Online Advertising Stronger in the Recession in Russia

I don’t have exact figures right now but as far as I remember after reading it somewhere, Russia is one of the countries influenced by the world recession the most. In fact, I don’t think I know anyone among my friends or family who was not damaged in any way. Even those of Russian citizens who still have their jobs and have not even had their salaries cut, still experience it because the same amount of money will hardly buy you the same assortment of groceries, for example, as prices for some products increased dramatically by as much as 30 or 40 per cent.

Right now we seem to be recovering slowly same as other countries of the world but of course it will take years for many companies that were severely hit to fully resume their businesses. At the same time it now looks that at least one industry has not suffered significantly - and it is online businesses that are monetized with advertising.

In the very early weeks of the recession there were two camps of people here arguing about the future of web businesses amidst the financial crisis. The first camp claimed that all the companies will cut their advertising budgets and we will see a significant decrease in advertising everywhere, internet included. The second camp supported the opposite point of view: advertisers will cut their spending on traditional expensive and less cost-effective advertising mediums but those advertising budgets that remain will flow online much more than used to.

In fact, I think we have all heard the same discussions in the English-speaking internet segment as well. But for Russia we now actually already have some positive results that prove that the second camp was right in their forecast as online advertising has remained pretty healthy even when everything else has been damaged.

All in all, advertising has not been in a good shape here as I kept seeing blank billboards along the streets everywhere and frequently on TV we saw ads only for the TV networks advertising their own advertising opportunities - but probably in vain because new advertisers never arrived.

Of course advertising budgets shrunk here same as they did everywhere else in the world but advertisers actually rushed online looking for direct contacts with their target audience and better measurements of their campaigns effectiveness. And online advertising networks were happy to welcome them here.

Today I have seen stats regarding the situation in the online advertising market after the results of the first 6 months of the year have been revealed by ad networks. And the results are pretty impressive - even though they don’t feature the immense growth that existed in the industry in the previous years.

The thing is that online advertising market in Russia used to grow at the rate of about 70% per year. Of course it would have been too much to expect such a growth during a recession but even growth of 5% (this is what we have after the first 6 months of 2009) is obviously still good enough when everything else is declining. In fact, the entire advertising market across all media dropped by 30% compared to the same period of 2008 so this 5% growth turns into a huge achievement actually.

The predictions that people will surf less in the severe economy did not prove to be true as the online population is still growing quite rapidly and people still find new uses for the internet - which is not surprising for a country with a huge population and a low percentage already online. And it is no wonder that advertisers are more than willing to target those who are already online because these are the people who are socially and economically active and are still willing to spend money on goods and services.

As a result we’ve seen a boost in the number of advertisers who use online advertising. And many of those advertisers that were already online further increased their activities - and for some of them the increase was very significant. In fact, top 10 advertisers in the Russian internet segment increased their overall spend online by as much as 88% compared to the same period of last year.

So all the advertisers spent quite a nice amount of estimated $272 million on display and contextual advertising over the first 6 months of 2009 in the Russian segment of the internet. And while this amount itself may sound kind of abstract, it will get much clearer if we compare it to other mediums: online advertising is already larger than print advertising and is twice as large as radio advertising.

And of course the forecasts for the remaining portion of 2009 are even more optimistic as the industry and retail will be recovering - slowly but steadily - and advertisers will continue to invest in the online media that supported them and demonstrated good ROI during the worst months of the recession. Of course time will tell if online advertising industry lives up to these expectations but the overall trend seems to be clear - and it certainly feels good to be part of this particular industry as people in the traditional media must feel much worse about these forecasts and their future.

Via (in Russian)