iab russia digital advertisers barometer

IAB Russia Digital Advertisers Barometer – 2014
Prospects for digital advertising in Russia:
a view of advertisers
the results of the study
Report provided by
SEPTEMBER 2014

IAB Russia Digital Advertisers Barometer – 2014 2
Сontents
1. Acknowledgements ...................................................................................... 3
1.1. Ordering Parties of the Research .............................................................................. 4
1.2. Research Partners ...................................................................................................... 4
1.3. Advertisers .................................................................................................................. 5
1.4. Experts ........................................................................................................................ 6
2. Main Results ....................................................................................................... 8
3. Research Method ........................................................................................... 10
4. Advertisers Budgets in the Runet............................................................. 12
5. Market Trends ................................................................................................. 17
About the IAB ....................................................................................................... 19
Data Insight research agency ........................................................................20

1. Acknowledgements
The following is the key results and conclusions of the IAB Russia Digital Advertisers Barometer
research, which is a study of opinions of advertisers regarding market, tools and players in
this market. This research is primarily a direction indicator of sorts, which shows changes in the
market sentiment, their transformation depending on the situation inside the market (inventory,
advertising tools, analytics etc.), and the economic situation in the country and in the world.
Based on this research, we can draw conclusions about how the situation will change in the
future.
In 2002, Daniel Kahneman won a Nobel Memorial Prize for his work in the field of
understanding of “...a person’s judgment in the context of economic uncertainty.” He had
actually shown that in an environment where information is insufficient, the markets behave
in accordance with the mood of the active majority and a wide range of experts. It is these
experts whom we have invited to participate in the research; and it is to them that we are
grateful for this work: both to those who have allowed for their brand names to be published
and to those who have not given such consent.
1.1. Ordering Parties of the Research
This research was the result of a decision of the general meeting of full members of
IAB Russia in November 2013. The companies that pool their resources in the name
of development of the market of interactive advertising in the Russian Federation have
unanimously supported the launch of regular research on the mood and the expectations
of advertisers in order to give the platform to entrepreneurs and marketers from the real
business and thus to increase market transparency.
We express our gratitude to the member companies of IAB Russia that have funded this
study.
3 IAB Russia Digital Advertisers Barometer – 2014

1.2. Research Partners
This research was made possible thanks to the support of our partners (communication
agencies that have performed a great work of attracting research participants, i.e. the
advertisers). We would especially like to note that not only IAB members, but also other
agencies that found this research necessary for the market, participated in its preparation.
We would also like to emphasize that participation of agencies in this research was
absolutely gratuitous and that their involvement in this research was due to their
commitment to making the digital-advertising market in the Russian Federation more open,
transparent, and understandable for all its participants.
Finally, we would like to express our sincere appreciation to each of our partners
personally for their help in the preparation of this research:
IDEA DRIVES ROI

1.3. Advertisers
We would also like to express our gratitude to all the companies that participated in this
research whether they have given consent to their brand name being specified in this
list or not. The opinion of each of you is valuable to us because they collectively define
the further development of the interactive-advertising market in the Russian Federation.
Advertisers that participated in the research:

1.4. Experts
Furthermore, this research could not exist without the experts: the professionals who help
us in planning the research and, of course, in processing and interpretation of its results.
The list of our experts is provided below.
Belyaev Alexey, head of internet research division, Vi Analytical Center. Chairman
of the Committee on Research IAB Russia. He graduated from the Faculty of Physics,
Moscow State University. MSU in «Space Physics» worked as a researcher and head
of the laboratory in the Institute of Nuclear Physics of Moscow State University.
In 1997-1999 worked RosBusinessConsulting, participated in the development
and the establishment www.rbc.ru site and on-line financial services. In the years
2000-2006 worked in of «Rambler Internet Holding» took part in the creation and
development of projects Rambler-News, Rambler’s Top100, Rambler-Real Estate,
partnership projects, participated in the organization of seminars and conferences.
In 2006-2009 headed the Association «Internet and Business» – a non-profit
organization, combining large Russian Internet company, involved in the organization
and the annual conference «Internet and Business». Since June 2009 head of internet
research division, Vi Analytical Center.
Chernyshev Andrei, Chief Digital Officer at Dentsu Aegis Network Russia. Mr.
Chernyshev graduated from the Moscow State Institute of Electronics and Mathematics
(MGIEM) and received his master’s degree in the field of computer science from the
State University of New York. He has been in online advertising since 1997 and was in
charge for the development of internet-marketing programs for dealers and distributors
of Intel Corp. From 2000 to 2007, he was the Director of Development and a partner
in the AdWatch agency. Since 2007, he has been the CEO of AdWatch advertising
agency. After the purchase of AdWatch by Aegis Media (now Dentsu Aegis Network),
an international communications group, he continued to work in the group as the CEO
of AdWatch Isobar and the Chief Digital Officer of the Dentsu Aegis Network Russia
group of companies. Under his leadership, the group of companies have created digital
departments of the following advertising agencies: Carat, Vizeum, Ad O’Clock; the
iProspect Russia performance-marketing agency and the RTB-AMNet trading platform
were created, and Traffic advertising agency was purchased and integrated into the
Isobar network. Andrei Chernyshev was the winner of the “Media Manager of Russia”
award in 2009.
Chernitskaya Maria. Ms. Chernitskaya graduated from the philology department
of St. Petersburg State University and received her master of art degree at the State
University of New York, Albany. In 1997, she headed the St. Petersburg branch of
CityLine, the then-largest Internet service provider. From 1998 to 2000, Ms. Chernitskaya
served as the Director of Marketing for the Mail.ru National Email Service. In 2000, she
became the Director of Marketing and Sales of the Russian representative office of Lycos
Europe, an American Internet portal. In 2002, she opened her own contextual advertising
agency, iConText. Today, iConText is the largest independent digital agency in the
Russian Federation and the flagship of iConText Group. The group consists of six Internet-marketing
companies and 3 projects.
In late 2006, Ms. Chernitskaya received the Rambler Media Internet Person of the
Decade Award. She is a co-author of “100% Internet Marketing,” which was published in
2009, a recognized expert of the Internet industry, a regular speaker of leading Internet
conferences both in the Russian Federation and in the CIS.

Boris Omelnitskiy, Director of Business Development of ADFOX service at Yandex
company. Mr. Omelnitskiy was elected the President of IAB Russia in September 2011.
Prior to that, he had worked as the Executive Director of Begun company for seven
years, where he was responsible for strategic development, operational management,
and organization of the business processes of the company. From 2003 to 2004, he
worked as the marketing director of the retail network of White Wind – DIGITAL. In the
period from 1998 to 2003, he worked in the following Internet projects: Zhurnal.Ru, Polit.
Ru, Kinoizm.Ru, Sibintek, Krutilka.Ru, and eHouse. He has been deeply involved in the
formation of infrastructure and standards of the online-advertising market for the last 15
years by participating in organization and implementation of industry conferences of
RIF + KIB, RIW, eTarget, IBC Russia. He is a lecturer in the Higher School of Economics
and in the School of New Media and is one of the co-authors of the book “Contextual
Advertising.” He holds an MBA degree in strategic management.

2. Main Results
The surveys were conducted from May to August 2014 concurrent
to the development of anticipation of the crisis; however, no sharp changes
in budgeting plans for interactive advertising have been detected. The factors
that motivate an increase of the budgets in the digital sphere are not affected
by the crisis: the audience continues to grow; the exact targeting, to develop;
and the efficiency is quantifiable and high when compared with other media.
Boris Omelnitskiy. IAB Russia
Sixty-five percent of the major Internet companies plan increasing their budgets
for interactive advertising by more than 10 percent in 2014. For “brick and mortar”
companies (i.e., those companies which primarily do their business offline), this value
equals 39 percent of the respondents. Big advertisers increase their advertising budgets
for interactive advertising despite the growing expectations of the difficult economic
situation in the country. In this regard, more than two-thirds of respondent advertisers
agree with the statement that the share of interactive advertising in the general advertising
budget is increasing and will continue to increase.
Mobile advertising is the most requested innovation in the market of interactive
advertising. All the market participants either want to try it or already use it in their
advertising mix. At the same time, a third of advertisers considers it an integral part of any
advertising campaign while another third thinks of it as a field for experimentation, and
only one-third does not know what can be done with the use of mobile advertising.
Search advertising is not just the most used form of interactive advertising but also the
most growing one. Today, 89 percent of the country’s biggest advertisers use this type
of advertising and spend, on the average, 26 percent of their budgets on it. At the same
time, 38 percent of advertisers are expecting increased costs for contextual advertising.
The cost of advertising has virtually no effect on the dynamics of advertising budgets.
Neither low nor high cost of advertising, in fact, can be characterized by the bulk
of the respondents. To paraphrase the answers of our respondents: “We will use online
advertising because we cannot but use it, and this is an issue of a channel without which
we cannot do rather than a question of price.” In our opinion, it is the value
and the uniqueness of the channel that are a key factor in the growth of interactive
advertising budgets rather than separately taken efficiency and transparency of Internet
advertising or the growth of the audience of Internet users. It is the set of all these factors
that is important.
What hampers the growth of interactive advertising budgets? In fact, oddly enough, it
is the fixed advertising budget and the inability (or unwillingness) to reduce the cost of
advertising in other media channels. This is exactly what tied for third place (32 percent
of respondents) in our rating, preceded by the impossibility of solving tasks with the use of
interactive advertising and the insufficient size of the Internet audience. At the same time,

the fourth place (27 percent of respondents) was given to the conservative leadership,
which is not ready for placement of digital advertising.
The internet audience constitutes more than a half of the population of the Russian
Federation, and the size of the audience of the largest websites is comparable to the TV
audience in size; however, even some large advertisers (as much as 35 percent of the
respondents, actually!) believe that the coverage of the Internet audience is inadequate
for implementation of their advertising goals. Thus, the real growth of the budgets is not
due to the growth of the Internet audience, since it is already large, but rather to the
increasing awareness of the size of this audience by advertisers. In other words, we
suppose that the Internet audience is smaller than it really is.
Most advertisers agree that Internet advertising is an effective (perhaps, the most effective)
part of the media mix, which already includes or will soon inextricably include mobile
advertising; furthermore, a significant part of this advertisement in the near future will be
on the screens of smartphones and tablets.
Even in 2014, in anticipation of the crisis, the volume of interactive advertising is escalated
by largest advertisers much faster than the total volume of advertising (if any, given an
overall decline in the volume of advertising). The fastest growing segments in this year are
pharmaceuticals, retail, and FMCG.
In the context of the 2014 crisis, we can see that advertisers are willing primarily to
increase the budgets of the directions that have proven to be effective and are not ready
to participate in new directions that, though attractive they may be, have yet to prove
their effectiveness. A good example of this trend is mobile advertising, which 40 percent
of advertisers are going to try but only 25 percent of respondents are going to increase
the budget correspondingly. At the same time, based on the number of new tools that
advertisers are going to use it can be said that the greatest number of innovators is in
retail, electronics, and - a little less - in the pharmaceutical industry.

make decisions on the
allocation of the entire
advertising budget
make decisions on the
allocation of the budget
for online advertising
participate in decision-making
on the allocation
of the advertising budget
3. Research Method
At the heart of this research is a survey of major advertisers with individually sent
questionnaires. We conducted a survey of advertisers with a budget for Internet
advertising of no less than one million RF rubles a month (regardless of the region of
the company in the Russian Federation). The choice of advertisers for the survey was
conducted through agencies that acted as partners of this research.
In total, 187 questionnaires from various advertisers have been collected. Among the
representatives of the companies surveyed, more than half (52 percent) make decisions
on the allocation of the entire advertising budget; and another 13 percent – on the
distribution of the advertising budget in the segment of digital advertising. More than half
of our respondents (58 percent) have experience in advertising and marketing of over
6 years. Another 30 percent, from three to six years.
Fig. 3.1. Do you make decisions on the allocation of the advertising budget
of your company?
Fig. 3.2 . How many years of experience do you have in the fields of marketing
and advertising?
From 1 to 3 years
From 3 to 6 years
From 6 to 10 years
More than 10 years

Within the scope of our research, we have identified several key categories of advertisers
which we were able to examine in more detail: FMCG, retail, electronics and household
appliances, finance and insurance, pharmaceuticals, IT and telecom, and cars.
Fig. 3.3. Distribution of the Companies Surveyed by Category of Advertisers
FMCG
retail
electronics
finance and insurance
pharmaceuticals
IT and telecom
media
cars
other

4. Advertisers Budgets in the Runet
Within the scope of this research, we have asked a question about the change of the
budget of our respondents in 2013 and its planned modification in 2014. We have also
asked about the change of the budget of our respondents for interactive advertising.
4.1. 2013 vs 2012
Firstly, it is necessary to understand who the advertiser is. The composition
of advertisers in interactive advertising is not very homogeneous. Moreover,
their budgets vary from year to year in different ways. Thus, a substantial
share of the data for 2012-2013 was composed of the data of web-based
businesses. Here, we are not talking about retail but rather about online
projects. Examples include coupon sites (Biglion, Daberi, Kupikupon), Avito
and others. In 2014, some of them stopped investing in interactive advertising
because of the success while others did the same because of absence thereof.
On the other hand, however, banks and mobile carriers have increased their
budgets. At the same time, as we have seen, the same advertisers decrease
investments into certain kinds of interactive advertising and increase them into
others (for example, investments into performance marketing). Therefore, some
advertisers reduce their investments while others increase them altogether or
increase them in respect to certain segments while decreasing them in respect
to others. In my opinion, the total amount of money in the industry is not
decreasing but is not actively growing, either; and this situation will continue in
2015 as the money will simply change pockets. As it always happens in
a crisis, there will be more advertisers. Previously, crises demonstrated that
“when the going gets tough” everybody begins to look for more efficient tools.
And – wait for that – they discover the effectiveness of digital advertising as
a whole and its individual parts in particular.
Maria Chernitskaya, iConText
Only 62 percent of advertisers have said that their budgets for interactive advertising
increased in 2013 while 15 percent of all respondents (and 11 percent of respondents from
offline advertisers) have indicated that their advertising budgets for interactive advertising
in 2013 increased by more than a half. Most of the respondents are traditional “brick-and-mortar”
companies while online company only constituted one-fifth of the respondents;
therefore, the latter have not had too much influence on the results. For this reason,
we continue to present data for all the advertisers and for the advertisers from online
companies but do not present any data on offline advertisers.
Among the advertisers of online companies, only 17 percent have indicated that their
budgets for interactive advertising did not change; all the others have said that their
budgets for 2013 increased. At the same time, 30 percent of advertisers in this group have
indicated that their budgets for the year increased by more than a half.
In comparison with the data on the total advertising budget, interactive advertising is
doing very well. Twenty percent of all the advertisers have reduced their advertising
budgets while another 19 percent have left their budgets unchanged. Only 52 percent of

A larger percentage of advertisers
have increased their budgets for
interactive advertising under falling or
unchanged budgets for all advertising
activity. Internet companies increase
their budgets faster (although the
budgets themselves are smaller).
advertisers have shown that their advertising budgets have increased over the year 2013.
The share of offline advertisers who increased their advertising budgets is only 44 percent
of respondents.
A larger percentage of advertisers have increased their budgets for interactive advertising
under falling or unchanged budgets for all advertising activity. Internet companies
increase their budgets faster (although the budgets themselves are smaller).
Fig. 4.1. How has the budget of your brand for interactive advertising changed in 2013
compared to 2012? (In RF rubles)
Fig. 4.2. How has the total advertising budget of your brand changed in 2013

Fig. 4.3. How has the advertising budget of your brand (converted to RF rubles) changed
in 2013 compared to 2012?
4.2. 2014 vs 2013
Budgeting of advertisers has undergone a significant change. If Internet
advertising grew with the growth of the budgets of advertisers and
at the expense of other, less effective, media until 2014, the year 2014 saw
this trend change, as only the growth at the expense of other media remained.
Against the background of general absence of growth of advertising budgets
of advertisers, the funds are invested only in the most effective media (primarily,
contextual advertising, which demonstrated an increase of 28 percent
in the first half of 2014, and video advertising, which demonstrated
an increase of 60 percent in the first half of 2014).
Andrei Chernyshev, Dentsu Aegis Network Russia
The situation in 2014 does not look so bright as it did in 2013 since more than half of all
the advertisers (54 percent) have indicated that their advertising budgets will decrease or
remain the same in 2014. Together with the “slightly increase” option, this accounted for
66 percent, i.e. two-thirds of all the respondents. For online companies, the situation
is much better, as only 29 percent of companies say that their budgets have not increased
or have decreased; and another 6 percent say that they have slightly increased.
Interactive advertising didn’t avoid the crisis: 17 percent of the surveyed companies say
that the volume of interactive advertising in 2014 will be reduced. Another 31 percent of
advertisers say that the budget for interactive advertising will remain at the same level as
in 2013. For online companies, these figures are 6 percent and 24 percent, respectively.
It is important, however, that 65 percent of large online companies are going to increase
their budget for interactive advertising by more than 10 percent. For “brick-and-mortar”
companies, this share is 39 percent of the respondents.
In this regard, more than two-thirds of respondent advertisers agree with the statement that
the share of interactive advertising in the general advertising budget is increasing and will
cnue to increase.
65 percent of large online companies
are going to increase their budget for
interactive advertising by more than
10 percent. For “brick-and-mortar”
companies, this share is 39 percent
of the respondents.

Fig. 4.4. How will the budget of your brand for interactive advertising change in 2014
4%
6%
16%
17%
9%
31%
4%
3%
15%
15%
10%
33%
17%
26%
22%
6%
24%
Fig. 4.5. How will the total advertising budget of your brand change in 2014
17%
20%
6%

Fig. 4.6. How will the advertising budget of your brand (converted to RF rubles) change in
2014 compared to 2013?
Fig. 4.7. If one talks about the common trends of last (2013) and the current (2014) years,
how is the share of interactive advertising (including both online advertising and mobile
advertising) in the advertising budget of your brand changing?
increases
no increase
cannot say

5. Market Trends
5.1. Mobile Advertising has Become Well-Marked
Basically, there is nothing to say about the growth of mobile advertising: its volume has
increased but – seeing that the growth of new tools from scratch always looks swift –
no major changes have happened in this type of advertising. In fact, we have to say that
no new tools nor new sites nor new technologies nor new strategies have appeared.
However, one significant change did take place: mobile advertising suddenly – like
online advertising did 12 years ago and SMM did 5 years ago – has taken its place
in the minds of advertisers, who – while still far from discussing the details and the tools
of mobile advertising, as is the case with other types of advertising – do already
understand and say that mobile advertising is an integral part of interactive advertising.
In free responses, the users further commented that the number and the quality of offers
of mobile advertising has significantly increased; that mobile advertising has entered the
arsenal of tools of most agencies; and that almost every new proposal includes
a mobile component. And, by the way, mobile advertising is a huge margin ahead
of all advertising options that are not currently used by companies but that will most likely
be used in the coming year.
Mobile advertising still has a long way to go to become a full member of the interactive
pie; however, this way is already clearly visible and can be predicted.
5.2. Video Advertising
It is a definite trend that marks the majority of advertisers without special comment. The
volume of use of video advertising is growing continuously at the expense of the share
of ordinary banners in display advertising and creates a whole new market in the form
of commercials that are distributed through video-hosting websites and social networks.
Video advertising is becoming a standard part of the media mix as a part of display
advertising.
5.3. RTB Ceased to Be Three Scary Letters
Several years of discussions of articles and publications at conferences and active sales
have led to the fact that major advertisers understand what these letters stand for and are
no longer put off by complicated explanations and mathematical calculations. It is true,
however, that they understand RTB differently: some advertisers think that this is a way
of purchasing the same advertising at a cheaper price; others, that this is a way to buy
advertising more accurately; and yet others believe that RTB fails to live up to its promises
as a technology. In any case, RTB is no longer just three letters and some trendy name
but a set of technologies, principles, and approaches that are clear and easy for large
advertisers, who either already use it on a daily basis or who realize its inapplicability
for their advertising campaigns at this stage of technology development.
In fact, Programmatic Buying does not take its place even in the budgets of advertisers;
however, this technology has been discussed at the level of detail rather than at the level

of mere concepts. Thus, the increased share of PB in the budgets of advertisers is only
a matter of time and technology capabilities.
5.4. Websites Play Out
More and more advertisers indicate an increase in the use of landing without reference to
the main site: the advertised product or event is covered on a separate page and all the
advertising leads to it. At the same time, the page may contain no links to other suggested
products or events in order to increase the conversion. Thus, the advertised offer and the
advertised page may be totally independent from the main site in terms of design, logic,
transitions etc. This trend is typical both for major advertisers, which primarily place brand
advertising, and for medium advertisers, which are focused on performance marketing.
It is obvious that with the increase in the proportion of mobile traffic and mobile
advertising (where the users’ behavior and web usage patterns are substantially different),
the advertising share attributable to the landing will increase as well. This, in its own way,
not only changes the approach to advertising but also the nature of the Internet. It is
important for this research that advertisers see it and understand it.
5.5. Automation of Advertising
(Primarily – Contextual and Targeted Advertising)
A huge number of tools for automated control of large tracts of search ads and targeted
advertising have emerged in the market. They include both licensed Western systems and
independent Russian systems as well as the systems that have been developed within
agencies to control advertising campaigns of their clients. The systems for managing large
budgets and huge amounts of advertisements are best reflected in the attitudes of large
and medium-sized advertisers, as this is where they are the most appropriate. Moreover,
despite the fact that such systems have existed for many years, advertisers “suddenly” saw
a sharp increase in their number.
This trend affects the large advertisers of contextual advertising. It should be noted,
however, that there is a certain class of advertisers which conduct their contextual
advertising through an agency and for which search advertising is not a key form of
advertising (we are mainly talking about brands here); these advertisers are not so much
interested in automation systems. In this case, the automation of the entire process is on the
side of the agency and is of little concern to customers.
Less Important Trends:
The growth prospects of the CPA model in the Russian Federation are the
most ambiguous. On the one hand, the idea embedded in the model is the
closest to the advertiser. On the other hand, CPA agency have compromised
product with traffic of a poor quality and have failed the expectations of the
advertisers. With the development of programmatic / RTB buying, which is
more transparent for advertisers and potentially more profitable for advertising
space, the proposal for the CPA inventory will decline.
Andrei Chernyshev, Dentsu Aegis Network Russia

About the IAB Russia
The Interactive Advertising Bureau (IAB) Russia – Non-profit partner-ship
to promote the development of interactive advertising is part of an interna-tional
network of associations IAB and is independent of the Russian public
organization.
IAB is the world’s largest interactive advertising union represented in about
40 countries, the market expert and the author of industry data the only
acceptable in the world.
The main objective of IAB Russia is the growth and development of the Russian
interactive advertising market.
Mission:
z Integration of Russian market into the world digital advertising market
z Two-way exchange of information and experience
z Distribution of digital advertising standards to Russia
z Provision of infrastructure for communication with foreign community
z Developing projects for demonstration of market potential in Russia
Philosophy:
z Transparency and frankness of relations
z «Out of politics» atmosphere
z Balanced positioning of various market participants
z Focus on the industry needs
Contacts:
16/5 Sushchevskiy Val street, office 1100, Moscow, 127018
phone/fax: +7 (495) 662 39 88
email: add@iabrus.ru
www.iabrus.ru
The full version of the survey in Russia is available at:
iabrus.ru/docs/report_iab.pdf

20
Data Insight research agency
Data Insight is the first Russian research agency specializing in
internet market: interactive advertising, ecommerce, digital PR,
online education, internet start-ups. We operate on the Russian,
Kazakhstan, Belarusian and Ukrainian markets.
The agency founded by Fedor Virin and Boris Ovchinnikov in 2010.
Data Insight provides analytical surveys based on mix data sources:
polls, web stats, financial data, usage data, expert opinions,
company’s data (like sales stats). We make a strong models with all
this types of data to understand user behavioral and to provide
forecasts
Contacts:
phone/fax: +7 (495) 540 59 06
email: a@datainsight.ru
www.datainsight.ru

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