Yandex Q2 2011 Market Update


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Russian digital advertising market and yandex overview updated as of Q2 2011.

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Yandex Q2 2011 Market Update

  1. 1. Q2 2011 Update SearchJuly 2011
  2. 2. Forward Looking Statement DisclaimerThis presentation includes forward-looking statements. All statements contained in this presentation other thanstatements of historical fact, including statements regarding the expected growth of the internet search market and thenumber of internet and broadband users in the countries in which we operate; competition in the internet search marketin the countries in which we operate; our anticipated growth and investment strategies; our future business development,results of operations and financial condition; expected changes in our margins and certain cost or expense items as apercentage of our revenues; our ability to attract and retain users, advertisers and partners; future advertising supplyand demand dynamics; are forward-looking statements.These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could causeactual outcomes and results to be materially different from those projected. These risks, uncertainties and assumptionsexpressly qualify all subsequent oral and written forward-looking statements attributable to Yandex or persons acting onits behalf and include, but are not limited to, the following: the growth of the online advertising market; competitivedynamics in our market; quarterly fluctuations in our operating results; seasonality; our ability to attract users and searchtraffic; our ability to continue to develop successful services; the adoption of social, mobile and the web as relationshipmarketing channels; our ability to maintain profitability; global economic conditions; political, legislative and regulatorydevelopments and the other risks described under Risk Factors and elsewhere in our prospectus. It is not possible forour management to predict all risks, nor can we assess the impact of all factors on our business or the extent to whichany factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trendsdiscussed in this presentation may not occur and actual results could differ materially and adversely from thoseanticipated or implied in the forward-looking statements.You should not rely upon forward-looking statements as predictions of future events. The events and circumstancesreflected in the forward-looking statements may not be achieved or occur. We cannot guarantee future results, levels ofactivity, performance or achievements. We are under no duty to update any of these forward-looking statements after thedate of this presentation or to confirm these statements to actual results or revised expectations, and we disclaim anyobligation to do so, except as required by law. 2
  3. 3. Introduction Yandex: World-Class Technology & Internet Leader #1 Search #1 Internet Leader Destination 65% search market share in Russia 38 million unique visitors per month 44% of Russian users homepages Leading Online Largest Russian Advertising Platform Internet Business 180,000+ advertisers $440 million Revenues (2010) 58% online ad market share $217 million Adj. EBITDA (2010) 3
  4. 4. Key Investment HighlightsLocal Champions Can Win in Search Yandex Baidu Naver (launched 1997) (launched 2001) (launched 1999) Yandex Baidu NHN 65% 1 80% 2 69%3 South Russia China Korea 6% 4% Others 14% 22% Google Others 14% Others 27% Google Google Source:, iResearch,, Nielsen KoreanClick 1.  As of March 2011 2.  Average market share for 2010 3.  As of August 2010 4
  5. 5. Key Investment Highlights Continuous Focus on Innovation Mail Payments Language Search News Shopping Maps Understanding 1989 1997 2000 2002 2004 1998 2002 2004 2005 2006 1 1989 2001 2005 2008 Source: Company information,, iResearch,, comScore 1. Baidu News Service launch date based on being available as of the date of IPO 5
  6. 6. Financial ReviewLocal Focus and Understanding Russia/CIS is our Backyard Locally-relevant Content and Services Russia + Ukraine + Kazakhstan + Belarus Search Verticals Maps/Traffic Street Views Images 1,400 different territories for Yandex Videos Music Goods Blogs … Our Ad Campaigns Have a Russian Accent… “The monitor does not give consultations.” 6
  7. 7. Key Investment Highlights Yandex: The Search Market Leader in Russia Search Traffic Share 1 65% 58% November 2009 2006 Launch of MatrixNet •  Google opens office in Russia •  Google introduces Russian language morphology January 2010 stops using Yandex for search 26% 22% 5% 7% 5% 2% Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Source: (March 2011) 1. Search traffic reflects Russian users to Russian websites 7
  8. 8. Key Investment Highlights Yandex is Replicating Success in Adjacent Markets Share of Search Traffic in Ukraine, Kazakhstan and Belarus 1 Ukraine Kazakhstan Belarus (2005) (2009) (2010) 73% 64% 52% 46% 48% 48% 29% 24% 26% 37% 40% 19% 22% 20% 7% 6% 3% 3% Apr-09 Jun-09 Aug-09 Oct-09 Jan-10 Mar-10 May-10 Aug-10 Oct-10 Dec-10 Mar-11 Jan-10 Apr-10 Jun-10 Aug-10 Nov-10 Jan-11 Mar-11 Source: (March 2011) 1. Search traffic reflects transitions by respective country s users to local and Russian sites 8
  9. 9. Leadership in a Fast-Growing Market Number of Searches per Month (MM) 1 2,336 783 254 68 54 сен.05 мар.06 сен.06 мар.07 сен.07 мар.08 сен.08 мар.09 сен.09 мар.10 сен.10 мар.11 Sources: (March 2011) 1. Based on monthly search traffic to Russian websites from Russian IP addresses 9
  10. 10. The Gateway to the Russian InternetRussia’s Most Popular Homepage – 44% of All Russian Users News Mail Traffic Jams / Maps Comparison Shopping Yandex.Money 10
  11. 11. The Most Popular Online Destination in Russia Monthly Unique Visitors in Russia (MM) 38.3 35.7 31.6 28.4 23.3 YANDEX MAIL.RU Vkontakte Google OdnoklassnikiSource: comScore (March, 2011) 11
  12. 12. Key Investment Highlights Russia: Large and High Growth Internet Market Opportunity Growth in Internet Users vs. Penetration Total Internet Users (MM) 100 Key Developed Markets 80 80 Russia 2014e 66 Internet Penetration 2010 (%) 60 BRIC 54 50 Brazil 39 40 33 31 Russia 2010 China 20 India 0 0 5 10 15 Germany UK Russia France Italy Spain Internet users CAGR 2010-14e (%) 2010 2014E 2010 2014e Source: Euromonitor (January 2011), FOM (March 2011) for Russia 12
  13. 13. Market Overview The Russian Advertising Market Is Booming Russian Total Ad Market ($ Bn) Online as % of Total Ad Spend – 2010 14.6 29% 11.8 9.6 20% 18% 18% 7.9 15% 13% 11% 10% 5% 2% 2010 2011e 2012e 2013e UK China Germany France US Spain Russia Italy Brazil India Source: ZenithOptimedia (April 2011) 13
  14. 14. Financial ReviewRussia – A Rich Source of Technical Talent Education in Hard Sciences Math & Programming Olympiads Yandex School of Data Analysis Best Place to Work for Russian Developers 14
  15. 15. Technology, Technology, Technology, Local Focus, Culture. 15
  16. 16. 4 Things to Remember when you use Yandex v Simple auction based bidding; but with some local differences v Geographic targeting is important; but you can dip your toes in without it v Russian language is very different; localization and translation from English is difficult v  Conversion can be different; make sure you are measuring the right things 16
  17. 17. Get StareWant to try Yandex? v Contact International Business Development team v Free translation, training and initial setup v Local optimization and campaign feedback v Dedicated English speaking Account Manager in Moscow v Web based reporting, budgeting, etc. available in English language interface v Yandex U.S. entity available for simplified payment, invoicing & contracting v Dollars vs. Rubles v Post pay billing available v U.S. vs. Russian legal jurisdiction v European entity planned for late 2011 17
  18. 18. Thank You! Preston Carey Director, Business Development +1 857.288.8762 @prestoncarey