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.

The increase in competition in the advertising sector, which coincides with the development of the DTT offering, as well as the tendency by investors to reduce their advertising budgets, has led Sipra to adapt its commercial structure to the new market conditions. In order to optimise the presidia of the domestic and foreign markets and make the most of the offer of multiplatform contents of Rai, at the beginning of 2011 the commercial structure was strengthened: the TV, Film and Web Northern Sales Management and TV, Film and Web Southern Sales Management were created, along with the New Business and Foreign Management, with the aim of expanding the Sipra customer portfolio by developing commercial relationships with new investors in Italy and abroad.

As soon as the first timid signs of recovery from recession began to appear, the national advertising market showed a reversal of the trend for 2009, which closed at -13.4%, and presented moderate but widespread signs of recovery for almost every medium and sector: the advertising market presented growth of 3.8% in 2010, increasing revenue by about 300 million euros. With the exception of periodicals and daily newspapers, which marked a contraction of 4.3%, all media have shown a positive trend. (Source: Nielsen Media Research - Net Investments for 2010).

Television advertising investments, which closed at -10.2% in 2009, highlighted growth of 6% in 2010 and an increase in the market share from 52.5% to 53.6%. (Source: Nielsen Media Research - Net Investments for 2010). The Rai networks, despite the structural differences between Rai products and those of the main competitor in terms of availability of space, rules on overcrowding and rating profiles, have grown by a total 4.5%, considering the overall TV offering, including the part not yet measured by Nielsen. In this last segment, specialised channels broadcast in DTT, Sipra sells the advertising spaces of Rai 4, Rai 5 (formerly Rai Extra), Rai Gulp, Rai YoYo, Rai Premium, Rai Movie (formerly Rai Cinema), Rai Sport 1, Rai Italia and Rai News. During the year Rai Extra and Rai Cinema were repositioned and rebranded, in order to optimise audience figures and increase coverage of more dynamic audience slots. With a view to improving its offering and reaching prestigious targets, Sipra has added the specialised channels Rai Storia and Rai Sport 2 to its bouquet.

This bouquet projects Rai towards leadership in the free DTT segment. Considering the overall offering of specialised channels of the Rai Group, the segment highlights growth of more than 100%. This result was possible thanks to the acquisition of 137 new customers (Internal source). In the advertising revenue market, the Radio has recovered a large part of the investments lost in 2009: in 2010 it marks +7.7% acquiring 33.6 million euros compared with 2009. In this context, commercial radios have grown 10% according to our estimates on FCP Radio figures, being more competitive in terms of cost per contact and more clearly aimed at the commercial targets. Overall, the market share of the medium remains stable (passing from 5.3% to 5.4%).

In 2010 Sipra intercepted 121 new radio customers, thanks partially to the performance of special initiatives which increased the customer portfolio with 66 new investors.

As regards the Film sector, after markets declined in revenues in recent years, in 2009 an in-depth phase of technological renovation was launched, enabling the containment of the contraction in revenues from advertising at 4.4% (Source: Nielsen Media Research - Net Investments for 2009). In particular, the digitalisation of the broadcasting of adverts was launched on a vast scale, while the offering of audio-visual contents was expanded with the addition of 3D films. In the early months of 2010 Sipra completed the various processes for implementation of the network and equipment for broadcasting adverts in digital format, therefore launching the sale of digital advertising spaces for the entire circuit.

During the year the presence of the Sipra circuit was strengthened, with the acquisition of the management of the advertising in 11 new cinemas, consolidating the record of the concession holder with the highest number of digitalised cinemas, totalling 531.

Thanks to digitalisation Sipra intercepted 96 new advertisers in 2010 (Internal source). Overall revenues from advertising for the whole Cinema market showed growth of 12.2% (+6.8 million euros).

The web, the only medium to have escaped the negative trend during the recession, confirms the expansion of advertising investments (+20.1%, +60.8 million euros) and of the market share from 3.6% to 4.2% during 2010 (Source: Nielsen Media Research - Net Investments for 2010).

In 2010 the number of mobile phone owners connected to the web rose (+44%), reaching 6.2 million Italians, 13% of the reference population (Source: Audiweb). With a view to strengthening its offering, in May 2010, Sipra launched applications for the Mobile segment, now activated for IPhone, relating to RadioRai, and these will subsequently be extended to other contents.

RadioRai's Podcast continues to grow in terms of user profile and the number of downloads (over 20 million in 2010), with considerable growth compared with 2009, confirming the interest in the quality of RadioRai's programmes (Internal Source).

Overall in 2010, the success of the commercial performance is partly due to the presence of big sports events, such as the World Cup in South Africa and the Vancouver Winter Olympics.

Outlook for 2011 - Rai and Sipra

In the absence of elements that allow expectations of a strong recovery of the economy and the absence of big sports events, the outlook for 2011 indicates a slowdown in the rhythm of growth of advertising investments, with a weak start and acceleration in the second part of the year. The latest forecasts are between -1.6% and +3% on an annual basis. While, on one hand, the media centres agree that there will be a minimum growth of 2%, Mediobanca estimates a contraction of 1.6%.

Considering the latest estimates, it emerges that growth in 2011 will be drawn by Tv and Internet and that, also considering the search share, the web will be the second medium in terms of advertising revenues, overtaking periodicals and daily newspapers (Source: ZenithOptimedia and Nielsen).
Continuing on the subject of demand envisaged in 2011, 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, 2011 will be an important year for Sipra and Rai: in December 2010 about 75% of households were covered by the digital terrestrial signal and 2011 could be the year in which full coverage of the national territory will be reached, depending on the scheduling of the forthcoming switch-offs. Therefore, the progressive expansion of the DTT platform will implicate a further increase in viewers of Rai's specialised channels and a consequent outlook of growth in revenues from advertising for these broadcasters.

As regards radio, after the blockage of data in 2010, 2011 will witness structural changes to the Audioradio research which, in compliance with the decisions of the Board of Directors and as long as nothing unexpected occurs, will switch to the dissemination of information based largely on a panel survey as opposed to the C.A.T.I. telephone survey.

The results of these new figures may generate effects, hopefully positive, from the autumn, by virtue of the new radio programming.

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.

Particular attention will be devoted to the expansion of the offering on new devices, especially tablets, and to the improvement of the offering on Mobile. By virtue of the implementation of the European Directive 2007/65/CE with Legislative Decree 44 of 15/03/2010, the so-called Romani Decree, it has been possible to introduce television Product Placement into the bouquet of Sipra products.