Sipra

Sipra has an exclusive contract with Rai to manage the advertising space of Rai's television and radio broadcasts in analogue, digital and satellite (both free and pay), webcasts, with the portal and all the websites in the www.rai.it domain, promoting the high value of the media under concession to investors, in terms of programming quality, audience ratings and less overcrowding.

2009 was another decisive year for Sipra in the pursuit of the absolute need for flexibility within its organisational layout in order to follow and, where possible, anticipate the increasingly swift evolutionary changes in the advertising market.

During the year, Sipra's organisational structure was adapted to guarantee the best conditions for promoting Rai's offering, in a competitive context heavily conditioned by the impacts linked to the passage to digital technology.

From February in particular, a complex review of the commercial structure was launched, influencing both sales and marketing.

As regards the sales structure, the main actions were represented by the formation of a single unit to monitor the general-interest and specialised television offering and the creation of a sales network, aimed at the media centre channel, for advertising on the web.

The activities described above determined the need for a general review of the agency contracts held with the sales force, with specific reference to the customer portfolio and products assigned. Within the scope of the commercial support structures, a new unit was set up for the development of multimedia offerings and a department responsible for coordinating commercial policies.

In keeping with the new strategic lines for managing film media, the project for the digitalisation of advertising materials was launched during the year. The study and implementation of the project required the integration of different skills, as the entire operational process was fully re-engineered, with impacts on the commercial, administrative and technical management structures.

As regards advertising investments, the negative overall market situation strongly conditioned buying decisions by companies and played a decisive role in reducing advertising budgets: in 2009 the advertising market showed a decline of �13.4%, with losses of 1.3 billion euros. Apart from the web, which showed an increase of +5.1%, almost all the media suffered two-figure reductions (source: Nielsen Media Research � Net investments for 2009).

Television advertising investments highlighted a �10.2% reduction in 2009 and an increase in the market share from 49.4% to 51.2%. By virtue of stricter legal limits to overcrowding by advertising, Rai networks recorded an overall decline of 16.9%, while Mediaset reported a reduction of 8.4%.

It is necessary to highlight how the further decline of Rai's sales figure is strongly influenced by the structural differences between Rai products and those of the main competitor, in terms of availability of spaces, overcrowding rules and rating profile, factors which penalise advertising income on Rai, especially during periods of financial difficulty.

In order to properly analyse the change compared to the previous year, it is also necessary to consider the presence in 2008 of the European Football Championship and the Beijing Olympics, and of the General and European Elections in June 2009.

Sipra gained 137 new television customers during the year.

In line with the market as a whole, the Radio division also suffered an overall decline, falling 7.7% (36.6 million euros) during the year. Recording a smaller reduction than that averaged by the other media, the Radio division's market share rises from 4.8% to 5.1%. The FCP estimates on income for the whole year present a decline by the media of 8%: in this context, the commercial radio stations were more stable than RadioRai, thanks to benefits from a more competitive cost-percontact and better profiling on commercial targets. Despite the marked decline in investments, RadioRai gained 145 new customers.

The outlook for 2010, in the absence of elements that allow hopes for a strong recovery of the economy, indicate substantial stability of investments in advertising compared to 2009, also in the presence of the World Cup in South Africa and the Winter Olympics. Operators' expectations agree with the indication of a first part of the year still characterised by slight reductions and a moderate recovery in the autumn.

Continuing on the subject of demand envisaged in 2010, the European trend which encourages investors to ask the media to maintain the number of GRPs (gross rating points), i.e.: advertising pressure, despite a drop in investments, was confirmed. Sipra's commercial policy in the first part of the year will be that of a substantial stability in tariffs, with a trend in line with that of programmed inflation. The aim is to defend the value of Rai's television advertising, which is strongly threatened by the increase in the number of competitive players and is indispensable to the need to guarantee the resources necessary to the development of the digitalisation process.

As regards digitalisation, 2010 will be an important year for Sipra and Rai.

The progressive expansion of the DTT platform will implicate a growth in the ratings of the new Rai channels and a consequent forecast of growth in income from advertising.

In terms of the web, the growth aims can be pursued thanks to the forecast increase in the number of pages seen and single users of our portals, as well as the progressive development of video content.

Also in terms of film, the digitalisation of advertising will allow this media, after a necessary initial trial period, to reduce the technological gap with the new media.

As regards radio, 2010 will witness structural changes to the Audioradio research which, upon completion of the experimental phase, will switch to the dissemination of information based largely on a panel survey as opposed to a telephone survey. The results of these new figures may generate effects, hopefully positive, from the autumn.