Although many of the Eastern European countries have much in common and, to varying degrees, share similar political and legal bureaucracies, since the fall of communism some have been much more effective than others in developing their economic systems.
Before the 1990s, Eastern Europe existed in the limbo of a command economy, which precluded any role for advertising as a market tool. A visit to an East Berlin or Prague "supermarket" between 1950 and 1990 would have startled a Western shopper. One would have seen no color on the shelves because there were no brands, only product categories, without the element of competition for a share of the market. In the West an extensive stratification had developed within categories; milk, for example, was sold in a wide choice of sizes and flavors and with varying fat content. Even in the best food stores in East Berlin, however, milk was sold as a commodity, unrefrigerated and in unmarked plastic bags. Canned goods, toilet paper, dry goods, soft drinks and other staples were all unbranded generic products.
At the turn of the 21st century, more than 120 million people lived in the countries of Eastern Europe, the most populous nation being Poland (38.5 million) and the least populous, Slovenia (1.9 million). The Czech Republic, Hungary, Poland and Slovenia had largely homogenous populations, while many other countries and regions had large minority groups (Albanians in Serbia and Macedonia, Greeks in Albania, Hungarians in Romania and Turks in Bulgaria).
Several major languages were spoken, the most prominent being Slavic, including Bulgarian, Czech, Macedonian, Polish, Serbo-Croatian, Slovak and Slovene, all of which are closely related in grammatical structure and vocabulary. Other languages included Albanian, Hungarian and Romanian. In addition, German was widely understood by older people, while many young people spoke at least some English.
The state of the media
Due largely to political changes and privatization, the space given to advertising in the media burgeoned in the 1990s. With the communist system having almost entirely disappeared, numerous trans-border TV and FM radio stations, as well as newspapers and magazines, competed to capture largely new audiences.
Early in the 1990s, many old media outlets disappeared. Others managed to evolve and adapt, and some new outlets emerged. Slovenia, for example, acquired three new national TV stations, three new national daily newspapers and dozens of local radio stations, while in Bulgaria at least 23 newspapers (most now shuttered) were established.
Across Eastern Europe, the print media's share of total advertising expenditures dropped from more than 80% to around 50% (a level roughly comparable to that in developed countries), while TV's share grew from 10% to almost 50%. In absolute terms, however, the press increased its income from advertising, a result of the overall increase in use of the media. In terms of growth in advertising per capita, Hungary was the top performer in the five-year period from 1992 to 1997, with an increase from $23 to $54.
By 1995, the top media market in Eastern Europe was Poland ($545 million in advertising expenditures), followed by Hungary ($338 million) and the Czech Republic ($326 million), according to Ogilvy & Mather. By contrast, advertising expenditures in Romania totaled $85 million, while those in Slovakia and Bulgaria totaled $55 million each.
Growth continued, and in 1997, the leading Eastern European countries by percentage of households with TV were Poland and Slovakia (100%), Bulgaria (96%), Hungary and Slovenia (95%), the Czech Republic (93%), Croatia (90%) and Romania (86%). The percentages of households with VCRs ranged from 53% in Poland to 26% in Romania. In terms of access to cable and satellite TV, the leading countries were Slovakia (73%), Hungary (58%), Romania (53%), Slovenia (49%), Poland (48%), Bulgaria and Croatia (34%) and the Czech Republic (32%).
In eight Eastern European nations, government-run TV had lost more than 10% of the market share by 1997, although public stations managed to hold onto their market position and tended to remain market leaders. Hungary was one of the few countries showing an increase in viewing time per person, from 228 minutes per week in 1996 to 235 minutes in 1997. During the same period, viewing time in Poland dropped from 256 to 213 minutes; the Czech Republic posted a decline from 200 minutes to 130.
The first regional home shopping network in Eastern Europe was launched in 1997 via satellite with news and product messages customized for different markets and broadcast in local languages. Home shopping programming was available in several countries, including Albania, the Czech Republic, Hungary and Romania.
The number of Internet service providers continued to grow, as did the number of cybercafes offering Internet service to the public. In Slovenia, a 1997 survey conducted by the Faculty of Social Science at the University of Ljubljana found that 11% of the population had Internet access and that most respondents recognized graphic banner ads for products or services and knew that they could reach an advertiser's Web page by clicking on the banner. The researchers also found that 30% of Slovenian companies had Internet access and that more than half of survey participants said that they liked Internet ads that led them to interesting sites.
Top advertisers and agencies
Major Western companies such as Procter & Gamble Co., Henkel and Unilever began saturating the package-goods market in nations such as Poland, the Czech Republic and Hungary in the mid-1990s.
Agency experts in the region acknowledged that Western companies faced a serious dilemma in attempting to take maximum advantage of new opportunities while at the same time working to reduce the possibility of consumer backlash against the flood of Western goods. Market research indicated that some Eastern European consumers regarded many Western products as too expensive. That fact partly explained why marketers looked for a range of pricing opportunities to address those portions of society that resented the "invasion" of Western companies.
The top advertisers in Eastern Europe were an interesting mix of multinational companies and homegrown industries. In 1998, Advertising Age International listed the top marketers for seven of the 12 nations based on U.S. dollar equivalent spending in TV, radio and print. P&G was first in Poland, Hungary, the Czech Republic, Slovenia and Romania, while Unilever was first in Slovakia and second in Poland, Hungary, the Czech Republic and Romania.
In Poland, the top 10 advertisers spent a total of almost $180 million in 1998; all were multinationals, including Mars Inc., Henkel, Daewoo Group, PepsiCo and Colgate-Palmolive Co. P&G and Unilever spent more than $36 million and $34 million, respectively, while others ranged from $10 million to $20 million. In Hungary the top 10 advertisers spent almost $100 million, with familiar names such as Philip Morris Cos., Nestlé and Coca-Cola Co. among the leaders. The total for P&G was more than $23 million, while Unilever and Henkel spent more than $18 million and $13 million, respectively. One Hungarian advertiser, Postabank Takarekpenztar, made the No. 10 spot.
On the agency side, the dominant shops were multinationals, or those partnered with a multinational firm. In Poland, for example, the top shop in 2001 was IT McCann-Erickson Poland, with gross income of $15.78 million, followed by Corporate Profiles DDB ($13.58 million), Euro RSCG Poland ($12.79 million), Leo Burnett Co. ($12.72 million) and Young & Rubicam Poland ($8.19 million). In Hungary, the top shop was McCann-Erickson Budapest with $8.48 million in gross income, followed by Young & Rubicam Hungary ($4.99 million), Leo Burnett Budapest ($3.93 million), Lowe GGK ($3.83 million) and Publicis ($3.59 million).
At a creative crossroads
Western observers described Eastern Europe at the beginning of the 21st century as struggling to find its "creative resonance." The industry was said to be at a creative crossroads. The best work from the region reached an international standard of quality, although some suffered from an apparent lack of understanding of what constitutes effective advertising.
At the annual Golden Drum Advertising Festival of the New Europe, which draws the top creative work from throughout Eastern Europe and former Soviet-bloc countries, simple, strong conceptual ideas and top-notch executions marked the winners.