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Mail.Ru Idea Proposal

Mail.Ru Idea Proposal
 

Research Question: Are the new ad products on Mail.ru’s MyTarget platform allowing it to increase share of advertisers’ budgets?

Report Available: Oct. 28, 2015

 

Blueshift’s initial research shows digital advertising in Russia continuing to grow while all other advertising channels have declined. MLRYY was growing its top-line but bleeding profit as Russian’s economy remained in the doldrums. The company rolled out new advertiser tools such as MyTarget, which has been viewed optimistically by some advertisers. However, CPC rates in Russia remain incredibly low and some are predicting Russia’s recession will last through 2018.

 

Observations

  1. Today, up to 30% of ad budgets in Russia are spent online. Digital media spend in Russia grew by 6%while every other marketing channel slowed down in 2015. Spending on both online video and targeted ads grew by 15% but spending on banner ads fell. Recent data from an ad tech firm showed a 20% increase in ROI for its clients’ mobile ads in Russia. MLRYY revenue grew by 7.2% in the first half of 2015, but saw its profits shrink. Its VK social network currently has over 320 million registered users, 72 million of whom are daily users.
  2. MLRYY recently added several ad products and features to its three social networks VK, OK, and My World, including MyTarget, an ad platform that allows advertisers to target users on all its networks. Several online coursesare available (in Russian) for advertisers wanting to learn MyTarget. VK’s new advertising formats, including its video, mobile, and targeted ads, were seeing improved monetization and low inventory utilization. One advertiser reported CPM rates on VK were dependent on which community was being advertised to, and typically ranged from 10 RUB to 100RUB.
  3. The World Bank reported Russia would not return to growth until 2017. Russia’s Central Bank predictedthe country would come out of recession in 2018. CPC rates in Russia were still considered some of the lowest in the world. Despite the low rates, Russian advertisers were complaining that MyTarget required a minimum of 3540 RUB (appx $56) to replenish the account. Western firms looking to advertise on VK have been warned to be wary of deceptive CPC pricing on the site. Western advertisers also struggled with strict ad censorship; for example, any ad that insinuated a connection to alcohol, drugs or gambling were often censored.
  4. Blueshift’s May 1 Mail.Ru reportfound that the company would not see the same success as FB by copying its products and strategies. Sources questioned the efficacy of advertising on MLRYY’s VK as its demographic of mostly younger users lacked purchasing power. Sources reported flat spending in online advertising, but did see increased spend in video advertising.

 

To gain insight into MLRYY and the Russian digital advertising market, Blueshift will gather data and issue a market research report from independent sources in the following areas: International ad agencies in Russia, Digital media companies in Russia, Independent/local ad agencies in Russia, and Companies advertising on social media in Russia.

 

Companies: Mail.Ru (MLRYY), Facebook (FB), Google (GOOG), Yahoo (YHOO), Yandex (YNDX), Twitter (TWTR), Naspers Limited (NPSNY)