The Georgian advertising sector is characterized by a lack of competition and dominated by a small network of friends and business partners with ties to former Defense Minister Davit Kezerashvili, a new report [1] by Transparency International Georgia finds.

While mapping relationships within the sector, TI Georgia found that several off-shore companies registered in Panama and the British Virgin Islands are used to conceal ownership and financial flows. A suspiciously high number of changes in official ownership structures of single companies and the apparent use of front men are undermining the sector’s transparency. The TV advertising sales house General Media commands a de-facto monopoly in selling ad-slots on national TV, the company Outdoor.ge has a dominant position in outdoor advertising in Tbilisi.

Ownership structure and relations between selected players in the Georgian advertising sector

[2]In the private sector, a climate of self-censorship persists and many advertisers remain reluctant to cooperate with outlets that are known for their critical views, fearing negative consequences for their businesses. Most media outlets also lack independently verified data on their reach and audience – with the exception of Tbilisi-based TV stations – making it even more difficult for smaller outlets to attract advertisers and become financially sustainable.

Growth, competition and professionalism in the advertising sector are an important precondition for a financially sustainable and thus truly pluralistic and strong media sector in Georgia. Net advertising spending in 2010 was between USD 43 and 46.5 million. TV advertising accounted for USD 35 million and radio advertising for USD 2.2 million. Spending on online advertising is estimated to remain significantly below USD 1 million.

In recent weeks, the Georgian government has taken a 70% share in a chain of newspaper kiosks that are also used as outdoor advertising sights and are now managed by the Georgian Post. Government controlled entities continue to provide targeted financial support to specific media outlets through advertisements.

You can download the full report as pdf [1], and in an an ebook [3] for Kindle and other e-readers.

Click the image below to view an interactive version of the Georgian advertising market.

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The G-MEDIA program [4] is made possible by support from the American people through USAID [5]. The content and opinions expressed herein are those of Transparency International Georgia and do not reflect the views of the U.S. Government, USAID or IREX.