The Russian online sector is largest online market in Europe with 66 million internet users, and crucially, it is also one of the fastest growing. Year-on-year growth is expected to stay at around 15%-20% up until 2018. It is therefore no surprise that online marketing in Russia is an advanced and integral part of the tech sector. It is currently worth around $2.5 billion and employs around 50,000 Russians. On a global stage, it is only behind Israel and the US.
One of the keys to Russia’s success in online marketing is its focus on creating products for SMEs. Russian automated self-service platforms are among the most advanced in the world and appeal to smaller companies that do not have the budget to retain digital agencies. The focus on SMEs may explain why US and European companies have had difficulty dominating the sector in Russia. Many large western ad tech companies focus on products that service large corporate brands, as such there is more emphasis on the ‘reach’ of a campaign. The value of each ad click or view is less of a priority and consequently less attention is paid to analytics.
As a result, many of the methods used by big brands are relatively unsophisticated. For example, if you were to visit one or two sites that mention ‘Nike’ most platforms would label you as a ‘potential Nike consumer’ and you would see a lot of Nike adverts on the pages you subsequently visit. However, the ‘sentiment’ of the website you visited has not been taken into account; it could easily have been a news report about the shares prices of sporting goods companies. Put another way, how often have you bought a product online and then seen adverts for the same, or similar products, for the next few weeks? There is often little sense or value in this type of advertisement.
More advanced and accurate ad tech does exist. Platforms and services that leverage big data or use real time bidding (RTB) to focus more accurately on demand could be used by corporations the world over if brand managers were more aware of the power of analytics.
However for Western companies, the pivot towards focusing on the accuracy of a campaign over its reach has started to take place. Online marketers have integrated mainstream products such as Adobe Adlens and Marin Software into their products, but also augmented their offering with localised SEO and contextual advertising. The result is bespoke online ad campaigns finely tuned to deliver the best value for money.
Looking ahead, all ad tech companies will increasingly use big data to add greater predictive elements to marketing campaigns. This could include accurately predicting how real world factors influence an online campaign and automating the correct response. The influence of public holidays or sporting events on online behaviour is a key example of this. Adoption of this technology is likely to happen quickly in Russia as smaller companies are generally keen to experiment with technology that could give them an edge over competitors.
In the next few years we are likely to see a convergence of online marketing approaches as the global ad tech market matures. This homogenisation will see Russian, European and US based ad tech companies all learning from each other and thus forging a standardised global blueprint for successful online marketing.
By Nick Davidov, Managing Director of The Pult Group.
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