and street furniture were up for grabs for ten years, Gema was the only participant in most lots. As a result, the auto holding received more than 1.3 thousand seats at a starting price of 20.4 billion rubles. and thus became the second owner of advertising structures in Moscow after Russ Outdoor.

At auctions in 2013–2014, failure of the winners to fulfill their obligations was also recorded. In December last year, payment for the next year of work amounted to 1.3 billion rubles. could not do it on time The Nike company , which in 2013 for 13.2 billion rubles. won more than 800 billboard spaces. The Department of Media and Advertising terminated the contract with Nike and canceled all permits issued to it for the installation and operation of structures. After this, the Nike structure, for which the contract was drawn up, initiated its own bankruptcy.

Gema also had problems with payments. In December last year, she was supposed to transfer 2.04 billion rubles to the Moscow budget. financial support for the contract won in September for 1.3 thousand places. But the auto holding asked department officials to defer payment until February and provided a promissory note. Officials made a concession to Gema. In February of this year, she finally paid the required amount. Agreements with auction winners provide for the payment of a penalty for each day of delay, but, as follows from the official response of the head of the department, Vladimir Chernikov, to RBC’s request, in the case of Gema, officials did not find any grounds for collecting the delay.

In March, Chernikov left the Department of Media and Advertising and headed the Department of National Policy, Interregional Relations and Tourism.

“We do not want to publicly comment on the dispute between two business entities,” responded Konstantin Gorokhov, press secretary of the media and advertising department, to RBC’s request about the situation with Auto Cell.

Budget revenues increased

After the auctions, the capital’s budget revenue from advertising increased significantly, Chernikov previously repeatedly emphasized. For example, the Tekhprogress company, the predecessor of the Boulevard Ring, transferred only 270 million rubles to Mosgortrans in 2006–2010. (initially she promised to pay more than 1 billion rubles over five years, but these obligations were not fixed in the contract in any way). “Boulevard Ring” transferred 284.6 million rubles to Mosgortrans in the first year of operation alone, in the second – 350.3 million rubles, in the third – 437.8 million rubles.

The Olymp company, which operated in the capital’s subway from 2002 to June 2011, transferred 783 million rubles to the metro in 2010. Auto Cell, which replaced it, paid out 2.38 billion rubles in the first year of operation.

When asked whether Boulevard Ring and Auto Cell are collecting money from the market or simply attracting loans to make the next mandatory payment, Chernikov answered in an interview with Kommersant in 2012: “It will take time to understand whether it is profitable or not.” business. And it’s not me you should ask. Our task is to ensure that, given the normal flow of money into the Moscow budget, we develop this industry.”

In 2010–2012, the annual income of the capital’s budget from outdoor advertising (rent payments paid to the city by the owners of advertising structures) amounted to 2–2.5 billion rubles. After the 2013 auctions, seven winners transferred more than 15.9 billion rubles to the Moscow budget in December of that year. (according to the terms of the contracts, in addition to payment for the first year of work, it was also necessary to pay in the form of financial security the amount for the last year ). In December 2014, these same companies were supposed to transfer another 7.2 billion rubles, but due to Nike ’s default , the amount amounted to only 5.9 billion rubles. In addition, the city received over 2 billion rubles with a delay. based on the results of the 2014 auction.

Open auctions, in which anyone can take part, are the only possible form of bidding, the head of the media and advertising department was convinced. Market participants believed that only professionals should participate in trading. “But here there are restrictions on the admission of new players to the market,” Chernikov objected. “Why should we not allow a serious investor into the market if he wants to get into outdoor advertising?”

“The financial component [of trading] is very important, but it is not the only condition for successful work for a long period,” Maxim Tkachev, managing director of Russ Outdoor, explained in an interview with Kommersant a year ago. “It doesn’t occur to anyone to choose a dentist, an architect or a lawyer solely based on price. And you don’t need an advertiser either, it will cost you more... Rental income, the appearance of the city and the quality of service are three criteria that must be considered when conducting any auction.”

The city authorities seem to have finally heard the arguments of market participants. Only those who already manage advertising structures with a total area of at least 1.3 thousand square meters will be able to take part in the new Mosgortrans auction to select an advertising contractor, announced last week. m and whose annual income from the placement and distribution of advertising exceeds 250 million rubles. True, Mosgortrans did not coordinate this documentation with the Department of Media and Advertising.

The situation has changed

While actively bullish, participants in advertising auctions did not take into account that the market situation could deteriorate sharply. “In August [2013, when the largest advertising auction took place in Moscow], we lived in a slightly different macroeconomic reality,” Russ Outdoor managing director Maxim Tkachev admitted last year in an interview with Kommersant (he left the company in May of this year). In 2013, total spending on outdoor advertising throughout the country, according to the Association of Russian Communication Agencies, increased by 8%, to 40.7 billion rubles. without VAT. At the end of 2014, there was no more growth; expenses remained at the level of 40.7 billion rubles. And in the first quarter of this year, expenses fell by 27%, to 7–7.3 billion rubles.

The Moscow metro will remain without advertising