Russia is almost a one-off in terms of Google’s failure to cultivate any kind of monopoly in the country. Yandex dominates Google’s market share by almost two to one, a ratio that shows little or no signs of erosion.
Performance marketers looking to break into the country from Western Europe would be wise to keep this in mind. The regular roll-out of new features and options from Yandex hints at a trajectory with a firm ascent laid out before it.
The full extent of advertiser confidence in Yandex has been revealed in the last few sets of strong financial figures, so we decided to quiz Bernard Lukey, head of Yandex Europe, about the Russian outfits plans for the future and how he hopes to fend off Google’s advance.
How do you Hope to Build on the Last Few Sets of Healthy Financial Figures?
Bernard Lukey: After we had announced our Q2 2013 financial results, we changed our revenue forecast for full 2013 from 30-35% to 34-38% (compared with 2012). Online advertisement is the fastest growing advertisement channel in Russia. Here are some figures from Russian Association of Communication Agencies. As you can see, the market for text-based (contextual) advertising last year grew by 45%, display advertising grew by 17%, while TV advertising had only a 9% growth. Last year, revenues from online advertising surpassed print media and were second largest, followed by revenues from TV advertising. Quite meaningful milestone for the Russian ad market. This year, Yandex overtook the largest national TV channel (Channel One – Pervy Kanal) by daily audience and we are now very close to them by revenue from advertising.
Why is Growth in Text-based Advertising and Paid Clicks on Yandex so Much More Than Display?
BL: Text-based advertising is a must both for small and large businesses that would like to cover fast-growing internet audiences. We see text-based advertisement receive more and more of advertising budgets.
Text-based advertising is all about expanding sales by delivering to the target audience concrete messages tied to search results. Text-based ads are much more accessible in terms of cost: a company can launch an ad campaign for just a few tens of British pounds and fine-tune it based on the first results. A powerful targeting tool makes text-based ads worth the cost even for a very niche company.
Display advertising is more focused on branding and coverage of large audiences, consequently, it is more expensive. The range of local businesses for whom display advertising is cost-effective in terms of reach and coverage. This is the main reason why display advertising doesn’t grow as much as text-based advertising. Another reason is that display ads have limited targeting opportunities and aren’t based on search queries (in contrast to text-based ads). We believe, however, that display advertising can gain more traction when Real-Time Bidding technologies become more popular and developed.
Which Verticals Tend to Perform Better in Each of These?
BL: As for text-based ads, we see budget growth across almost all industries, but this growth is especially high in finance (banks, insurance), retail and e-commerce (online stores) and car manufacturers/distributors. Display ads are more popular with mobile and telecom operators, car manufacturers/distributors and finance industries – they spend more than any other industry (we have pretty the same line of advertisers as TV channels has).
How Important Has Local Market Knowledge Been in Maintaining Your Successful Russian Market Share?
BL: It is very important. First, Russian, as a language, need some work to do for any search engine to work correctly, and it is worth to pay a lot of attention to contextual technologies to be relevant. Second, Russia is a huge country and we have to understand what exactly users in different parts of the country mean when they make the same search queries. Speaking about advertising technologies, there is a lot of that we have to keep in mind to be location-specific and open and accessible for all those advertisers who want to start text-based advertising on the internet. Small businesses in Russia need a more flexible discount system. They need a credit line, as well as an opportunity to pay by installment and so on. That's why the way we sell text-based ads is very different from what you probably are used to seeing in Europe or US.
Are you Looking to Open Local Offices in Western Europe? If Not, Why?
BL: We can't comment on plans here, sorry.
We've Seen Quite a Few Western European Digital Companies Launch and Cease Operations in Russia, Why do you Think This has Happened?
BL: Russia is quite specific for companies from Western Europe or the US. Some of them don't understand local specifics and prefer not to discover how to be successful in Russia6 they use same strategies as in any other region and fails. Nevertheless, we can see growth of interest in the Russian internet market, since it’s the largest market in Europe (we surpassed Germany by the number of internet users in 2011), which is still growing, with Russia’s internet penetration still less than European, on average. eBay, Amazon, PayPal are among those companies who declared their plans to be more visible in Russia and started to make first steps in this direction. We also see a huge interest from both large and medium digital agencies in Europe, who are seeking partnership with Russian internet companies, because their clients are interested in promoting goods and services in Russia. People understand that they need a different approach in Russia and those tools that they are used to using in their ad campaigns in Europe sometimes don't work in Russia or for Russians.
What Work Are you Doing Around Semantic Search?
BL: We have been working on application of semantic technologies in our products and services for a few years already, and are now developing our work along a few directions.
One direction is utilising semantic information on webpages to improve our <information retrieval> services. We check if a page in our index database has any sematic markup (schema.org, microformats etc.) that matches <the code of> any of our services and use this information to enhance our vertical search databases (Yandex Business Directory, Yandex.Auto, Yandex.Video etc.) and to improve this page’s snippet on our search results page (Enhanced Snippets). You can read more about semantic markup in detail on Yandex here, here or here.
Another direction is utilizing semantic markup in our new search platform, Islands. Using this markup website administrators can tap into the platform to set up a direct data transfer from their website to Yandex’s search engine. The Help section on our Yandex.Webmaster website provides a detailed description of how this works.
We are also in a close touch with the semantic search community. We sponsor Schema.org and take an active part in the industry conferences. We have recently made a contribution to Wikidata, a new initiative of Wikipedia’s creators, Wikimedia Foundations, which aims at creating a Wikipedia-based knowledge base that can be read and edited both by humans and machines.