Sure we’ve got growth in the UK, but Europe’s number one and two internet companies are in Russia, it’s the sixth biggest online economy in the world, and it’s one of the very few countries not to be conquered by Google’s search advertising empire.
And now Russia is joining the real-time bidding, programmatic trading bandwagon as one of the country’s leading online backing entrepreneurs launches a digital media business to take advantage of two of the hottest trends in the biz: emerging markets and real-time bidding (GigaOm covered the launch).
Oleg Tinkoff, founder of the online bank and credit card company Tinkoff Credit Systems, which counts Goldman Sachs among its investors, has launched Tinkoff Digital – a full service online advertising company including supply and demand-side platforms, data management services, a mobile network and an ad exchange. Then project has $20 million in backing from Tinkoff and Goldman.
It’s virgin territory for Russia, with the vast majority of Russian online ads being prepared and sold by hand. Buoyed by the success of Tinkoff Credit Systems – which now has assets worth $1.3 billion in H112 – Tinkoff is expecting big things from his digital venture with $300 million in revenue expected by 2015.
Tinkoff himself and Tinkoff Digital CEO Anna Znamenskaia explained the idea behind the venture at a briefing in London this week, giving an interesting glimpse into just why big-time investors across the world are so keen to invest in RTB despite so many reservations from publishers.
You can’t do this alone
The new ad economy is interconnected and interdependent, so it makes sense for any new entrant to the RTB market to partner with existing players. Znamenskaia confirmed to me at the event that Tinkoff Digital will be looking to sign deals with DSPs and SSPs in the UK and elsewhere to give advertisers access to Russian media and vice versa.
TV is not king
“The internet is number two behind TV in terms of audience – we expect internet advertising spend to reach US$3 billion in four years,” says Znamenskaia. “The 25-to-35 (age) market are not covered by TV and advertisers cannot just use TV any more, especially for the young audience.”
She’s right: as the chart shows, in terms of reach you’re better off thinking online to reach young Russians – 86 percent of 12-to-14-year-olds go online every day but only 59 percent watch TV.
There is shedloads of growth left in display
If you want to crack Russia, don’t bother with search. Just as Scotland is one of the few countries where Coca-Cola isn’t the leading brand of soft drink, Russia is one of the few countries where Google isn’t the leading search advertising player. The mighty Yandex and Mail.ru have that market sewn up.
But Tinkoff estimates search in Russia to grow 37 percent this year, having grown 46 percent last year. Sectors such as real estate have grown exponentially, with 126 percent growth last year in display.
Mobile is key
Mobile is where Tinkoff wants to be and it’s building a mobile ad network into the business from day one.
This might sound odd – but Tinkoff is using the relative cheap prices of online and mobile ads as a marketing tool. TV is expensive, it goes up every year, young people don’t watch it – but mobile is good value at much lower cost, goes the argument. Znamenskaia argues that while RTB ads – on a per user basis – might cost $70 and an online ad $16, mobile is just $0.50.