//Kevin Anderson /May 8 / 2013
Competition grows in Russia’s rapidly growing digital ad market
Russia continues to experience rapid growth in digital advertising, although the rate of growth slowed in 2012. While the increase in digital advertising has been putting pressure on print revenues for some time, digital ads are now also cutting into television revenues.
Russia has seen some of the fastest growth in digital advertising in recent years. Even though the torrid rate of growth proved to be unsustainable last year, digital advertising is capturing more advertising revenue, and the opportunity has attracted international investment in the classified advertising market.
News organisations, both print and broadcast, will need to monitor these fast-moving developments to develop an effective strategy to compete for digital advertising revenue with a range of new competitors.
Digital growth outpaces other media
Advertising continued to grow across most media in Russia in 2012, but while the rate of digital growth slowed, its impressive 35 percent rise year-on-year outpaced other media, according to the Russian Association of Communication Agencies.
Both print and television advertising continued to grow in 2012, but their respective growth rates of 2 and 9 percent was dwarfed by the growth in internet advertising, according to a report in East-West Digital News.
Internet display advertisingDisplay AdvertisingA form of online advertising where an advertiser’s message is shown on a…//read more only grew 17 percent. The real growth in digital advertising was driven by contextual advertisingContextual AdvertisingA form of targeted advertising on a website that is relevant to the page’s…//read more , which includes search advertising. It grew an impressive 45 percent.
In three to four years, it is predicted that digital advertising will capture a third of the advertising spend in Russia, according to a report in Vedomosti.ru. The rise of digital advertising comes at a cost for other forms of advertising. It is predicted that television’s share of advertising will decline from 48 percent to 46.4 percent this year, and print advertising will decline from 13.9 percent to 12.6 percent, according to the Vedomosti report.
Print advertising growth declined from 6 percent in 2011 to only 2 percent, but much of the coverage of the report focused on how internet advertising was cutting into television revenue.
Stanislav Povolotsky, RBC media holding’s commercial director, said that advertisers that had traditionally used television to reachReach1) unique users that visited the site over the course of the reporting period,…//read more consumers were now shifting to internet advertising, according to East-West Digital News.
In a widely reported sign of the shift from television to the internet, search engineSearch engineA website that provides a searchable index of online content, whereby users…//read more Yandex almost overtook state-owned TV station Channel One in advertising revenue. In 2012, Yandex brought in 28.1 bn rubles, while Channel One earned 28.2 bn in advertising earnings, according to the Wall Street Journal. Of course, Yandex earns one out of every two rubles spent on online advertising in Russia, according to Immanuel Simonsen.
New advertising technologies such as real-time bidding are helping to fuel internet advertising growth in Russia, according to Michael Voschinsky, the managing director of Aegis Media.
Rise in digital ads attracts investment
With Russia offering such promising growth opportunities in terms of digital advertising, the market is attracting foreign investment.
According to the Financial Times, the deal would create the fifth most popular website in Russia, with more than 100m page viewsPage ViewsWhen the page is actually seen by the user. Some platforms, like Facebook cache…//read more per day, and the third largest classified advertising site in the world.
The move was seen as the beginning of consolidation in Russia’s online classified market, according to Ventures Africa.
Russia continues to experience rapid internet growth, with the number of internet users growing by a third every year, and the market is developing very rapidly. News organisations, especially print groups, will need to develop strategies to compete for internet advertising revenue or they may face stagnating revenues at best.
News groups will need to invest in audience intelligence in order to deliver better targeted advertising to compete with the contextual offerings of Yandex and the major social networks. Yandex poses a particular challenge to regional and local media as many of its advertisers are small and medium businesses rather than large national or international advertisers, and consolidation in online classified companies will put pressure on local media by chipping away at this lucrative source of revenue.
While search engines and online classified companies might not seem like competitors to news organisations, they will compete head-on with news groups for internet advertising revenue. News groups will need to develop strategies to face these new and growing sources of competition.
Article by Kevin Anderson