Market environment

K2 Group operates on a perspective market of digital advertisement, the development of which is considerably affected by the number of Internet users. Pursuant to the report of Centrum Badania Opinii Społecznej already 2/3 people in Poland use the Internet and forecasts demonstrate that in 2020 it will constitute 80% of the whole population, however in accordance with the European Digital Agenda, until this time, 50% of Poles will have access to 100 Mb/s Internet.

Pursuant to Starlink media house report, the media, in relation to which a growth in revenue was observable, was e.g. the Internet (the greatest growth by 6.4%, i.e. by PLN 95.8 mn). Apart from that the radio (growth by 6.3%, over PLN 35 mn) and TV (growth by 5.6%, over PLN 202 mn). The total share of these media in the advertisement market already amounts to almost 75%. The income from advertisements dropped for the press, cinema and to some slight extent outdoor advertisement. The total advertising expenditures grew by 2.7%, i.e. by over PLN 193 mn as compared to 2013, and the value of the advertising market amounted to PLN 7.28 bn.

PWC's data demonstrate a similar tendency on the global market. The share of on-line advertisements in the total advertising income is close to TV advertisements, becoming the largest segment of the entertainment and media market. In 2013, the total revenue from on-line advertisements amounted to USD 117.2 billion, and in 2018 it will grow to USD 194.5 billion at 10.7% CAGR  (Compound Annual Growth Rate). It is a considerable progress as compared to 2009, when the total TV advertising income amounted to USD 132.0 bn, and comprehensive on-line advertising income reached the level of USD 58.7 bn. Apart from that PWC in its information mentions Poland beside such countries as e.g. Canada, China, Finland or Russia, as a large dynamically growing market with a high growth dynamics with CAGR above 11%.

In the segment of on-line advertising the video advertisement sector is till growing the most dynamically. Pursuant to the information in sectoral media, based on Starlink's report, video advertisements reported a growth by 21% in 2014.

And in IAB's report devoted to Video Online experts deemed the development of Video Online as one of the most important trends in 2015. The report expressly demonstrates that traditional TV is in the downward trend.
 

 

K2, following the market trends strongly invests in the development of video competences and may boast of the status of a Youtube's partner. Ads on YouTube have a greater and greater potential. According to http://www.interaktywnie.com/, the service currently attracts 16 mn Polish Internet users and will become more and more important advertising channel for brands. Experts of interaktywnie.com think that in 2015 we will spend PLN 250-260 mn on on-line video.

A mobile component is often used in projects realised by K2 which in numerous cases is the key axis of promotional activities. It is related to the natural and already very strong permeating of communication channels. The number of tablets and smart phones is increasing, prices of internet packages decrease, and campaigns are more and more interesting and more efficient. The Ministry of Economy estimated the number of tablets in Poland in 2014 at 4 mn and of smart phones at 27 mn pieces. 

Interaktywnie.com in "Mobile marketing" report points out that the presence in the mobile channel is advantageous, and will be even more advantageous and more expensive and demanding since in 2015 over 50% of Poles will use smart phones and, a group of people who are not aware of the possibilities of these devices will shrink.

And, according to ZenithOptimedia analysts global expenditures on mobile advertising (on mobile devices - smart phones and tablets) grow 6 times quicker than for advertising on desktops. ZenithOptimedia forecasts that due to a grater and greater popularity of smart phones and tablets, until 2016 the expenditures on mobile advertising will grow by 51% annually on average. Analysts of ZenithOptimedia estimate that until 2016 global expenditures on mobile advertising will reach the amount of USD 49.5 bn, which will constitute 30.4% of expenditures on on-line advertising and 8.6% of total expenditures on advertising. The mobile channel will become, even before the end of 2016, the fourth, as regards the size, medium and the value of expenditures on advertising on mobile devices will be higher than in the radio, magazines and outdoors.

Currently, the mobile sector is the greatest growth factor of advertising expenditures. ZenithOptimedia estimates that in 2013–2016 the mobile advertising will bring a 42% growth in the advertising expenditures. TV comes next, which will contribute to a 30% growth. Another 28% growth will be brought by on-line advertising on desktops.