This document discusses the impact of the 2009 recession on the Russian internet market and key lessons learned. It summarizes that despite the recession, more people in Russia went online and online advertising revenues increased, though not as much as hoped. Specifically, display ad revenues grew 16% and context ad revenues grew 42% in early 2010 compared to early 2009. However, advertisers became more demanding of online ads and interactive ads that engaged users grew in popularity. The recession accelerated certain trends like growth in new online services and mobile adoption. Overall, the internet proved resilient during the economic downturn in Russia.

1. Andrey Sebrant Yandex Recession-2009:results and lessons

2. Warsaw, October 2008, “Russian hour”

3. 19 months later So, what were we doing? What happened?

4. Russian Internet growth (in ‘000) Age, years March 2008 March 2010 March 2009 Cities 100 000+, monthly reach Source: TNS WebIndex

5. Activity growth Reach 6 months 3 months 1 month 1 week 1 day 2006 2007 2008 2009 More frequent users every year Source: FOM

6. Age matters; size, too All cities100 000+ Age, years Moscow Internet penetration Source: TNS WebIndex, March 2010

7. Important note Russian market is changing very fast. Data in Do you CEE report are valid for January 2009; do not reflect the reality of summer 2010.

8. Result #1 Despite recession, we’ve got more people online

9. They love context ads In tough time, they come in crowds

10. …and they got smarter Your text

11. …and they are slightly different The realty segment was the most spectacular looser. On the other hand, health and beauty gained a lot.

12. Not a mourning time

13. 2010Q1 First financial results for 2010 are even more impressive: Display ads +16% Context ads +42% Total +31% (3,4 billion RUR) Source: ACAR

14. Result #2 Despite recession, we’ve got more money in online ads (but not as much as we’d wish…)

15. Online money go down the funnel Interactive marketing requires activity from a recipient. That’s why responsive and truly interactive ads are getting more and more popular. They are unique for the Internet (+mobile), they attract offline money. user activity

16. Recession is anything but a slowdown… Internet is the last thing people cut from their budgets (personal or marketing)(In fact, Misha predicted it here in 2008) Advertisers DO run online in tough time, but become much more demanding – so you better meet their expectations New services and devices (mobile first) catch on faster than ever.

17. PS. One slide of boasting InternetCEE’08 60% - 40% - Or maybe it’s a lesson, not just boasting…

18. They say it may be a W-shaped one? Okay, we’ll keep working!(Because we know it’s not all that bad, after all) And dancing, of course ;) Warsaw, yesterday ;)

19. Thank you! asebrant@yandex-team.rufacebook.com/asebrant@asebrant