28 October 2015


Blog about successful marketing strategies in Russia


part 3.  Advertising in the Russian Mobile Environment 




We continue a series of articles to review a mobile web in Russia, its capabilities and features in the context of use as a media for marketing communications. Part 1 was dedicated to general characteristics of mobile web on the Russian market. In this part, we are going to describe an image of a Russian mobile Internet user in details. Part 2 was focused on a portrait of the Russian mobile internet user. The third, the final, article is dedicated to advertising in the Russian mobile environment.

Global trends
According to PwC's Global entertainment and media outlook 2015-2019, entertainment and media revenues will rise at a compound annual growth rate of 5.1% over the coming five years, 5,1% means that revenues will rise globally from $1.74trn in 2014 to $2.23trn in 2019.
By 2019, digital advertising as a whole - including digital out-of-home - will account for 38.7% of total global advertising revenue, up from just 16.6% in 2010.  A primary driver of digital advertising throughout the forecast period, according to PwC experts, will be rapid rises in mobile and video Internet advertising. Mobile Internet advertising will surge at a 23.1% to 2019, overtaking revenue from display Internet advertising globally in 2018, and supplanting paid search in the US in 2016 as the leading Internet advertising category. 
Gartner predicts that, mobile advertising market will rise to $41.9trn by 2017. Together with emerging markets of Brazil and Mexico, Russia will become one of primary countries – drivers of mobile advertising growth.
Generally, it can be stated that a new environment, where consumers believe that any distinction of "digital" and "non-digital" is irrelevant, is emerging. At the same time, there is a general trend of the growing importance of digital media. The fact underlined by Internet advertising’s position as the fastest-growing segment of advertising market through to 2019, overtaking global broadcast TV advertising.
As viewers change their preferences from traditional networks to the digital alternative, advertisers will follow, PwC projected that it will drive broadcast TV advertising's share of global total TV advertising down from 97.2% in 2014 to 94.3% in 2019.
However, as we can see, the position of broadcast TV as the leading media remains strong, and despite the rapid growth of Internet advertising (and mobile ad in particular), expectations of global revolutionary changes on the global advertising market in the coming years have not been justified.
Key trends of the Russian media market and Internet advertising
Economic deterioration in the country has had a significant impact on the situation in the Russian advertising. Advertising market, as very flexible, is sensitive to macroeconomic changes, and the decline in total consumption touches it first.

 Nevertheless, PwC experts expect that in the forecast period for five years the most rapidly developing segments are Internet (15.4%), online advertising (13.7%) and pay-TV (9%). TV advertising shows a decrease (-10.3%) while book publishing is still in decline (-2%). As reported by Russian Association of Communication Agencies (RACA or ACAR) for 2015, Russian advertising market in January-June decreased by 16% compared to the same period in the previous.

For a half year as a whole, advertisers spent 138 billion rubles, in the same period of the previous year the figure was 165 billion rubles. TV advertising accounted 61.6 billion rubles, among them cables and satellite TV earned 920 million. TV decline was 22%. 

Radio advertising market declined by 21% to 6-6.2 billion rubles. The volume of outdoor advertising dropped by 27% to 15.3-15.5 billion rubles. The deepest decline showed printed advertising: 11.2-11.4 billion rubles, 33% less than a year earlier. 

Online advertising was up by 10%, to 41.6–42 billion rubles, with 15% increase of paid search, the volume was 34.5–34.8 billion rubles. For comparison, paid search growth in the previous year was 30%. At the same time, display advertising sales dropped by 10%, to 7.1-7.2 billion rubles.

At year-end, the total amount of media advertising could drop by 17%, according to ZenithOptimedia predictions.
The main types of mobile advertising 
It should be noted that the concept of mobile advertising is ambiguous. If  we understand mobile advertising as all advertising that a user sees on their mobile devices, it can be not only an advertising addressed to desktop users (when a user visits websites using a mobile browser), but also specially placed ad that you can see only on  mobile devices (for example, advertising in mobile applications and mobile versions of websites). Therefore, when you plan to run Internet campaigns, you should consider effect on a mobile user of each of them (as well as the fact that some types of standard online advertising can’t be displayed on mobile devices).
The following classification applies to mobile advertising only, in other words applies to ads that will be displayed on mobile devices only.
Banners - the most common form of advertising (popular size 320x50, although there are other banners, including full-screen). Banners often have the lowest CTR (click-through rate) and as a result, the lowest CPM (cost per mille).
SMS advertising - historically has been pioneered in mobile advertising, appeared in the era of first mobile phones, and survived to nowadays. This extremely easy and simple type of ad, however, continues to be in demand for certain groups of advertisers due to its low cost. Currently, SMS advertising offered by various mobile suppliers uses legal databases and allow to make targeting by audience and geography.
Interstitialsan advertising that covers the interface of the host app and requires user action (close the ad or click on it). As a rule, it’s a full-screen ad. In most cases, it’s shown when the app starts or during natural transitions in the app. Interstitials are divided into several types: static (a picture) and flash-animated (banners).
Videoa variant of interstitials, it’s a full screen ad, that shows video. There are different types of video advertising. For example, on customer loyalty, it can be skippable and unskippable (i.e. it can or can not be closed). Videos are typically skippable. If it lasts for 30 seconds, the skip button usually appears after five seconds. If video lasts 15 seconds or less, it’s usually unskippable. Video advertising is the most expensive at the moment.
Native adsan advertising that looks like part of an interface or an application content. This format is relatively new, it appeared at the end of 2013, and is gaining momentum. Fasebook mobile app can stands as a shining example. This type of advertising with proper integration looks naturally in the app and almost does not cause irritation.
Attitude toward mobile advertising
It should be noted, that attitude toward Internet advertising as a whole demonstrates a negative trend in recent years (Tab. 1-2).
‘The data of RosIndex study shows that, over the past two years, the attention to online advertising has declined. Only 24% of weekly Internet audience pay attention to advertising on websites. Quick response indicator falls as well - in case of interest, only 29% of the group click on the ad. However, more than half of weekly Internet audience (52%) perceive Internet advertising as a media about new products and services. Regular Internet audience tries to dissociate itself from ads - 50% of the group scroll or close advertising messages without reading them. Other 12% turn off images and pop-up windows in a browser. 27% of the group watch ads,’ said Liudmila Bratenkova, Chief Client Officer of Synovate Comcon Research Company.
As for the attitude toward mobile advertising, the situation is as follows.

Attention to mobile SMS advertising grew during the past five years, however, in the fight against SMS spam, started in 2014, the Russians began to receive less spam - and the share of people who pay attention to SMS advertising per week dropped to 27%. Attitude toward mobile advertising as a whole, according to a study by Romir, is more critical than toward traditional Internet advertising.
Near-term prospects for mobile advertising market in Russia
The mobile advertising market is growing rapidly, and, according to most experts, is now ahead of its takeoff.
Therefore, the inflow of new advertisers is expected. Mobile advertising must become one of the most familiar methods to promote products – the same as display or PPC advertising, as ad that is placed on websites, social media, blogs and other websites.
It is expected that small and medium business will gradually get involved in mobile segment. The main contribution to the market volume is by those who have already mastered this type of media and who spends considerable funds for mobile. It can be expected, that the increase in budgets will mainly due to redistribution in media mix: the money spent on traditional media (press, radio, TV) will flow into mobile.
The obvious trend on the market of mobile advertising - increasing number of supplier companies selling mobile traffic, that agitate customers to promote their services and products through mobile channel. We can see a greater presence of e-commerce and retail, as well as in telecommunications and entertainment in mobile segment.
The behavior of advertisers is quite predictable: customers who work on mobile market not the first year will turn to new, more interactive advertising formats. Those who until now only tried or tested mobile advertising channel, will finally decide for themselves which budgets should be allocated for mobile, allowing the market, in the end, to receive new money and these indicators to grow.
Existing barriers of mobile advertising development
Unclear market volume. Experts give different estimates on the market volume that are at odds. This prevents to evaluate the effectiveness of mobile advertising and becomes an obstacle to plan and run campaigns in the mobile environment. It is not clear what should be included in mobile advertising segment: only paid search and display advertising, or to add successful campaigns in SMS advertising and performance placement in applications.
Mobile advertising prices have not reached stability; the overall economic situation in the country has affected prices as well. Therefore, market size is very conditional and sometimes far different in evaluations of various experts. Such situation is good for many players - to show large amounts and to heat up the market, while in reality, advertisers are in no hurry to enter mobile, and while in monetary terms budgets are incommensurate with the amounts that spent in developed countries.
There are no mobile versions of websites. According to study carried out by Mail.Ru Group, the majority of web professionals surveyed have not adapted website for mobile devices, 19% of them are only thinking about it. One of the reasons for the refusal to create a mobile website - the lack of a serious mobile traffic and belief, that they just don’t need it. It is a vicious circle, as often the reason why people do not come on a website from a mobile phone, is that it is inconvenient due to the lack of mobile version.
There are no metrics. There are many developed technologies, systems and services for Internet advertising, that evaluate performance indicators, conversion rate, analyze target audience, but even these tools cannot predict with one hundred percent probability the result of an ad campaign. It is even harder in mobile, because to make a mobile version or an application until now was considered as a main achievement.  Meanwhile, mobile platforms in terms of performance measurement potentially have powerful tools.
Special services allow advertisers to track metrics at all levels - contacts and interaction with advertising materials, visits to mobile websites, application downloads, visit depth and time users spend in applications, tracking action on mobile platforms, orders and purchases, etc.
The weak development of e-commerce market. For now mobile e-commerce in Russia can show it’s products to consumer only through the screen of a mobile device. For comparison, the United States experiencing a boom in the m-commerce: it is not only the payment of goods through a smartphone, but also a mobile management of a bank account, which includes finance planning and personal finance management.
For several years, Internet advertising market waits for a sharp rise of investments in mobile tools and, unfortunately, is still waiting. This year is likely to be no exception. What is the reason? The reason, of course, is the attitude of a buyer and an advertiser toward the channel as a whole.
For example, such a big difference in the popularity of this media in Russia and in the United States is caused by customers' trust and loyalty to mobile phone as a point of purchase. While overseas mobile websites of online stores compete with desktop versions in the number of transactions, in Russia conversion rates of these media are still incommensurable.
46% of Russian customers believe that mobile applications as a tool to pay for purchases are very insecure and vulnerable. As a result, the share of Russian online shoppers increases, Russians break down barriers of mistrust to transactions in the browsers. However a segment of Russian mobile-shoppers develops slower. Purchase through a mobile becomes the norm in fashion-retail or in sales of tickets for events, but in most product categories the conversion has not reached the desired level to make purchases via mobile channel. So, the main reason is one - distrust of a buyer to the purchases via mobile channel.
The situation will change, just not as fast as we would like. In the next two years, we will see an increase in the share of mobile shopping in banking, tourism and others categories. It will be a result of growing and enrichment of the younger generation, as well as the effect of the natural need of a buyer to save money.
This year we see advertisers’ investments growth in mobile advertising in the categories "Entertainment", "Real Estate", "Auto" and "Retail”. It was the norm for all these categories to use primitive SMS advertising from 2010 to 2014. This year they have passed this stage and are ready for experiments with new tools. Today, advertisers are interested in banner formats and interstitials, but we also recorded increasing number of orders of video ads in mobile.
Old format of SMS advertising, on the contrary, acquires negative stereotypes of obsessive irritant, and its volume is gradually decreased in online mixes of our clients. In a brief for almost every third client, we have a request to create a special project that would include mobile marketing as a part of mechanics. In our opinion, this positive trend will be developing. The next two years mobile channel will enter the category “must have” of all big advertisers.
Source: Adinex.ru

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