Economic freedom is better than unfreedom

In 2021, revenues from the sale of all types of advertising goods and services amounted to 98.9 million manats ($58.2 million),  by 24.9% more than in the previous year. In general, the media received 14.8 million manats ($8.7 million) from the distribution of advertising in 2021.

The share of mass media in the total volume of advertising was 15%. While in the US, the share of media in the total advertising market exceeds 90%.

In Azerbaijan, the lion's share of media advertising fell on TV and radio companies. They earned AZN 13.3 million or  by 25.9% more than in 2020. The share of television in the media advertising has reached 97%, while in France, for example, online media accounted for more than 70% of advertising; and in developed democracies, this is a trend.

Income from advertising on various notices, printed and audiovisual products totaled AZN 1,323,000 or $602,000 (+29.4%). It  is unknown how much online and print media earned in this structure. Since 2019, the report of the State Statistics Committee has been structured in such a way that it is difficult to determine the volume of advertising in print and online media. Television and radio are merged into the TV and radio column, and telecommunications means are merged with postal orders, periodicals with written notices, printed and audiovisual products.

This approach does not make it possible to analyze the state of each area of ​​the media. The actions of the State Statistics Committee (SCS) actually distort the picture of the true state of the media advertising market in Azerbaijan, which has been stably difficult for more than 23 years.

 Income of producers of advertising information for the year totaled 32 million manats (+5.7%), companies engaged in its placement - 31.7 million manats (+2.5 times).

According to the State Statistics Committee, the costs associated with production and other activities in the field of advertising for 2021 amounted to 87 million manats, 12.2% more than in the previous year.

Record low share of  media ads in GDP

In 2021, the GDP of Azerbaijan in real prices amounted to 92.86 billion manats ($54.6 billion). The share of media advertising in GDP was 0.015%, while the international norm is 1% of GDP. For example, in the United States it amounted to 1.7% of GDP (media advertising $398 billion, GDP - $22.996 trillion), in France - 1% (media advertising - 29.3 billion, GDP - 2937 billion, in the UK - 1% (media advertising 35 billion, GDP - 3187 billion)

From the beginning of the century until 2015, the volume of the Azerbaijani media advertising market in relation to GDP fluctuated steadily within 0.1%, despite the more than 10-fold increase in GDP, provided by the growth of oil revenues. Subsequently, the gap increased greatly - this ratio is in the range of 0.015%. This ratio is an important evidence of state control of the media advertising market and the state's unwillingness to create conditions for the economic freedom of the media.

Ideally, the domestic media advertising market should have been not 14.8 million manats, but 920 million manats. But this is impossible a priori. More on that below.

Reasons for the degradation of the media advertising market

In Azerbaijan, it is impossible to achieve an international standard of correspondence between the size of the media advertising market and GDP for a number of reasons - both economic and political.

First, it is not beneficial for the authorities, who are interested in information management and disorientation of society, to have a large and free advertising market, as this threatens the formation of financially independent, and therefore creatively independent media, as it was already in the 90s of the last century.

Second, the energy-dependent economy is unable to stimulate the development of advertising up to international standards. The share of energy resources in GDP from 2005 to 2021 decreased from only 67% to 37.8%, and the economy's dependence on oil continues to be high. 88% in the structure of exports falls on energy resources. The state budget revenues of Azerbaijan in 2021 amounted to 26.419 billion manats ($ billion). At the same time, 13.5 billion manats ($8.2 billion) or 51.1% was supplied by the oil sector. The lion's share of this amount - 11.4 billion manat - was transferred from the State Oil Fund of Azerbaijan. This indicates the low potential of real advertisers who are concentrated in the non-oil sector. The main supplier of advertising, small and medium-sized businesses (SMB), occupies a niche of 10% in GDP. The government announced a program for the development of the economy until 2030, the total increase in the share of SMB to 35%, but the program has not been adopted so far. It should be noted that in developed countries, SMB account for up to 70%, and in some even up to 90%. In developed countries, it is small and medium-sized businesses that are the backbone of the economy and the driving force behind advertising.

Thirdly, Azerbaijan, as an authoritarian state, is not interested in the development of a free economy, free trade and free competition, which, for objective reasons, is a threat to the regime. Economic freedom inevitably leads to individual freedom, freedom of speech and, finally, to political freedom. It is no coincidence that the undermining of the independence of the media in Azerbaijan began with the destruction of their economic foundations, economic self-sufficiency.

Fourth, Azerbaijan's "gray" economy forces most potential advertisers to conduct their business as much as possible in a covert mode, in a semi-legal state, so as not to attract excessive attention from fiscal authorities.

Fifth, due to the above reasons, the culture of advertising has been practically destroyed in the country. Even businesses that need them are unaware of the power of her influence and see her as a burden.

Financial dependence of the media

We know the amount of legal funding for pro-government media. Last year it was within AZN 58 million, of which AZN 34 million and AZN17 million accounted for state television and public TV, respectively. However, given the total dominance of the pro-government media, their staff and illegal salaries, we can say that we are talking about illegal subsidies worth tens of millions of manats.

Media financing from the State Budget in 2021 (in AZN manats)

Media financing from the State Budget in 2022 (AZN manats)

Note. In the state budget for 2022, the budget of the Media Development Agency is not specified separately. It is included in the group of public legal entities (culture, art, information, physical education, youth policy and other activities), which received a total of 53 million manats. It is unknown- to whom and how much.

Sorrowful perspective

The media calendar year 2022-2023 (22.07.2022-22.07.2023) does not bode well for the development of freedom of speech in Azerbaijan. The process of adopting the essentially reactionary Law on Media and its provisions are a clear confirmation of the authorities' desire to tighten state control over the media. And not only over the press, but also over the entire information community. The law, which expands the shadow of the state over the media space, opens wide scope for state regulation of freedom of expression, further restricts the economic freedom of the media through state intervention: registration, licensing, control, punishment.