August 26, 2014 at 16:19How sanctions will affect the Russian online advertising market
The foreign policy situation in the world continues to be very tense, and many users of Runet continue to discuss how sanctions can affect various aspects of life in the country. This is a really interesting question, since sanctions and the crisis may even affect areas where this was not particularly expected - for example, in online advertising.
Current situation
Recently, much has been said that from symbolic and targeted sanctions, the conflicting parties have moved to more serious sanctions - they were imposed on Russian companies and sectors of the economy, as well as foreign entrepreneurs who were involved in the food business, the delivery of which was due For a year, the authorities of our country have banned.
Investors withdraw capital from Russia and are reluctant to invest in projects in our country. It becomes more difficult for financial organizations to receive loans abroad. As a result, the general economic situation in the country is increasingly characterized not by the word “stagnation” (that is, lack of growth), but by the term “recession” (negative growth).
Crisis phenomena
In this situation, the income of many companies will fall, which means that they will reduce their advertising costs. The first victims of this trend already exist - this is Mail.Ru Group. The company published a report on financial performance for the second quarter of 2014, from which it became clear that its revenue was less than the forecast by 280 million rubles (total it amounted to 15.1 billion). Dmitry Grishin, CEO and Chairman of the Board of Directors of Mail.Ru Group, said that the company's revenue will be 4-8% less than forecasted, the worst indicator since 2008.
The top manager of the company connected the drop in indicators in the first half of the year with the complication of the economic situation and the geopolitical situation:
These factors negatively affected our advertising revenue, especially from media, which decreased by 10% in the second quarter.
Possible trends
The situation in the economy and in the advertising market will lead to the fact that advertising budgets, by and large, will be reduced. Smaller advertisers may begin to refuse a variety of creative advertisements in the fall, large companies will probably not cancel the contracts already in the budget, but spending will be actively revised for 2015.
As a result, we can observe several trends in online advertising:
- Reducing the cost of branding advertising - “brand recognition”, which was necessary for the business at a time when “everything was fine,” it would not need against the backdrop of a real drop in sales and revenue.
- Television content will begin to penetrate more actively into online channels - they will want to save profits and capture new niches (the video of Channel One will be broadcast on Rambler & Co sites).
- Reduced sales will push advertisers to use “selling” advertising - contextual advertising is an obvious option.
- The transition to "performance marketing", that is, marketing aimed at a specific result - the sale or completion by the user of a target action.
- Based on this, it is logical to predict the increase in the use of advertising using real-time auction technology (Real-time Bidding, RTB), as a cheaper option than display advertising (banners) sold directly on Internet sites.
What's up with RTB
Let's talk a little more about RTB, which is one of the most promising advertising technologies - with its help Internet sites (“publishers”) can sell banner placement on their resources through special advertising exchanges where advertisers automatically trade for the best placement price. The ad robot wins, offering the best price for a specific banner placement opportunity. The whole process is fully automated.
RTB is a good tool for attracting targeted traffic to a site - an advertising robot determines the prospects of placing a banner on the basis of anonymized information about visitors to a particular Internet site (demographics, income, network activity history, profiles on social networks, etc.) received from different sources - this way the system can spend money only on displaying banners to the most promising users.
This does not make an advertising auction a substitute for contextual advertising - such ads are shown to users who are already looking for a specific product or service on the social network, and banner advertising (to which RTB belongs) helps to make the user want to search for this product. However, in the context of the crisis and RTB, in view of the targeting and search capabilities of the target audience, some advertisers will begin to be seen as a certain alternative to contextual advertising, which can also help expand the use of this technology.
More options
One cannot fail to note the observed course of government officials to strengthen Internet regulation and the isolation of Runet from foreign segments - this is facilitated by the requirements for social networks to provide data at the request of Roskomnadzor to determine the popularity of bloggers (for the implementation of the relevant law), as well as the requirements for foreign Internet companies to store data Russians on servers in our country.
In the Russian online advertising market, and in particular, its RTB segment, there are several foreign players (you can recall the same Google), Yandex has partnered with some of them. It cannot be ruled out that the data processing requirements of the Russians, which are used for advertising (albeit impersonal), can be ruled out exclusively by Russian companies to increase security. It can also bring some benefits to Russian advertising companies in the short term.
Strengthening control over the Russian Internet will lead to a slowdown in the growth of foreign players in this market, and may provide domestic benefits - subject to certain conditions. In particular, many analysts say that the departure of the founder of Yandex, Arkady Volozh, from the post of general director of the company, was carried out precisely to reduce possible pressure from the state. If this is true, then the search engine will have the opportunity in a relaxed atmosphere to deal with foreign competitors in the home market.
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