2011 Capital Markets Day

New Advertising Sales Structure

Yulia MoskvitinaChief Commercial OfficerChief Commercial Officer

Strong Track Record of Advertising Revenue Growth…Strong Track Record of Advertising Revenue Growth…

75 8US$ mln

215.4

424.9 75.8

40 9

48.7 US$ mln

2005 2010

16.6

2005 2010

40.9

2008 2010

357% ad revenue growth since launch in 2005

97% ad revenue growth within 5 years

19% ad revenue growth since pre-crisis 2008

…by monetizing unique audiences which advertisers desire to reach…by monetizing unique audiences which advertisers desire to reach

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Growing Market Shares Through Increasing Combined Power Ratio Growing Market Shares Through Increasing Combined Power Ratio

1 2

1.5xpower ratio

10%13%12%

19%1.2xpower ratio Complimentary channels in portfolio

Strong brands of CTC Media channels10%

g

Audience quality

Bundled sales

2004 2010

CTC M di "All 4 " A di Sh

Bundled sales

Ad options beyond classic spots

Hi hl f i l t d k ti dCTC Media "All 4+" Audience ShareNational Ad Market Share

Highly professional trade marketing and promotion to advertisers

Power ratio = National TV advertising market share/All 4+ audience share

2

Stable Consumer Goods Client Base With Both MultiStable Consumer Goods Client Base With Both Multi--National and Local AdvertisersNational and Local Advertisers

1 Food 26%

FY 20101

2 Cosmetics 19%

3 Other goods and services 13%

4 Pharmaceuticals and vitamins 10%

5 Appliances 7%

6 Telecoms 5%

7 Detergents 5%7 g

8 Personal care products 5%

9 Beverages 4%

10 Beer 4%10 Beer 4%

11 Auto and finance 2%

100%

3

Russian TV Advertising Sales Structure before 2011Russian TV Advertising Sales Structure before 2011

Advertisers

Advertising Agencies

d e se s

2 major sales houses:

Fast evolutionary

Video International AlkasarGazprom-Media /

Media Sales Houses: Fast evolutionary development of recently emerged TV ad market in Russia

CTC Media:

National ad inventory was sold by VI since 1999, regional – since 2006

4

Amendments to Advertising Law Amendments to Advertising Law –– A Challenge Turned into An OpportunityA Challenge Turned into An Opportunity

Q i k dNovember 2010 –

Quick and decisive

response to regulation

July 2010 –decision on internal

new agreement with VI is signed

regulation change led to

optimized sales efficiency

internal sales house is made

F ll 2010

Spring 2010 – Booz&Co

hi d J J l

September 2010 –Everest Sales i t bli h d

Fall 2010 –start of negotiations with advertisers forwas hired June-July

2010 –more clarity about the

is established advertisers for 2011

December 2009 –surviving the “first shock”

future market structure

5

New Deal with VI Ensures Continued Support from the Largest Player… New Deal with VI Ensures Continued Support from the Largest Player…

C ti i l d fi d d i bl l tM i i d • Compensation includes fixed and variable elements – complex structure

• Effective VI compensation of 10-12% of total reported Russian advertising sales (13% previously)

Main services and consulting agreementg

• 12% gross sales commission (15% previously) • Commission will be netted off from revenues

Direct sales agreement for Commission will be netted off from revenues

• Revenues from direct VI sales will not exceed 4% of our total Russian ad sales

agreement for regional sales to

local clients

… and is accretive in terms of reduced cost of sales … and is accretive in terms of reduced cost of sales

6

Advertising Sales Structure from 2011Advertising Sales Structure from 2011

Advertising Agencies

Advertisers

Advertising Agencies

Media Sales Houses:Internal Sales Houses:

Video InternationalGazprom-Media / AlkasarEverest Sales RTR-Media

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Benefits of Internal Sales HouseBenefits of Internal Sales House

More control over the sales process

Lower cost of l % f

Mastering i t l ti sales as % of

revenuesinternal expertise

in direct sales

Individual approach to each

client and customized

Bundle sales with additional

options, including customized offerings

Working directly

p , gnon-FTA

Working directly with advertisers

and media agencies

8

2011 Sales Structure: National & Regional Ad Sales to Moscow2011 Sales Structure: National & Regional Ad Sales to Moscow--Based ClientsBased Clients

CLIENTS

Телеканалы Ad ti

CHANNELS

Телеканалы -Advertisers-Advertising agencies

Vid I t ti lVideo International

Up to 96% of Russian ad sales directly through Everest Sales

9

2011 Sales Structure: Regional Ad Sales to Local Clients2011 Sales Structure: Regional Ad Sales to Local Clients

Телеканалы

CHANNELS’Regional Stations

Video International Subsidiaries

Local sales

Distribution of inventory between Moscow-based and regional clients

Signing deals with clientsSales directors of CTC Signing deals with clients by VI local branchesMedia regional stations

1.Pre-sale2.Control of the deals3.Trade marketing Regional sales to local

Not more than 4% of Russian ad sales through Video International

g gclients

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What Gives Us Confidence in the Success of Our New Sales Structure?What Gives Us Confidence in the Success of Our New Sales Structure?

Strong sales team

Established relations with major advertisers

We continue to build our sales capabilities

Incorporating best practices with the help of Booz&Co

Continued alliance with VI and benefitting from their expertise, IT platform, back-office support and analytics

Three TV channels with complimentary audience profiles

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