2011 Capital Markets DayNew Advertising Sales Structure              Yulia Moskvitina      Chief Commercial Officer
Strong Track Record of Advertising Revenue Growth…US$ mln                                            75.8                 ...
Growing Market Shares Through Increasing Combined Power Ratio                                   1.5x                      ...
Stable Consumer Goods Client Base With Both Multi-National and Local Advertisers                                          ...
Russian TV Advertising Sales Structure before 2011                               Advertisers                              ...
Amendments to Advertising Law – A Challenge Turned into An Opportunity                                         November 20...
New Deal with VI Ensures Continued Support from the Largest Player…    Main    M i services and            i      d       ...
Advertising Sales Structure from 2011                                        Advertisers                                  ...
Benefits of Internal Sales House                                    More control over                                    t...
2011 Sales Structure: National & Regional Ad Sales to Moscow-Based Clients                                                ...
2011 Sales Structure: Regional Ad Sales to Local Clients                                                  CHANNELS’       ...
What Gives Us Confidence in the Success of Our New Sales Structure?                                       Strong sales tea...
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Capital Markets Day 2011 Yulia Moskvitina

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Capital Markets Day 2011 Yulia Moskvitina

  1. 1. 2011 Capital Markets DayNew Advertising Sales Structure Yulia Moskvitina Chief Commercial Officer
  2. 2. Strong Track Record of Advertising Revenue Growth…US$ mln 75.8 75 8 48.7 424.9 215.4 40.9 40 9 16.6 2005 2010 2005 2010 2008 2010 97% ad revenue growth 357% ad revenue growth 19% ad revenue growth within 5 years since launch in 2005 since pre-crisis 2008 …by monetizing unique audiences which advertisers desire to reach 1
  3. 3. Growing Market Shares Through Increasing Combined Power Ratio 1.5x power ratio 1.2x 12 19% power ratio Complimentary channels in portfolio 12% 13% Strong brands of CTC Media channels g 10% Audience quality Bundled sales 2004 2010 Ad options beyond classic spots CTC M di "All 4 " A di Media 4+" Audience Sh Share Highly Hi hl professional t d marketing and f i l trade k ti d National Ad Market Share promotion to advertisers Power ratio = National TV advertising market share/All 4+ audience share 2
  4. 4. Stable Consumer Goods Client Base With Both Multi-National and Local Advertisers Multi- FY 20101 1 Food 26% 2 Cosmetics 19% 3 Other goods and services 13% 4 Pharmaceuticals and vitamins 10% 5 Appliances 7% 6 Telecoms 5% 7 Detergents g 5% 8 Personal care products 5% 9 Beverages 4% 10 Beer 4% 11 Auto and finance 2% 100% 3
  5. 5. Russian TV Advertising Sales Structure before 2011 Advertisers d e se s Advertising Agencies 2 major sales houses: Media Sales Houses: Fast evolutionary development of recently emerged TV ad market in Video International Gazprom-Media / Alkasar Russia CTC Media: National ad inventory was sold by VI since 1999, regional – since 2006 4
  6. 6. Amendments to Advertising Law – A Challenge Turned into An Opportunity November 2010 – new agreement Quick d Q i k and July 2010 – with VI is signed decisive decision on response to internal regulation sales house change led to is made optimized sales efficiency Fall F ll 2010 – September start of Spring 2010 2010 – negotiations with – Booz&Co Everest Sales was hi d hired June-July J J l is t bli h d i established advertisers for 2010 – 2011 more clarity about theDecember 2009 – futuresurviving the “first marketshock” structure 5
  7. 7. New Deal with VI Ensures Continued Support from the Largest Player… Main M i services and i d • C Compensation i l d fi d and variable elements ti includes fixed d i bl l t – complex structure consulting • Effective VI compensation of 10-12% of total g agreement reported Russian advertising sales (13% previously) Direct sales • 12% gross sales commission (15% previously) agreement for • Commission will be netted off from revenues regional sales to • Revenues from direct VI sales will not exceed 4% of our total Russian ad sales local clients … and is accretive in terms of reduced cost of sales 6
  8. 8. Advertising Sales Structure from 2011 Advertisers Advertising Agencies Internal Sales Houses: Media Sales Houses: Everest Sales RTR-Media Gazprom-Media / Alkasar Video International 7
  9. 9. Benefits of Internal Sales House More control over the sales process Mastering Lower cost of internal expertise i t l ti sales as % of l f in direct sales revenues Individual Bundle sales with approach to each additional client and options, including p , g customized non-FTA offerings Working directly with advertisers and media agencies 8
  10. 10. 2011 Sales Structure: National & Regional Ad Sales to Moscow-Based Clients Moscow- CHANNELS CLIENTS Телеканалы -Advertisers Ad ti -Advertising agencies Video International Vid I t ti l Up to 96% of Russian ad sales directly through Everest Sales 9
  11. 11. 2011 Sales Structure: Regional Ad Sales to Local Clients CHANNELS’ Regional Stations Телеканалы Video International Subsidiaries Distribution of inventory between Moscow-based and regional clients Local sales Sales directors of CTC Signing deals with clients Media regional stations by VI local branches 1.Pre-sale 2.Control of the deals 3.Trade marketing g g Regional sales to local clients Not more than 4% of Russian ad sales through Video International 10
  12. 12. What Gives Us Confidence in the Success of Our New Sales Structure? Strong sales team Established relations with major advertisers We continue to build our sales capabilities Incorporating best practices with the help of Booz&Co Continued alliance with VI and benefitting from their expertise, IT platform, back-office support and analytics Three TV channels with complimentary audience profiles 11

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