RuNet 2012: Unprecedented Online Market Growth In Russia Continues

­ Today I want to share some numbers for 2011 and fresh data reported from different sources for 2012 that shows unprecedented, double digit growth of RuNet, Russian Internet eco-system, and what potential it presents to those who are willing to conquer this very attractive market.

Unfortunately, this year I wasn’t able to go to Moscow to participate in RIF+KIB, major annual Internet conference in Russia. But I was able to check video broadcast recording of the most of the presentations (they were available even in HD format!) to get fresh information about Russian Internet market and its dynamics.

In June I was participating in International Search Summit in Seattle where I heard the speech of Preston Carey, US Business Development Director for Yandex, who presented a great overview of Russian Internet, Yandex and its target markets, as well as sharing tips for running effective SEO and PPC campaigns.

In last twelve months Yandex had a successful IPO on NASDAQ, started its expansion into foreign markets including Turkey and the Czech Republic, got partnership agreement with Twitter, and launched several interesting products and services to Russian audience that include Yandex.Webmaster tool, Search Retargeting, Search Suggestions to search queries, Yandex.Disk (free storage service), Real-Time Bidding (RTB) for display advertisement, Navigator (a free mobile application for drivers), Taxi Booking Service and many other.

One of the interesting facts I’ve learned was that, while Yandex continues to be the most popular search engine in Russia, its market share dropped to about 60% from 65% in 2011, and Google was able to increase its share from 20 to 25%. Kudos to Google-Russia team for pushing hard and getting more weight in this important region!

Internet Audience

Last fall Russia has finally became an absolute European leader in online audience and now ranked #6 in number of Internet users worldwide.

At the KIB+RIF 2012 Sergey Prugotarenko, president of the Russian Association of Electronic Communications (RAEC), announced that the audience of the Russian-speaking  monthly Internet audience (age 18+) has grown to 57.8 million people, which is 15% higher than the last year, with 44.3 million people using Internet daily.  By the end of 2014 this number is projected to grow up to 80 million users per month, close to 71% of Russian population in 18+ age group.

Most of the growth (+16% comparing to 2011) occurred in regions outside Moscow and St. Petersburg, two major cities in Russia with highest Internet penetration level that has reached 76%.

Overall Russian-speaking audience (including users in Ukraine, Belarus and residents in other foreign countries) is estimated at around 80 million users.

Current Internet penetration in Russia has reached 51% mark and is bigger than in China and Brazil, two other fast growing markets.

Mobile Internet

Following global trends, Mobile Internet in Russia is gaining huge popularity and became one of the major forces behind the Internet audience growth in Russia, growing two times faster than growth of access through desktop PCs. About 33% of Russian Internet users have access to the web through mobile devices like iPhone and other smartphones, and 20% of them use Mobile Internet daily. Considering that rural areas have pretty good level of mobile network coverage, mobile Internet access also allows regional users to reduce the level of inequity in Internet access comparing with users in major Russian cities.

iPads and other tablets are gaining more popularity in Russia and fuel further growth of Mobile Internet, with about 7% of Internet users reported about having access through tablets.

About 30% of all mobile applications downloaded by Russian users are products of local developers, with overall sales estimated at 300 million USD.

Online Advertisement

Russian online advertisement market in 2011 was 42 billion RUB (or 1.08 billion EUR), with 56% growth compared to 2010, which made it the most dynamic market in Europe.

E-Commerce

The volume of E-commerce has increased by 30% and reached 310 billion RUB (7.97 billion EUR). Most of the growth occurred in such important for Russia industry as travel, with 86 billion RUB spent on airfare and train ticket online purchases (+45% comparing to 2010)

14 million users made purchases at least once in 6 months period.

125 billion RUB (+80%) were spent through major online payment systems like WebMoney, Yandex.Money, RBK Money, MoneyMail.

Online gaming industry has shown a very rapid growth – 38 millions of active online players (+171% comparing with 2010)  - with spending close to 7 billion RUB (179 million EUR).

Social Media

According to RIA news’ information from Sergei Plugotarenko, 99% of RuNet users engaged with at least one of many social networks available in Russia.

Odnoklassniki.ru continue to be the largest social networks (73%) followed by VKontakte (62%) and MoiMir (31%).

Twitter presently has more than 1.7 million Russian users and shows over 50% growth in last 6 months (comparing to 1 million users reported by Yandex in July 2011). I think partnership with Yandex will definitely help Twitter’s popularity growth in Russia.

Facebook audience in Russia continues to grow and estimated at 18% of all RuNet users. That’s pretty impressive growth comparing to just 5% back in 2010.

Google+ seems to be growing pretty well in Russia as well, with the number of Russian Google+ users reached 1.4 million mark.

In February 2012 Yandex launched People Search service that allows search of person through social network profiles open for indexing. LiveJournal, Twitter, Facebook provide data feeds to Yandex, and other social networks like Odnoklassniki.ru and VKontakte provide info through indexing of open public profiles.

In January 2012 Mail.ru has launched new service called Futubra.com. As per Futubra’s description, this service seems to be a hybrid of Twitter and Facebook. Apart from normal “tweets”, Futubra’s users are able to share pictures and video, read news, and create events and groups. Just like Twitter, Futubra will allow its users to subscribe for other people feeds without becoming “friends”.

Futubra team also created free apps for iOS, Android, Windows Phone 7 and Symbian at the same time as the web-based service. It is hard to predict what future holds for this new multimedia blogging service, but integration with large social networks like Odnoklassniki.ru and Moi Mir owned by Mail.Ru will definitely help its growth in popularity.

Conclusions

As we can see, the Russian online market is still growing really fast. This fact should be taken into account by companies that want to enter new markets. While doing business in Russia is still full of challenges coming from legal complexities and dominance of local players, the perspective of growth both Internet audience and middle class Russian consumers should be attractive for newcomers to enter this promising market with huge potentials.

SEMPO Canada Search Summit

Two weeks ago, June 29th, we had the first ever SEMPO Canada Search Summit in Vancouver organized by SEMPO Canada and Google Canada teams. We were discussing this idea with Google Canada team for several weeks, everybody was agreed that through the year Vancouver doesn’t have any major Internet marketing events except annual IMC (Internet Marketing Conference) in the fall, and finally we came with the date that was acceptable for both teams.

I was one of organizers of this event, mostly responsible for finding the place to host this event and setting up the venue. We had only three short weeks to set everything up and it put a lot of pressure on those involved in preparing presentations and venue, marketing and selling tickets for this one-day conference. With a help from Sophia Shakia, our volunteer event coordinator, we were able to get a great deal from Empire Landmark Hotel at 1400 Robson St., which offered us to rent a big ballroom with catering service for reasonable fee. We spreaded information about this conference through all local online marketing meetups, SEMPO Canada’s LinkedIn group, and our personal contacts and at the end we were had more than 100 people registered. This event was free for SEMPO members and Google clients in the area, for the rest of the public tickets were offered at $99 that included breakfast and lunch as well.

The main goal of SEMPO Canada Search Summit was to provide local search marketers with opportunity to explore new Search Marketing strategies through presentations prepared by both Google and SEMPO experts and let them opportunity to communicate face-to-face with Google team, ask questions, get quick reviews of sites and ad campaigns.

SEMPO Canada team made opening presentation with a quick review of SEMPO and SEMPO Canada working group, about organization’s mission and goals, global reach and recent activities here in Vancouver. It also presented 2011 State of Search Market report.

Google Canada team made several presentations about latest innovations in search introduced by Google, and latest trends in mobile advertisement and Social Media, just one day after Google+ social network was officially launched.

Q&A session in the afternoon lasted for almost 40 min. and everybody was given a chance to ask a question directly to Google team members. Some of the attendees were able to get their Google AdWords accounts reviewed on the spot

General feedback from most of the people show us that Search Summit was a great success, which we hope will become a regular annual event for search marketers working here in Greater Vancouver area. It was obvious how excited Google team was about the results of this event which makes me to believe we can expect the same event to be organized in other Canadian cities and here in Vancouver again next year.

SEMPO Canada team is also very happy to report about signing 22 new SEMPO members which is a great news for Canadian Search Marketing industry. We hope these new members will become an active supporters for organization. We are going to follow up with all new members soon to make sure they are informed about all local events organized by SEMPO Canada and actively participate in them.

Three busy days at RIF+KIB 2011, major Internet event in Russia

RIF+KIB 2011, the main Internet conference in Russia

RIF+KIB 2011, major Internet event in Russia

I just came back from Moscow after spending three days at the RIF+KIB 2011, the biggest Internet conference in Russia. It was a very interesting experience, I have learned a lot about the Russian Internet industry and particularly about online marketing business there, and met a lot of great people. About 7,000 people attended this three-day event, mostly young, in their 20’s, very ambitious and eager to learn about the Internet industry.

I haven’t been in Moscow for almost 20 years, and I was very excited to see the city where I started my military service back in 1983 and then visited several times while doing export-import business before immigrating to Canada. The city has changed a lot, with many new buildings being constructed and a lot of old ones being repaired. Unfortunately, traffic problems in the city were very obvious as well, with so many cars trying to move around the city and making it almost impossible to be on time anywhere.

RIF+KIB 2011 was held near Moscow, in the suburban area called Rublevka known for the most extravagant and expensive houses of “new Russians”: oligarchs, politicians, influential businessmen, government bureaucrats. While our bus was slowly going through the congested road, I was looking at 4-5 storey mansions, almost palaces, many of them staying behind 20 feet tall metallic fences with constant presence of police everywhere. Time to time we were passing very fancy restaurants, Ferrari and Bentley dealerships, expensive boutiques and very modern sport complexes. The presence of big money there was very obvious.

The program of the conference consisted of two main groups of events. The main program was formed by organizing committee and it was broken into sections covering a lot of topics: Online Marketing, Web Development, Social Media, education, start-up businesses, legal aspects, government regulation, etc. I submitted a proposal to speak about SEMPO two months in advance and didn’t get any response from organizers, even after I followed with email asking about the status of my proposal. It simply wasn’t included into the main program, and nobody bothered to tell me why.

The second group (Program 2.0) was formed by participant’s voting for presentations submitted prior the conference. I submitted three proposals to speak, with topics like International SEO, Internet Marketing Education and SEMPO itself and at the end none of them were accepted. Presentations about education was getting quite a lot of interest and votes, but at the end it was the only presentation in this section and was rejected based on the rules. International SEO presentation (which was the only one) was taken into consideration for Regional Promotion section along with several other speakers, and this section was very popular with participants who voted for it. I was watching the voting very closely, and I was confident it would be one of the most popular among attendees. Unfortunately, when I came to the conference, somehow, in a very mysterious way, the whole section with 8 speakers from other regions of Russia wasn’t included in Program 2.0 as well.

Later I had some private talks with people close to organizing committee, and they told me that the conference program was finalized the night before opening, organizers had problems to get speakers for several sections. If it was a case, why any of my proposals were weren’t included along with many other proposals from regional companies – I don’t understand. I was also in many ways frustrated with how difficult it was to communicate with organizers of this event. While all contact info was posted on the website, nobody replied to my emails, and it was almost impossible to get any answers over the phone, especially if you call from Canada.

During the conference I had talks with representatives of almost all major players in Russia like RAEK (Russian Association of Electronic Communications), Yandex (most popular website and search engine in Russia), Begun, Ashmanov & Partners, RBS Corp., RU Center, 1C-Bitrix just to name few. We were talking about the growth of Internet industry in Russia and problems it’s experiencing right now.

I had a short conversation with Arkady Volozh, CEO of Yandex who looked just like an average person and was very polite. When I asked him if Yandex’s global indexing means the beginning of competition with Google, his reply was that Yandex mostly focused on indexing of Cyrillic content on the web. I also met with Andrey Sebrant, Director of Product Marketing, and Eugene Lomize, Advertising Technology Director, whom I met last year in Seattle when he was a speaker at International Search Summit conferences sharing information about Internet industry in Russia and Yandex growth in particular. I spoke about SEMPO and its role, and both expressed some interest to support SEMPO in Russia. We still need to discuss the form of this support.

Interesting  scheme of Russian Digital Marketing Eco-System was presented by Boris Omelnitskiy, CEO of Begun, one of the Top 5 Internet advertising platforms in Russia. It shows key sectors and all major players on this fast growing market. Begun’s Marketing Manager Elena Klimanskaya was very kind to spend some time with me and providing some valuable information about the landscape of Internet Marketing in Russia, explaining me how it works in the market where Google is not a dominant search engine, Facebook has only 5 million users to this date, and number of Twitter’s users is slowly growing as well.

I had a great talk with Ksenia Ryzhkova, Director of Marketing and PR for Ashmanov & Partners, the leader in the field of Internet Marketing in Russia. This company leads the way through organizing conferences, hosting monthly workshops, publishing books about SEO and providing training. Company has experienced big growth in business in last three years that were troubled years for many other businesses in Russia. Ashmanov started to develop its own sophisticated SE tools like this Search Engine Analyzer .

SEMPO was not known to most of the people there. Since I didn’t have a chance to present SEMPO to the big audiences, I printed flyers with info about SEMPO and was distributing them around. I found several companies which expressed interested to become SEMPO members, I am going to follow up with them this week. I have a feeling that we won’t see many individual members from Russia, Russian SEM specialists usually work for some company, I haven’t met any independent professionals at this event. I look forward to see how the Russian companies will react to this opportunity to get involved with SEMPO and global Internet marketing community.

It was very unusual to see so many government officials to speak at such an event. Russian president Dmitri Medvedev sent greeting message to the participants via Twitter, Minister of Communications and Information Technologies Mr. Igor Shchegolev took a tour around and later participated in round table discussions along with his deputy minister. It was also interesting to learn that Russian government has an interest in developing a new national Internet search engine independently from Yandex.

Few takeaways from this conference:

• Russia is still experiencing a big growth in Internet users (57 million people), especially in the regions far from Moscow and St. Petersburg, in smaller cities. Approximately 40% of those users were using mobile devices to access Internet. E-commerce is getting more and more popular as well as more people have access to Internet and credit cards.

• Russian SEM companies are totally focused on Yandex, the leading search engine and most visited website. This search engine has its unique web search service based on a proprietary machine-learning method MatrixNet . Yandex has its own webmaster tips , but more info can be found in Yandex Recommendations for webmasters that are very similar to Google’s Webmaster Guidelines (unfortunately, this document is available in Russian only). Yandex.Webmaster tool also looks similar to Google’s, with pretty similar functionality.  So all these things can be taken as an indication that if your website is optimized according to the Google’s rules, then it has pretty good chances to rank well in organic SERPs of Yandex as well (of course if the content is written in Russian).

• If you want to use PPC advertisement in Russia, Google AdWords could be one of the options, but Yandex.Direct has a clear advantage in this market as well. Be prepared for minimal spending budget that is around $700. You can set up ad campaigns on your own or use one of the certified Yandex ad agencies to help you with this.

• Banner advertisement is still a big topic in Russia. To me it sounds like a stone age, but this is the reality in Russia. All major ad networks like Yandex, VKontakte or Odnoklassniki offer banner advertisement in their networks, and apparently it works well for many advertisers.

• Few SEM companies from Moscow and St. Petersburg totally dominate the Russian market. They open regional offices in other major Russian cities and try to do most of the business through their reps there.

• Russian market looks very self-isolated at this moment. Almost all Russian SEM agencies don’t do business outside of the Russia and CIS countries like Ukraine, Belarus, Armenia or Moldova. Possibly because of language barrier or lack of advertisers interested in foreign market, they simply aren’t ready to do business the way it’s been done in North America and Europe.

Busy Six Months

It’s been six months since my last post in this blog, which is probably a real sin for the guy who works in search marketing field. Well, as I predicted, my life has changed a lot since then. At that time I could haven’t know how much it was about to change.

First of all I left my position at Tourism BC (which doesn’t exist anymore as it was finally merged with BC’s Ministry of Tourism, Culture and The Art on April 1st) at the end of the March and a couple weeks later I started new job as a SEM Manager at Wave Maker Marketing, brand new SEM agency in town with great potential for growth. With almost 25 people on board Wave Maker provides full scale marketing support (including online, email, video and print advertisement) for several private colleges and Canada West University owned by Eminata Group, a large player on Canada’s private education market. Immediately I was busy with learning new things, preparing reports and managing small team of PPC and SEO specialists and making sure that we provide enough of quality leads to sales team to fill out classes with students.

In May I flew to Phoenix for the first face-to-face meeting of SEMPO’s Board of Directors. Before that I took my family for quick trip to Grand Canyon, since we could not make any plans for longer vacation because of my new job. It was a great experience to see with your own eyes this one of most magnificent wonders of the world. On way back to Phoenix we spent few hours in Sedona and really enjoyed beautiful landscapes and views of red colored rocks in this small city.

SEMPO Board of Directors meeting, May 2010, Scottsdale, AZ

SEMPO Board of Directors meeting. May 2010, Scottsdale, AZ

After getting back to Phoenix I had three busy days attending SEMPO’s BoD meetings which were full of very active discussions about SEMPO’s role, membership growth, SEMPO Institute, financial reports. I was excited to meet some people who were standing at the beginning of search marketing industry like Bruce Clay, Mike Graham and Kevin Lee to name few, and members who were presenting different countries like Kristjan Mar Hauksson from Iceland, Massimo Burgio from Italy, Michael Xu from China. Face-to-face meetings are much better than monthly calls we had before that, we were able to accomplish much more than when we have all discussions over the phone.

In June I was busy working on our PPC campaigns and was really happy when we finally hired an experienced PPC specialist, Adrian, to help us with this time-consuming task.

I also was able to attend SES Toronto (June 10-12) for the first time and worked with Alex Brabant and Ken Jurina, co-chairs of SEMPO Canada working group, on the SEMPO booth trying to promote this organization and sign new members. It was quite surprising for me to learn that people involved into search marketing in Toronto don’t really have opportunity to get together, exchange some ideas, just simply have a good time except during events like SES. Here in Vancouver, we meet at the SEM meetups almost every month, we have presentation covering different SEO, PPC or social media related topics which we usually discuss and learn something new from each other. It’s also a great networking opportunity for everybody involved in the industry, when we can see each other and exchange news, have a little bit of good time after busy day in the office.

I also signed to the SEMPO’s Education Committee and was doing review for PPC training course for SEMPO Institute to make sure it’s up to the date. One of the problems with that was the merging of Yahoo and Bing advertising platforms. With this change scheduled to be completed some time this fall it didn’t make sense to make a lot of changes into information about these two search engines and their PPC programs. I hope we will be updating this course quickly after this transition is finished.
The rest of the summer I was busy at work making sure that we meet our targeted numbers. We also were exploring new opportunities by setting up new PPC campaigns for mobile devices, remarketing, testing some foreign markets. We also started to use Facebook advertisement a lot and it worked out very well for us.

Now at the beginning of new school year we see some really good results of our efforts. It gives me some hope to commit to keeping posting to this blog more regularly.

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“Hello World!”

Believe it or not, but this is my first blog posting, and my life is about to change forever. You may ask why? Because I suddenly found myself in the big and bright spotlight. On March 8th I was elected as a new member of 2010 – 2012 SEMPO’s Board of Directors (thanks so much to everybody who voted for me!). This event was my best present to the 10th anniversary of my professional career in online industry. Suddenly I started to feel a lot of attention to myself from many people in the online world. I guess everybody is wondering “Who is this guy? Where he came from?” Well, many people checked my profile on LinkedIn already, but I think it’s time to tell a little bit more about myself through this blog and use it as an online dairy to share my experience as a search marketing specialist, as a one of the Directors of SEMPO Board, and just as a person with many interests in his life.

Looking back, I can’t say my way to this point was an easy one. I put a lot of efforts since I moved to Canada to get education and experience, to establish myself in this challenging field. I was working on many complex online projects in several highly competitive industries like pharmaceutical, tourism and sports. I always try to look at the big picture because I am able to fill the gap between web development, traditional and online forms of marketing which still exists after more than a decade of online business existence.

Currently I am working at Tourism British Columbia, which will be part of BC’s Ministry of the Tourism, Culture and the Art on the April 1st. It is going to be a big change for everybody in our office, but I hope transition will be smooth and we will continue to work hard to promote beautiful British Columbia as a premier travel destination.

Now I look at my future as even more busy than it was before, but I am ready for this test.

I hope to see SEMPO growing as a respectful professional organization among other business organizations and I am going to put in my time as a volunteer to make a real contribution to this organization.

I am passionate about Search Engine Marketing industry and I believe in great future of SEM that becomes an incredibly important part of any company or organization that want to succeed and prosper.

I strongly believe that in last few years search marketing expanded far beyond the boundaries of traditional marketing because it incorporates the best and most effective principles of marketing: flexibility, speed of implementation, cost effectiveness and measurability.  The Web allows each business to communicate with customers directly through each stage of an interaction or purchase decision.

Search engine marketer’s work is getting more and more complex as it combines new emerging kinds of media, many technical tools, and knowledge of usability testing and result measurement.

Thanks for reading this and I hope you will find my future postings useful and interesting to read. You can send me your feedback or questions at dminenko@shaw.ca .

Cheers,

Dmitriy.

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