Knowledge Bridge

Global Intelligence for the Digital Transition

Sizing up The RuNet, Russia’s internet market

The old management adage goes that if you can measure it, you can manage it, but when it comes to the internet, while it’s not difficult to find statistics, finding statistics you can have confidence in can be a challenge. Dmitry Frolov wrote about this challenge recently (in English and in Russian). Different companies have different methodologies, and after the figures are published in the media, search engines turn them into “a hell of a mixture” with “the truth hidden behind the final copy-paste”. Frolov, the editor-in-chief of the site Research & Trends, tried to overcome some of the problems of differing methodologies. He came up with what he thought were definitive figures by reconciling data from a number of sources including from the Russian state statistics agency, Rosstat. (A table of the data is available in English and in a Russian Excel spreadsheet.)

TheRunet, a site in English and German, has used these statistics, other market data and some articles to give a sense of the size of the Russian internet market and some of its major trends over the past year. Mike Butcher of TechCrunch says that Russia’s 57.8m monthly, strong and growing internet market is poised to overtake Germany’s. The Russian Federation has a total population of 143m so, according to Mike, “there is plenty of growth left to be had”.

One thing the study highlighted was the possibility of growth in internet use outside of large cities. Frolov wrote:

Furthermore, today’s ‘poselok’ (Russian for a large village or rural township — TheRunet) are far more developed than they were twenty years ago. Real estate agents in Moscow cannot say that living in or out of the city is an important criterion for their clients today. The market’s current trend is that living in rural suburban areas is becoming increasingly prestigious, and this trend is spreading from the capital to Russia’s provincial regions. And, considering that most rural areas are now well covered in mobile networks, and that Internet connection technology using a mobile or stationary phone, or a mobile modem is getting more and more accessible, we see a huge reserve that many overlook or underestimate.

Other key statistics from the report include:

  • Russia’s online advertising market grew 57% to €1.05B. Only €388.5m of that revenue came from display ads with the rest going to search advertising, including Russia’s home grown search giant Yandex.
  • eCommerce grew 30% from 2010 to 2011 to €8bn.
  • The top 10 advertisers on the RuNet were dominated by major international brands, with Renault-Nissan taking the top spot, Proctor & Gamble coming in number two and Nokia rounding out the top three.
  • Havas Digital estimates that the top 10 internet advertisers spent 4.65bn ruble, or 17% of the their total advertising budgets, on internet advertising.
  • Cars, consumer goods and services dominated internet advertising. Cars alone accounted for nearly a quarter of all internet advertising spending in 2011.

One trend that news organisations need to be both aware and wary of is that social networks including vKontakte and Facebook are closing their content to search engines and creating what Anton Terekhov of Ichiba e-trade platform called an “internet inside the internet”. vKontakte is making it so that its users don’t have to leave the network to view third-party content. This might negatively impact news organisations by depriving them of ad impressions. If this is your market it’s worth taking a look at the full report, which contains a lot of excellent information that can help you prepare your news organisations to take advantage of the rapid growth of internet use in Russia.

Article by Kevin Anderson

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