Trends and Insight in association withSynapse Virtual Production

Digging into CEE’s Digital Revolution

London, UK
The region is bustling with digital optimism – LBB’s Laura Swinton explores some of CEE’s most exciting start up hubs
Forget Silicon Valley, Silicon Roundabout, Silicon Beach and the rest – when it comes to the most interesting up-and-coming digital hotspots our money’s on Central and Eastern Europe. The region has a ridiculous amount going for it. 

Tabula Rasa – An Ultrafast Infrastructure

For one thing, there’s the ultrafast internet fibre. According to Nesta’s EDCi (European Digital City Index), Europe’s best digital infrastructure is to be found not in Western Europe (as anyone battling with lethargic broadband in central London can attest) – instead it’s in cities like Bucharest, Riga, Vilnius, Bratislava and Budapest. That means digital agencies and start-ups in the region are at an advantage when it comes to speed.

But why might this be? Calin Buzea and Liviu Toader, co-managing directors of digital agency Nurun Romania (part of Publicis Groupe Romania) attribute this to the region’s late start. Soviet-era communications were notoriously poor – so 1990 ushered in a race to wire the region up. “It comes down to legacy,” they say. “We, the CEE, had a very late start. In a short period of time we had to get our game moving a lot faster than Western cities in order to catch up with them. Know-how, infrastructure, you name it. Education and experience. Because of this, we know many things from different technical areas and specialities.”

At J. Walter Thompson Group Poland, Business Development Director Radoslaw Smorga and Strategy Planner Barbara Niedziela agree. Where Western Europe has been bogged down in a hodge podge of historical networks, CEE countries have been free to build a digital infrastructure from scratch, one that’s fit for purpose in the Information Age. “We were a ‘tabula rasa’ after communism’s fall and we had to learn fast and adapt to all new technologies at once without thinking about what had been done before. We had no ‘before’.”

Dino Zupančič, CEO and Partner at Agencija 101 in Slovenia agrees that there were fewer obstacles to overcome. In his country they also had a forward-looking state-owned telecom company. “Telekom participated in the development of digital infrastructure in a big way. And finally, it’s immensely easier to establish digital infrastructure in a small country, such as Slovenia or Croatia.”

This superior digital infrastructure has provided a foundation for digital industries, both within and outside of advertising. In Poland, for example, they have one of the most advanced payment card systems in the world and the team at J. Walter Thompson points to online marketplace as a business that has truly flourished thanks to the fast infrastructure and digital revolution.

Advertising agencies feel the benefit too. “It has had a positive impact. For us, as an advertising agency with a strong digital core, it means new business opportunities. And for many businesses who take advantage of the infrastructure it means a good platform for developing products and services," says Dino at Agencija 101.

Calin and Liviu at Nurun Romania say that the robust infrastructure also gives them extra confidence about the ideas that they are selling into clients. “Because of this digital infrastructure we can stress it and we can ‘project’ on it. When you have broadband in almost the entire country, you know for sure that you can propose a campaign that involves HD video streaming or location-based triggers for in-app game content.”

Wired Women

The digital industries in general have been widely criticised for the gaping gender divide. Although the split of men and women employed as ICT specialists is far from equal - certain countries in the region are significantly ahead of its Western European neighbours. According to Eurostat data, the figure for women ICT specialists is 27.2% in Romania and 27.7% in Bulgaria (compared with 16.3% in Germany or 16.2% in the United Kingdom). However, looking at the data, Slovenia (16%), Poland (13.5%) and Hungary (11.9%) are less strong on this front.

So what’s the situation in the digital side of the region’s advertising industry? Of the agencies we spoke to most had a fairly even split between men and women, and Agencija 101 said that 2/3 of the team was female – although these roles were not exclusively ‘hard’ digital roles and included accounts, creatives and digital strategists.

The situation in Poland, one of the poorer performing countries when it comes to women working with ‘hard’ tech skills, is changing. Radoslaw and Barbara at J. Walter Thompson say that women are currently over-represented in soft skills but note that there are many CEOs at tech companies and digital agencies in the country. Magdalena Dziewguć (Head of Google for Work CEE), Agnieszka Hryniewicz-Bieniek (Country Director, Google Poland), Magdalena Taczanowska (Public Sector Director, Microsoft Poland), Anna Streżyńska (Minister of Digitisation), Beata Turlejska-Zduńczyk (CEO Lemon Sky J. Walter Thompson Poland), Alicja Wiecka (CEO SAS Institute Poland), to name but a few.

According to Isobar’s Artur Szatkowski, his agency has a 50/50 female/male split and while programming is largely dominated by men, the situation is more nuanced. “The number of women in ICT/Digital is definitely increasing. Men are still the majority when it comes to programming and data and systems architecture. About 90% of jobs in those areas are still held by males. However when it comes to data analysts, project managers and software testers it seems that female employees add up to more or less half of the positions – and their number is growing!”


So there’s the infrastructure and mixed success on the gender front – but what about digital skills? Poland is particularly strong on this front. 

Igor Kalenski, CEO, BBDO Warsaw, details the country’s strong credentials. 39% of Polish citizens between the age of 25 and 34 hold a university degree or equivalent and every year 80,000 Information Technology majors graduate in the country – that’s 16% of all graduates. “In fact,” he says, “Poland has one of the best IT education systems in the world and therefore is producing some of the best programmers in the world. It’s no wonder Poland has been attracting some of the largest technology firms such as Google, IBM, Microsoft and Motorola to set up their R&D centres.”

Indeed, the HackerRank system ranks the strongest developers in the world – Poland is ranked number three behind China and Russia. “With success like that I am sure you can imagine how intense the competition is amongst the labour market. This proves extremely beneficial for those electing to outsource to Poland. The highly competitive market provides motivation for app developers, which drives them to always put forth their best and produce high quality work,” says Igor.

At primary school level, coding classes are to become mandatory – but Isobar’s Artur is concerned that the Polish education system is still to catch up with curious young minds. “Last time I checked, the education system was still dragging behind the young ones: let’s face it a seven-year-old is often more skilled with digital media than their parents and teachers. On the good side, people are starting to become more aware of this and there are more and more organisations promoting coding among kids. It is also supposed to be one of the mandatory subjects in primary schools, starting next year or so… I wonder who’s going to teach them though.”

While Poland is something of a giant when it comes to digital skills in the region, other countries have much to offer too. Dino notes that the local Slovenian self-drive and curiosity is helping build skills. “Digital skills of young people are very good and older people are not that far behind anymore, thanks to big efforts of Simbioza group for educating elderly citizens every year with numerous free weekly computer workshops. But we must admit that education is not as good as it could be. Many digital skills are self-taught, perhaps also because Slovenes have a strong DIY sense in everything, including digital!”

Meanwhile in Romania the issue of digital skills is a tricky one to decipher. On the one hand the country’s pioneering spirit means that there’s a lot of interest in the area; indeed Calin and Liviu describe the city of Cluj-Napoca as ‘the Silicon Valley of CEE’ as there are tens of thousands of programmers working for the likes of Oracle, IBM, HP and Ubisoft. “We are early adopters when it comes to technologies. In urban areas I don’t think that there is anyone who doesn’t have a friend or acquaintance who knows how to programme or design a basic website.”

Unfortunately, Romania is still facing a digital skills gap – a 2015 report by the European Commission found that Romanian Internet users had the percentage of people with ‘advanced digital skills’ (2.01% of Internet users). A recent report by Quartz, which extols the virtues of Romania as the next start up honeypot, but notes that free movement within the EU means that retaining talent within the country can be a challenge. But according to the ECDi, the picture may not be so bleak for Romania’s digital skills – the 2015 survey ranked Bucharest as the 6th strongest European city for digital skills (Prague came 3rd and Warsaw 9th).

The Next Big Thing That’s Already Happening…

Compared with Western European cities, relatively lower costs in CEE also makes the region appealing to start ups. It’s worth noting that the top three cities in the ECDi ranked by lifestyle were Prague, Warsaw and Ljubljana. Cities like Bucharest and Ljubljana are also noted for their thriving underground art scenes, which makes them a potent location for creatively-minded digital start-ups and agencies.

But perhaps it was rash of us to describe CEE as the ‘Next Big Thing’ in digital – indeed the region is already overflowing with examples of amazing digitally driven businesses that are truly world-leading. In Poland, there’s the likes of CD Projekt RED, the award-winning games developer behind the biggest game of 2015, Witcher 3. In the MarTech sector there are businesses like the social monitoring tool Brand24 (mentioned by Igor at BBDO Warsaw and the J. Walter Thompson team and Artur at Isobar). The country is also one of the largest players in the iBeacon business, with the likes of Infinity and Estimote based there. 

Slovenia, meanwhile, is the birthplace of mobile ad display company Celtra, the Mag-Lev floating turntable, the stylish lifestyle tracker Bellabeat. And in Romania there’s the much-hyped Vector Watch smartwatch and innovative apps like SkinVision which monitors changes in suspicious moles (the business is now based in Amsterdam, but was born in Romania’s creative-digital maelstrom). 

And there are plenty of other countries in the region that we haven’t even had space to address – believe us when we say that there is so much more to be written about digital creativity and start ups in CEE. But we hope that we've managed to give you a flavour of just how exciting the region is when it comes to all things digital!
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