State Plans Could Cripple Vladivostok’s Outdoor Advertising Revenue

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May 14 – The State Duma might halve Vladivostok’s outdoor advertising market to give the city a face lift ahead of the 24th Asia-Pacific Economic Cooperation (APEC) Summit, to be held in the city in 2012.

The bill, which can grant Vladivostok administration rights to forbid outdoor advertising in certain parts of the city, was amended yesterday by the Russian parliament. “It is necessary to prohibit outdoor advertising along the route to be taken by guest delegations attending the APEC summit,” an explanatory note attached to the bill said. The new amendment to the law suggests that earlier established billboards should be dismantled at the expense of a city.

Evgenie Fedorov, chairman of the State Duma Committee on Economic Policy and Entrepreneurship, told Vedomosti that it is necessary to find out how to compensate individuals for the billboards and how to deal with those who are already paid for advertising contracts. “If their term does not expire before the summit it is impossible to remove them,” he said while adding, “this is a question of maintaining decent relations with businesses.”

According to Vladivostok government data, there are 2962 advertising billboards in the city, for which operators have transferred 556,000 rubles in toll fees paid while setting up a billboard, and 31.8 billion rubles (around US$1.06 billion) for rent into the local budget.

The local government official told Vedomosti that the majority of contracts with operators expire before the APEC summit, while employees of corporate agencies maintain that a lot of the contracts run up to 2012 and some of them even till 2020.

“Discussion over this question started to swing back and forth four months ago,” says a representative of the biggest Russian operator, News Outdoor, who own 300 billboards in the city. They pointed out that the deal “mainly concerns the main road of the city, Vladivostok’s 100 year anniversary avenue, which runs across the whole city and where the most expensive billboards are found.” If the bill is approved, Vladivostok’s advertising market, which accounts for an an estimated annual volume US$10 billion, will be reduced to half, and 30-40 percent of advertising surfaces will be lost.

“It is strange that the problems with advertising in this particular city are being addressed through amendments to the federal law instead of leaving things to regional authorities,” Goltsblat BLP partner Vitaly Mozharovsky said.

At the same time the 24th APEC Summit is giving unique possibilities to develop Vladivostok infrastructure and facilities. There are plans for 48 new different buildings sites amounting to a total of 230 billion roubles to be erected by 2012.