Focus on Ukrainian/Russian market

Telyatnikova Aleksandra

Head of the Internet Marketing Department at META Inc

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I. History of Internet advertising market development in Ukraine/Russia (2002 - 2007)

II. Modern tendencies in Internet advertising development in Ukraine and prognosis

III. Price formation, discuonts, methods of sales etc

VI. How to organize work with agencies and direct clients in order to maximize sales

V. Internet marketing - how to present succesful web product

Contents

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I. History of Internet advertising market development in Ukraine/Russia

(2002 - 2007)

4

0

3

6

9

12

15

18

21

24

27

30

2002 2003 2004 2005 2006 2007

Russia Ukraine

DYNAMICS OF MONTHLY AUDIENCE, mln users

Population Russia - 143,500,000Ukraine - 46,800,000

mln users

5

0

36

9

1215

18

21

2427

30

2002 2003 2004 2005 2006 2007

Russia Ukraine

DYNAMICS OF THE PENETRATION

%

Population Russia - 143,500,000Ukraine - 46,800,000

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GEOGRAPHY: districts share in all audience(According to Gemius and

LiveInternet as of Nov. 2007)

Kiev 36%

Ekaterinbu..

Saint Peter...

Moscow46%

Novosibirsk 3%

Other 26%Ufa 2%

Krasnodar 2%

Lower Novg...

Kazan' 2%

UKRAINE RUSSIA

0

50

100

150

200

250

300

350

400

2002 2003 2004 2005 2006 2007

Media advertising Context advertising

ADVERTISING SPEND in RUSSIA, mln USD(According to MindShare Interection) mln USD

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ADVERTISING SPEND in UKRAINE, mln USD(According to market’s players)

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007

Media advertising Context advertising

mln USD

9

MONEY SPENT per 1 USER

2002 2003 2004 2005 2006 2007

Ukraine $0.4 $0.7 $0.8 $1.1 $1.5 $2.3

Russia $ 2,1 $ 3,3 $ 5,4 $6.3 $8.5 $11.4

UKRAINE HAS HIGH POTENTIAL FOR GROWTH!

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NUMBER OF DOMAINES(According to Hostmaster Inc)

The number of second level domain names registered in domain .UA has increased by

39.47% in nine-month period of 2007

20022003

2004

2005

2006

2007

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

2002

2003

2004

2005

2006

2007

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

ZONA .UA ZONA .RU

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THEMATIC STRUCTURE OF UKRAINIAN WEB SITES (According to МЕТА as of Nov. 2007)

The number of Web sites indexed by META searching system constitutes approximately 100 000 sites (taking into account bolting of spam, etc.)

Leisure and entertainment

16%

E-commerce and shops12%

Autos4%

Tourism10%

Science/education6%

Real Estate2%

Business and finance27%

Internet portals/services

21%

Mass Media 2%

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Leisure and entertainment

17%

E-commerce and shops12%

Autos5%

Tourism3%

Science/education4%

Real estate2%

Business and finance9%

Internet portals/services

27%

Mass Media 22%

PAGE VIEWS STRUCTURE OF UKRAINIAN WEB SITES(According to BigMir as of Nov. 2007)

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THE SOURCES OF SEARCH TRAFFIC(According to Gemius and

LiveInternet as of Nov. 2007)

Yandex 55%

Meta 8%

Yandex 25%

Google56%

BigMir 2%Ram

bler 4%

Live.com 1%

Other 4%

UKRAINE RUSSIA

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II. Modern tendencies in Internet advertising development in Ukraine and prognosis

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SOURCES OF MARKET GROWTH

Increase of advertisers

Increase in page views

Educational activity

Increase of penetration

0

200

400

600

800

1000

1200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Media advertising Context advertising

PROGNOSIS OF ADVERTISING MARKET in RUSSIA*, mln USD

* Expert estimation based on Polish, Russian and Ukrainian market dynamic analysis.

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PROGNOSIS OF ADVERTISING MARKET in UKRAINE*, mln USD

0

10

20

30

40

50

60

70

80

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Media advertising Context advertising

* Expert estimation based on Polish, Russian and Ukrainian market dynamic analysis.

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FOREIGN PLAYERS ARE COMING!

In 2006-2007 large-scale foreign players have increased their activity.

In Ukraine have appeared the representatives or representative offices of:• Google• Yandex• Begun• RBC• Aukro.cz ( Allegro.pl) • Delfi • Adocean • Sostav.ua• Headhunter.ru

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SOME TRANSACTIONS in 2007• META.UA

Investment Group Russian Funds and Digital Sky Technologies have purchased control packet of shares of META Inc.

• FINANCE.UAInvestment Group Russian Funds and Digital Sky Technologies have purchased control packet of shares of Infinservice Inc.

• BANNER.KIEV.UACompany Imena.UA has bought out 50% of shares in Ukrainian banner network (UBN).

• UAPORTAL.COMInternet holding Obozrevatel has purchased Ukrainian Portal.MOBILNIK.UAInternet holding Obozrevatel has purchased thematic portal Mobilnik.ua.

• RABOTA.UAGrupa Pracuj Ltd - the leader of on-line recruiting in Poland - has entered the board of constitutors of Rabota International, having bought out 55% of shares.

• PRICE.UABritish company IDE Group has invested in large-scale Ukrainian web site Price.ua with the latter becoming part of the holding.

• AUCTION.UAMETA Inc. together with investment consortium comprising Investment Group Russian Funds and Digital Sky Technologies have purchased 55% of shares of Ukrainian Internet auction.

Approximate total cost of these deals ranges from 20 to 24 million USD.  

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MAIN MARKET TRENDS:

● Emergence of branch standards and measuring principles● New deals

– Purchasing of projects

– Purchasing of shares (investing)

● Internet audience distribution by regions increases (decentralization)

● Influx of large-scale foreign companies

● Context advertising segment will outgrow media advertising

● Emergence of Internet-units in large-scale network ad agencies● Enlargement and concentration of Internet business

● Development of Social Networking projects

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III. Price formation, discounts, methods of sales etc

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Flat fee - 85% Dynamic placing – 15%

Price formation CPM*K(N)

K= 1/2, 1/4, 1/8, 1/16...

N – number of viewing (according to statistical information)

CPM*N

N – number of viewing

Methods of sales Advertising agency and web studios – 80%

Direct client – 20%

Discounts Discounts depend on the size of sales in a year, quarter or month.

Traditional diapzone: 20% - 50%.

Price formation (media advertising)

Portals CPM, USD News resources CPM, USD Business resources CPM, USD

8 - 10 10 - 15 15 - 18

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PROBLEMS OF THE UKRAINIAN MARKET

- Absence of industry standards

- Absence of media research

- Absence of monitoring system

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Internet Advertising leaders in 2007, by industry

1. Autos2. Mobile operators3. Banks4. Electronics manufacturers5. Electronics sellers6. Politicians7. Real estate8. Insurance companies9. Alcohol10. Others

In 2006 50 trade marks entered the Internet market for the first time

SOURCES OF MEDIA BUDGETS

*(According to META ADD. 2007)

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DISTRIBUTION OF MEDIA BUDGETS*

0

5

10

15

20

25

30

35

Portals News resources

Business resources Entertainment resources

Portals News resources Business resources Entertainement

BigMir.net Korrespondent.net Finance.ua Bizarre.kiev.ua

META.ua Podrobnosti.ua Liga.net Natali.ua

Ukr.net Pravda.com.ua ... Ukrindustrial.com … Sport.com.ua ...

Monthly audience Monthly audience Monthly audience Monthly audience

2 - 3 000 000 1,5 – 2 000 000 0,5 – 1 000 000 0,3 – 1 000 000

*In alphabetical order

%

*(According to META ADD. 2007)

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IV.  Internet marketing - how to present succesful web product

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● Choose appropriate concept (niche, mass, etc)

● Define target audience

● Meet all parties needs:

easiness of use (usability) functionality speed

easiness of use (usability) quality of information positioning and branding functionality interactivity speed

absolute number of target audience (min. 10,000/day) prices and discount policy site positioning easiness of campaign management

HOW TO CREATE A SUCCESFUL PRODUCT?

Authors

Readers

Advertisers

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● There are several options depending on the situation:

– Niche product

– Mass product

1. Search engine optimization2. On-line PR and viral marketing3. Context advertising4. Niche peculiar advertising (off-line if needed)

1. Branding and positioning2. Search engine optimization3. Banner and context advertising4. Off line events

HOW TO MARKET A SUCCESFUL PRODUCT?

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IV. How to maximize sales?

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1. Establish own advertising agency

2. Partner with other advertising agencies, direct sales

3. Sell traffic to a LARGE scale player

Options of maximizing sales:

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Contact information

Telyatnikova Aleksandra

Head of the Internet Marketing Department at META Inc

telsa@meta.ua