Growing Online Revenue:Advertising, Sales and Classifieds                       Moscow, Russia               27 – 28 Septe...
Agenda                Topic                                Presenter Online Advertising Market Overview          Ross Sa...
Online Market Overview     Growth in regional Internet audiences has created a growing market     for online advertising. ...
Online Market OverviewBut these audiences are mostly concentrated in Moscow, Kyiv and St.Petersburg.                      ...
Online Market Overview           Internet advertising in 2011 grew dramatically in Russia and Ukraine           and will l...
Online Market Overview  Over the next two days we will discuss the three major types of  online advertising.              ...
Online Display AdvertisingFirst we will start with Online Display Advertising and focus thediscussion on the following ele...
Online Display Advertising          Online display advertising is dominated by national, international          advertiser...
Online Display AdvertisingLocal advertisers tend to adopt online advertising much more slowlythan national/international a...
Online Display AdvertisingThe sales and marketing challenge to generating online advertisingrevenue is two-part.1.How to a...
Online Display AdvertisingOne of the most common actions to attract local and nationaladvertisers is “standards”.         ...
Online Display Advertising     Online advertising standard are fluid, global and set in most     European markets by an in...
Online Display AdvertisingOnline advertising standards are defined by two key attributes ofeach ad.Ad size:    Defined in...
Online Display AdvertisingPricing for online display advertising must address two questions:What is the revenue model? Wh...
Online Display AdvertisingFixed price models offer many advantages for local news media andadvertisers who are still new t...
Online Display Advertising Increasingly CPM Pricing models are the standard for national and international advertisers.   ...
Online Display AdvertisingCPM Pricing models also have pros and cons.Pro’s of CPM Pricing:Easily understood and incorpora...
Online Display AdvertisingPrice per action advertising is the most sophisticated and often usedby e-commerce advertisers l...
Online Display Advertising              Depending on a website’s media mix, there are progressively              sophistic...
Online Display AdvertisingMedia sites over 1 million monthly page views use one of threedifferent ad serving technologies ...
Online Display AdvertisingRussian Version:                             21
Online Display AdvertisingDeveloping online display advertising requires focus on advertiserneeds, standards and pricing, ...
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Russian and Ukraine Digital Market Overview

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MDLF's Ross Settles looks at the digital media and advertising market in Russia and Ukraine.

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  • Russian and Ukraine Digital Market Overview

    1. 1. Growing Online Revenue:Advertising, Sales and Classifieds Moscow, Russia 27 – 28 September 2012
    2. 2. Agenda Topic Presenter Online Advertising Market Overview Ross Sales Teams: Organization & Motivation Ross Advertising Networks Ross Online Classifieds: Local Opportunities Ross Social Media: Building Audience & Revenue Kevin 2
    3. 3. Online Market Overview Growth in regional Internet audiences has created a growing market for online advertising. Total Internet Population Growth Rates 2010 vs 2011 (millions)46% 33% 51% 41% 54%Penetration Rates Source: iabEurope 2012; Gemius, 2012. 3
    4. 4. Online Market OverviewBut these audiences are mostly concentrated in Moscow, Kyiv and St.Petersburg. Regional Internet Penetration, 2010 Russia Ukraine* Est. Audience Penetration Est. Audience Penetration (millions) (%) (millions) (%) Moscow 8,421 73% Kyiv ~ 4,500 ~90% St. Petersburg 2,863 59% Odessa 1,193 44% National Average -- 46% National Average -- 33% Chelyabinsk Oblast 1,760 51% Zaporizhia Oblast 528 28% Tomsk Oblast 421 40% Lviv Oblast 695 27% Perm Krai 846 32% Crimea Republic 362 18% Tula Krai 485 31% Kherson Oblast 136 12% Altai Krai 703 29% Chernivtsi Oblast 76 8% Buryatia Republic 280 29% Rostov Oblast 945 22%Russian Source: Рейтинг регионов по доле пользователей сети Интернет по итогам 2010 гUkrainian Source*: Estimated from Kyiv Post, “Report: Ukrainians browse more, online advertising yet to boom” 4
    5. 5. Online Market Overview Internet advertising in 2011 grew dramatically in Russia and Ukraine and will likely continue to grow until it reaches European averages. Total Internet Ad Spending, 2011 Estimated Spending/User, 2011 (millions) European Avg = € 33 + 56% +59% -16% +26% +23% Growth RatesSource: iabEurope 2012; Gemius, 2012. Note*: Russian estimate does not include €50 to 70 million in online classified spending. 5
    6. 6. Online Market Overview Over the next two days we will discuss the three major types of online advertising. DescriptionDisplay Related to site audience/content Sold directly Multiple pricing models Directory/database drivenSearch/Context Sold directly or self-serve High volume, low price or free Search engine driven Sold by technology companies w/Classifieds/Directory specialized sales teams Driven by page views and clicks 6
    7. 7. Online Display AdvertisingFirst we will start with Online Display Advertising and focus thediscussion on the following elements.Display Advertising ElementsAdvertisers: Who are they?Advertising Standards: Whatare they?Pricing ModelsAdvertising Management 7
    8. 8. Online Display Advertising Online display advertising is dominated by national, international advertisers in Russia. Distribution of Online Advertising Spending, 2011 By Industry By Advertiser (rubles millions) 1. Renault-Nissan 885 2. Proter & Gamble 590 3. Nokia 472 4. MTS 472 5. Samsung 448 6. Megafon 448 7. Beeline 413 8. Unilever 342 9. Sberbank 295 10. Microsoft 283Source: ACAR, 2012 8
    9. 9. Online Display AdvertisingLocal advertisers tend to adopt online advertising much more slowlythan national/international advertisers. Local Online Advertising Trends Online Ad Mix – US Example Obstacles to Local Advertising (US $ billions)  Relative risk to the business  Lack of understanding/familiarity  Target audience (local) too small or difficult to track  Measurement  Generational issuesSource: Borrell Associates, 2012; eMarketer, 2012. 9
    10. 10. Online Display AdvertisingThe sales and marketing challenge to generating online advertisingrevenue is two-part.1.How to attract a portion of the national/international advertising budgets?- Do you offer sufficient size to interest them?- Is your online reach to the local market important?- Is some aspect of your market important for the sales/marketing oftheir service (e.g. sports equipment, airlines,…)- Is it easy to buy your ads? Credit process? Sales channels?2.How do you encourage local advertisers to trust you and try online ads?- Do you have any ability to educate them?- Do you have any way to reduce the risk in trying online advertising?- Can you work with the advertiser to develop a verifiable way to prove thevalue of online advertising.Find creative ways to use your traditional products to introduce your onlineproducts to both types of advertisers. 10
    11. 11. Online Display AdvertisingOne of the most common actions to attract local and nationaladvertisers is “standards”. Value of StandardsCost: Lowers the costs of ad creation and ad servingCreative and Clarity: Allows for greater creativity in ad design andcreates a clear distinction between ads and editorial.Access: Helps support media’s ability to deliver online sites quickly, with nodelays because of large non-standard ads.Support: Provides media with support to argue against unreasonableadvertiser requests. 11
    12. 12. Online Display Advertising Online advertising standard are fluid, global and set in most European markets by an industry association of advertisers and media – The Internet Advertising Bureau. iab Europe Education and Events News and consulting Research and measurement Standard setting New standard developmentIAB Contacts: iab Europe = www.iabeurope.eu Iab Ukraine (affiliate) = www.uair.org.ua iab Russia = iabrus.ru 12
    13. 13. Online Display AdvertisingOnline advertising standards are defined by two key attributes ofeach ad.Ad size: Defined in terms of the width and length of an ad unit measuredin pixels.Weight: Defined as the size of the advertising file in megabytes (MB).Other: For new or emerging ad units there are new attributes constantlybeing defined:- Length of video play- Automatically play or user initiate play- Duration of ad placement in gamesAd standards are constantly evolving – let’s look at the current standards adstandards most commonly used for news media sites. 13
    14. 14. Online Display AdvertisingPricing for online display advertising must address two questions:What is the revenue model? What are you selling the advertisers?- Fixed Price by position; by time of day or week- Price per thousand ad impressions (CPM Pricing)- Price Per Action taken by the reader- Hybrid pricing of two of the above timesWhat is the price level? For each unit purchased how much doesthe advertiser pay?Setting pricing levels require you to consider several factors. The three keyfactors are:- Competitive Prices- Ad Availability/Inventory- Audience size/reach/uniqueness 14
    15. 15. Online Display AdvertisingFixed price models offer many advantages for local news media andadvertisers who are still new to online advertising. Fixed Price Models PRO’s:  Used broadly worldwide:  Familiar sales pitch - Schibsted (Norway) - SCMP (Hong Kong)  Easy to verify/document for advertisers - Gannett (USA)  Ad positions are fixed and  Easy to price limited in number  Each ad position has a price for some fixed period of time:  Easy to track and serve For example: 1 leaderboard on CON’s the homepage for 1 week  Not easily included in national advertising pricing models  Inventory grows by adding positions or splitting positions  Creates some risk of under by time of day/day of week. performance for advertisers  Price levels generally set  May under value sites with high traffic relative local TV, print and growth rates. outdoor. 15
    16. 16. Online Display Advertising Increasingly CPM Pricing models are the standard for national and international advertisers. CPM Pricing Models Driven by national/international agencies and advertisers. Calculating Ad Inventory: Ad inventory determined by 1.5 million page views - Number of ads on each page X 3 ads/page X Number of pages served (Page Views) 4.5 million ad impressions = Total Ad Impressions Advertisers purchase blocks of ads by the Price Calculation: thousands. For large sites (> 1mm page views), ads are Advertiser purchases 2 million ad often run in “rotation”, called “run of site” impressions for P 300 per thousand ROS. 2,000 (thousands) x P 300 = P 600,000 Price levels are set in relation to competitive online price ranges. Range has two ends: - High = price points of competitive media. - Low = Ad Network Price + cost of sales. 16
    17. 17. Online Display AdvertisingCPM Pricing models also have pros and cons.Pro’s of CPM Pricing:Easily understood and incorporated into national/international advertiserprograms.Maximizes inventory value in high demand situationsRotating ads keep site fresh and up-to-dateCon’s of CPM Pricing:Complicated sales and verification process for advertisers new to onlineRequires ad serving technology – AdRiver, OpenX, Google DoubleClickCan result in substantial unsold inventory in low demand situationsCan result in advertisers “cherry-picking” only the best times/days of theweek to run their ads 17
    18. 18. Online Display AdvertisingPrice per action advertising is the most sophisticated and often usedby e-commerce advertisers like ozon.ru or amazon.com. Price per Action Models PRO’s:  Used extensively by e-  Direct link to ad effectiveness commerce advertisers  High yields on very highly targeted  Advertisers only pay when the content – electronics, travel, directory… reader performs some pre- defined action:  Simple to implement - Click - Register - Purchase CON’s  Does not perform well on most daily  Used heavily by ad networks news sites; performs best on “features like Yandex Direct and Google related content” like travel or product AdSense reviews  Frequently added as a bonus on  Can be difficult to track and verify for top of CPM purchase. actions beyond “click”  Works best when content is related to advertising category. 18
    19. 19. Online Display Advertising Depending on a website’s media mix, there are progressively sophisticated technologies to manage advertising. Manual CMS Based Ad ServerDescription  Staff managed  CMS includes a simple  External technology tool to upload and which manages manage advertisers display/tracking of ads  Often linked to external ad networks  Best for:  Low volume fixed price  Moderate to highUses - Fixed price models or CPM priced models volume CPM/Network - Low ad volume sites advertising - Local advertiser sitesExamples  ___  Bitrix, WordPress,  AdRiver, DoubleClick, Joomla OpenX  Staff salaries  Software – free  Software – Priced PerCosts  Staff salaries Thousand Ads Served  Staff salaries 19
    20. 20. Online Display AdvertisingMedia sites over 1 million monthly page views use one of threedifferent ad serving technologies to manage ad placement andtracking. 20
    21. 21. Online Display AdvertisingRussian Version: 21
    22. 22. Online Display AdvertisingDeveloping online display advertising requires focus on advertiserneeds, standards and pricing, and efficient management.Advertiser Needs:Be prepared to address very different needs from national/international andlocal advertisers.Standards and Pricing:Online ad standards help attract advertiser by reducing costs and increasingflexibilityAd Serving and Management:As site traffic and advertising volume grow, ad management needs willbecome more complex and require more sophisticated tools. 22

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