Digital revolution has finally arrived to the Central and Eastern Europe. In 2011 its Internet population increased by 9% as 12 mln of newcomers have joined online. Though TV is still No1 and attracts the majority of advertising dollars, Internet advertising shows the highest dynamic at 12.1% growth in Europe. This year Russian Internet ad budgets grow by 35% (last year 56%), TV by 10% and print by 5%. Although print is still growing, it has recently given up its No2 position after TV in favor of more dynamic Internet. Overall Internet share in the CEE ad budgets is 9%, while it is 17% in Russia. The CEE media is rapidly digitalizing and presents a great potential.
In Russia, Ukraine and Belarus market share of Facebook does not exceed 11% of the online population, while the highest reach of FB (88%) is recorded in Turkey (other countries are penetrated by 45% or more). Yandex reaches to over 75% of online population in Russia (60% search results) and 43% in Belarus. Groupon is active in 4 countries: Russia, Poland, Romania and Ukraine, while in Russia its leadership has been taken away by the local Biglion. All CEE countries are featuring growth in e-commerce and group shopping and go through the process of market consolidation around the leaders.
While print revenues are souring and digital gains are long to be waited for, all traditional publishers are trying to make ends meet. However few of them seriously plan to diversify and invest in digital. Media3 -- one of the leading media holdings in Russia decided to invest $100M in building a digital portfolio of companies over 3-4 yrs. We were inspired by examples of Axel Springer and Schibsted and in addition to our core online media segment decided to diversify in three additional segments: classifieds, online video, lead generation. During 2011 we have increased total audience of projects in our portfolio by 20 M UMVs and keep growing via M&A every year. We believe, that there are no challenges without opportunities!
Around the world in 60 minutes - Maxim Melnikov
Around the world in 60 minutesMaxim MelnikovCEOMedia 3Russia
New MediaWelcome to CEE!Maxim Melnikov, CEO Media3, Russia WAN IFRA Congress Kiev, September 3, 2012
Central and Eastern Europe: Dynamic. Digital. Local We are: Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Russia, Slovakia, Slovenia, Turkey and Ukraine Total audience 261 mln Internet users: 143.5 mln Internet Penetration: 55%Source: Media3 3
Key trends: Print Digital is no longer a strategy, it is reality.CEE is the region where old media is stagnating and the new media is growing • Largest internet audience in Europe: Russia (55 mln) • Fastest Internet audience growth in Europe: Belarus (+20%) • Highest Internet Advertising growth market: Ukraine (+59%) • Highest Mobile page views growth in Europe: Lithuania (+980%)Media by Region YoY% Change Q1 2011-12Source: Nielsen Global AdView Pulse report, 2012 4
Key surprises: Exceptionally strong local players (original or clones) in Russia,Ukraine and Belarus. Google, Facebook and Groupon are present but do notcontrol the CEE market Social networks: Russia (vk.com – 70%; odnoklassniki – 61%), Poland (nk.pl – 59%), Latvia (draugiem.lv – 54%) Search engines: Russia (yandex.ru – 74%); Estonia (neti.ee – 50.4%); Belarus (yandex.by – 43%) Group shopping websites: Russia (Biglion.ru – 36%)World Map of Social Networks Dominance Facebook penetration in CEE regionSource: Vincos.it (July 2012), Gemius/IAB Europe 5 5 5
Key challenges vs. Media3 responses to them: 1. Invest in and acquire mature digital projects with proven 1. “Mind the Gap” between business models, strong shrinking print revenues and leaders and give them growing digital ones. It may support they need . You will take a while till one will save time and avoid the start- compensate for the other. up risk Have you got that time? 2. Partner with only a few strong teams and invest only in 2. “VC Hype”: too much funds ‘built to last’ assets, not ‘pack from VCs on the digital to sell’; use your strategic market drives the valuations advantages in deal structure up to the extreme (media coverage; relations with advertisers, etc.) 3. “HR deficit in digital”: a lot of evangelists and buzz words; 3. Good professionals value only a few professionals in good teams. Once you invest management, sales and in a right digital asset you can marketing who are very build a center of competence expensive and hard to attract around it with a right ‘culture’ that will attract the right people.Source: Media3 6