e-commerce berlin expo 2017 - trends and digital advertising opportunities in russia

Trends and digital advertising opportunities in Russia Dominik Johnson Yandex

Doing Business in Russia ›  Opportunity ?

›  Ecommerce !

›  Case Study .

10%

66%

34%

90%

Total internet users in 1996 vs. 2014

Source: comScore

Russia is the biggest country in the world by territory

territories of Germany

48 territory of Russia

1 =

Statistics on Russia

Length: 7500 km Area: 17,125,191 km2 Population: 146,544,710

Internet really matters when distances are this huge

Source: comScore, MMX, Russia Home and Work Location, Age 15+, 2015

58 billion search requests were answered by Yandex in 2015

Search

Belarus

38%

Ukraine

30% Kazakhstan

24%

Turkey

5,1%

Source: Yandex Stat, November 2016

Search Share

Russia

55,2%

Doing Business in Russia ›  Opportunity ?

-8

-6

-4

-2

0

2

4

Oct. 2014 Jan. 2015 Apr. 2015 July 2015 Oct. 2015 Jan. 2016 Apr. 2016

Income down 6%

Incomes down 6% (График http://quote.rbc.ru/macro/indicator/1/211.shtml). Source: RBC, April, 2016

Source: RBC, April, 2016

% YoY

100,0

100,5

101,0

101,5

102,0

102,5

103,0

103,5

104,0

Jan. 2014 July 2014 Jan. 2015 July 2015 Jan. 2016

Inflation up 13%

Inflation up 13% (График http://quote.rbc.ru/macro/indicator/1/174/) Source: RBC, May, 2016

Source: RBC, May, 2016

%

2000 2100 2200 2300 2400 2500 2600 2700 2800 2900 3000

Jan. 2015 June 2015 Nov. 2015 Apr. 2016

Retail turnover down

Source: RBC, April, 2016

Retail turnover down 8% (График http://quote.rbc.ru/macro/indicator/1/212/) Source: RBC, April, 2016

Billi

on ru

b.

Imports contracting

Source: RBC, April, 2016

Упавший импорт берем отсюда http://quote.rbc.ru/macro/indicator/1/642/ Source: RBC, April, 2016

9

14

19

24

29

34

Mar. 2014 July 2014 Nov. 2014 Mar. 2015 July 2015 Nov. 2015 Mar. 2016

%

Buying power up 300% over a 15 year horizon

But is it really that bad?

Retail turnover 27 trillion Rubles (almost 370 billions of Euro)

Source: Russian Federal State Statistics Service, March 2016, 1Euro= 73 RUR

But is it really that bad?

E-Commerce is growing 16% year on year

But is it really that bad?

12,1 million people went on a holiday in 2015

Source: Russian Federal State Statistics Service, 2015

But is it really that bad?

2014 – 10 euro

2016 – 3 euro

Consumer Confidence Index - stable

Source: Nielsen, 2016

80 80 79 83 85 87 79

72 78 74 74

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Consumer sentiment

Source: Nielsen, 2016

86%

Have spare cash to spend In saving mode

71%

+ 31% sales growth in 2015 In 2016 all 25 cars allocated to Russia already sold out

Source: AutoBusinessReview, April 2016

Insights

An ordinary day in any big Russian city…

14.538.837 19.914.323 Jan-Dec 2014 Jan-Dec 2015

Jan-Dec 2014 Jan-Dec 2015

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

Impressions

Promo hunting sets new records

Source: Yandex, 2015

+37%

2014 2015

Consumer’s interest in discounted and cheap apparel & shoes rose 37% in 2015 vs. 2014

59%

0%

35%

4% 1%

Started paying more attention to prices

Started paying less attention to prices

Like before pay attention to prices

Like before pay attention to prices of goods new to me

Like before do not pay attention to prices

Source: Wellhead, OMI, February, 2015

Importance of price as a trigger of purchase soars

85% of shoppers in Russia expect further price increases

Source: GfK, 2015

What factors led to spontaneous purchase in e-commerce?

Source: GFK, September-October, 2015

4%

13%

14%

17%

24%

46%

77%

Push messages

Social network advertising

On-line advertising

Combined offers, bundles

Mail advertising

Free delivery

Sale

Share of shoppers buying on sale is up

Source: Sberbank CIB, 2016 

Q2 2015 Q1 2016

50% 60%

Doing Business in Russia ›  Ecommerce !

Rapid growth of online trade

Source: eMarketer, 2015. 1$=0,94 Euro according to the rate of the Central Bank of Russia by 01.12.2015

30,6

32,9

34,5 35,5

36,6

2014 2015 2016 2017 2018

Amount of online buyers in million

14,52 17,82

21,26 24,98

28,71

2014 2015 2016 2017 2018

Orders trough internet in billions EUR

Forecast Forecast

29% of Yandex Market customers buy with Smart Devices

Source: Yandex, 2016

25% clicks in YAN comes from Smart Devices

Source: Yandex, 2016

│  In 2014 16% of Russians like ads in general │  In 2015 the share grew to 21%

Source: GFK, 2015

Cross-border trade

Cross-border sales of physical goods in Russia

Source: RBC, October 2015

30% 10% 55%

USA UK & Europe

China

Where Russians prefer to shop (GMV):

Reasons for choosing a particular store

Source: GFK, 2015

73%

34%

32%

21%

9%

7%

6% 0, 0,15 0,3 0,45 0,6 0,75 0,9

Smaller price

Not sold in Russia

Wider assortment

Unique assortment

Better quality

Fast delivery

For fun

30% 18%

16% 16%

14% 13%

11% 6%

4,7 4,7

2 4,8 3,7 2,9 2,5 2,1

Most popular categories for international e-shopping

Source: GFK, September-October, 2015

Percentage of users who made orders from international online stores

Clothing and shoes

Children goods

Phones, smart phones and tablets

Cosmetics and perfume

Home and garden goods

Video, audio and photo equipment

PC and laptops

Small household appliances

Avg. amount of orders over last 12 months

Opportunities for Businesses

Russian Internet Self-Identification: Runet

Core numbers: MAU – 80.5 mln people (age 12+) (in cities 100,000+, 47 mln) DAU – 66.5 mln people (age 12+) (57% of MAU)

70%

99%

46%

95%

13%

53%

2007

2016

12-24 25-44 +45

Devices used to go online

55% 50% 58% Russia

0+ 29% 12% 12%

60% 53% 61% 34% 11% 15% Russia

100,000+

50% 46% 53% 24% 13% 9% Russia

100,000-

Customer behavior: Desktop, Mobile, Tablets

Mobile phone – on public transport

Tablet – at home Browser – at the office

Mobile as a natural filter Russian cities 100k+, % of population in each age group

12-24 25-44 45+

2014 2015 2016

10

30

50

70

90

desktop mobile

2014 2015 2016

10

30

50

70

90

2014 2015 2016

10

30

50

70

90

Runet: core values and features Diversity: the freedom of choice

Search:

Social Networks:

Runet: core values and features

›  Yandex.Market

›  eBay

›  AliExpress

›  Avito

e-Commerce hubs:

›  Yandex.Taxi

›  Gett

›  Uber

Online payments:

›  Yandex.Money

›  PayPal

Movie databases:

›  IMDB

›  Kinopoisk

Russians are natural multiusers, not just fans of one particular provider

Music streaming:

›  Yandex.Music

›  Zvooq

›  Google

On-demand rides:

Runet: core values and features

›  Yandex.Market

›  eBay

›  AliExpress

›  Avito

e-Commerce hubs:

›  Yandex.Taxi

›  Gett

›  Uber

Online payments:

›  Yandex.Money

›  PayPal

Movie databases:

›  IMDB

›  Kinopoisk

Russians are natural multiusers, not just fans of one particular provider

Music streaming:

›  Yandex.Music

›  Zvooq

›  Google

On-demand rides:

Taxi Navigator

Maps

Trains

Parking

Transport Traffic

Geoservices Information services

Weather News

Market Jobs

Personal services

Disk

Mail

Money Transfers

Fines

Money

Media services Search services

Flights

TV

Search

Video

Images Direct

Translate Radio

Afisha

Music

Before we start, please try to remember how Yandex main page looks like

48

and for Star Wars

50

51

This is how it worked

53

Is Runet Sustainable?

Local technology Local data Local rules

Local technology

MatrixNet

MatrixNet

AI is controlled by human-generated signals

Smart (AI) algorithms

Disco

Disco Recommendations

Service

Crypta

MatrixNet

[a] [b] [c] [d]

Speech and image recognition

Some text…

a b c d

Local data

Huge amount of data from lots of sources

partners

What’s the result?

Runet Advertising Revenue, 2015

97bn RUR € 1.25bn

Total online ad market

18.7bn RUR € 0.25bn

Display ads

78.3bn RUR € 1bn

Context ads

25bn RUR € 0.33bn

Mobile ads

In comparison

Yandex generates more ad revenue than the biggest Russian media holding with the most popular TV channel

€0.76 bn Gazprom Media

€0.78 bn Yandex

Doing Business in Russia ›  Case Study .

Premium Ad Block

Yandex Direct on SERP

Ad Formats

Text & Image Ads Ads for Mobile Apps Smart Banners

Smart Banners can look different, based on more than 15 templates available to advertisers.

Item Сarousel Single Item Discounts Special Offers Item Mosaic

Smart Banners

Campaign parameters ›  Budget – $ 500

›  Duration – 2 weeks ›  Number of product offers – 886

Results: ›  Impressions – 162 560 ›  Clicks– 4 390 ›  Revenue –$ 6 244 ›  Transactions – 22

СРС & СРА Comparison

x1.3

X2.4

x0.4

Смарт-баннер Рекламная сеть Директ (Поиск) Директ (Бренд)

CPC

x2.0

X1.3

X0.06

Смарт-баннер Рекламная сеть Директ (Поиск) Директ (Бренд)

CPA

Smart Banner Yandex Ad Network

Yandex Direct (Search)

Branded Traffic

Yandex Ad Network

Branded Traffic

Source: Yandex

Smart Banner Yandex Direct (Search)

Website Visitors

Target users who visited your website and had specific on-site behavior*

Behavioral

Target users whose interests, behavior, and recent searches match your ad copies content

Targeting Options

*Targeting website visitors requires Yandex.Metrica

Bid Strategies

Choose from a variety of bid strategies to optimize CPA and ROI

Geo Targeting

Target your customers in select geographic areas

Bid Adjustments

Modify your bids by time, device types, and users’ on-site behavior*

Optimization Options

*Requires Yandex.Metrica

Case Study

Case Study #1

Online Retailer Store

▌  Goal: to assess traffic volume by hour

Hour-by-hour Traffic

Moscow Never Sleeps

Adjust Bids by Hour

>  Bid up during working hours >  Decrease bids on weekends

Desktop vs. Mobile Traffic by Hour

Case Study #2

Online beauty store

▌  Goal: to show ads to a particular set of users

Create Segment

Create Segment

Build Remarketing Lists

Bid up on Yandex Search

who have been looking for New Year gifts

Gifts for new year

Gifts for the loved ones Gifts for New Year and Christmas. Sales! Skin Care Bath and Shower Gift Certificates Telephone & Address. 8 (800) 123-45-67 . Mon-Sun 09:00-22:00 • Free delivery • High Quality

siteforyandex.com/gifts

Retarget Users on Ad Network

who have been looking for New Year gifts

Gifts for the loved ones Gifts for New Year and Christmas. Sales! Skin Care Bath and Shower Gift Certificates siteforyandex.com Address and Telephone

Recommendation

Increase frequency of touchpoints with a consumer

Beware of longer planning and review cycle

Consider premium offerings

We are the gateway

More details to come

“The simpler and more transparent your site is, the better it will be indexed.”

Thank you! Questions?

Thank you.

dominik@yandex-team.ru

+41 (41) 248 08 60 @dominik_johnson

https://www.facebook.com/dominik.johnson

Dominik Johnson Yandex, Director Key Account Development