Ecosystem: Exploring Performance Marketing in Russia – A Comprehensive Market Overview

In today’s discussion, our focus will be on performance marketing within the Russian market. Wondering how the Russian performance marketing landscape operates? Explore further details in our latest blog post.

Online interactions with the audience can be broadly categorized into two major segments, namely brand marketing and performance marketing, depending on the advertiser’s objectives.

Performance marketing relies on tools that are both measurable and comparable in order to determine their value based on their impact on conversions, specifically the transition to final sales.

The pricing models in performance marketing vary depending on the type of paid targeted action. The most prevalent models include:

• CPC (Cost per Click): In this model, the advertiser pays for each click that directs users to their website.
• CPL (Cost per Lead): This model involves paying for specific target actions, such as filling out an application or making a call. The term “lead generation” (derived from the English term “lead”) is often used to refer to this model.

CPA (Cost per Action) is another pricing model in performance marketing where the advertiser pays for each targeted action performed on their website, such as placing an order or filling a food basket. Some companies consider the CPA model as a specialized case within the broader CPL model.

The performance marketing ecosystem in Russia

The current array of tools and technologies for performance marketing is extensive and encompasses numerous components.

The performance marketing ecosystem illustrates the interconnectedness of these tools with each other, as well as their relationship with the advertiser and the audience.

The factors that contributed to the growth of performance marketing are noteworthy. This form of marketing has experienced a remarkable ascent, transitioning from a niche segment within the advertising industry to becoming the second most prominent channel, surpassed only by television.

Factors fueling growth include:

• optimized ad placements for maximum efficiency;
• a diverse range of targeting options to effectively reach even the most niche target audiences;
• the expansion of mobile advertising has been substantial. Within the performance market, there are approximately 3,000 agencies and over 200 distinct technology companies involved.

Efficiency and audience focus are key drivers behind the growth of interactive advertising

While performance marketing used to primarily rely on contextual placements and SEO a few years ago, the industry has since witnessed significant growth in programmatic placements, targeted advertising on social networks, and marketplaces.

Since its inception, performance advertising has been guided by three fundamental criteria:

• Displaying only the message that aligns with the user’s interests.
• Showing the message in a context where the user feels comfortable.
• Presenting the message at a time when the user is receptive to accepting it.

As a result, the top three drivers of growth in advertising performance – efficiency, diverse targeting to meet user needs, and the expanding mobile internet audience – have remained consistent.

Furthermore, performance marketing advertisers are drawn to the ease of measuring results, the expanding audience base, and the multitude of options available for engaging with it. There are various models for measuring the effectiveness of advertising campaigns.

When strategizing and purchasing advertising, the majority of companies rely on key metrics such as clicks (71% of respondents) and the ultimate purchase of goods (56%).

Factors that may hinder the continued expansion of performance marketing budgets in Russia

Numerous businesses have recognized that inadequate audience coverage serves as a primary obstacle when it comes to adopting interactive advertising. These companies have already exhausted their existing user base and require new audiences in order to augment their advertising investments. These new audiences can be acquired through either expanding their online reach into untapped regions (territorial expansion) or capitalizing on the growing user base on emerging platforms such as mobile phones, tablets, and smart TVs.

Furthermore, numerous companies engaged in performance marketing have already allocated a significant portion of their advertising budget towards interactive advertising, nearing a saturation point of nearly 100%. Consequently, any escalation in expenses for this specific form of advertising translates to an overall increase in the marketing budget, which may not always be feasible.

Moreover, companies face limitations imposed by legislation and internal policies, such as in the case of medical prescription drugs, that prevent them from fully leveraging the complete potential of performance marketing.

Additionally, the expansion of performance marketing is impeded by the involvement of major industry players like Yandex, Google, and VKontakte.

Experts have highlighted that a crucial factor hindering the growth of interactive advertising budgets within the performance marketing sector is the absence of expertise on the client side.

What are the client’s expectations from an advertising agency?

The dynamics of the agency-client interaction vary based on the performance channels being utilized. In the majority of instances, the agency plays a significant role in the planning and execution of advertising campaigns.

The agency’s expertise is highly sought after in the following areas:

• Remarketing: 41% of respondents acknowledged that the agency is responsible for planning and implementing campaigns in this channel.
• Targeted advertising in social networks: 35% of respondents indicated the agency’s involvement in this domain.
• CPA-platforms: 32% of respondents recognized the agency’s expertise in handling campaigns on CPA-platforms.
• Search advertising: 30% of respondents reported the agency’s involvement in search advertising campaigns.

In addition to these areas, agencies also play a role in technology companies. However, considering the ongoing advancements in technology and the potential simplification of system interfaces and software, experts anticipate a diminished role for advertising agencies in the future of performance marketing.

However, the success of a performance advertising campaign is not solely dependent on the agency. The client also bears responsibilities and needs to monitor post-click activities, implement website changes, and adhere to other recommendations provided by the advertising agency.

The lack of expertise on the client’s part poses a significant risk to successful collaboration. It is of utmost importance for all parties involved to communicate effectively, share a common understanding of goals and objectives, and speak the same language when establishing targets and objectives.

The significance of technology in performance marketing during the year 2018

The current landscape of technology development in performance marketing in Russia comprises three key elements:

• Firstly, there is a focus on accumulating and leveraging user knowledge to create highly personalized advertising messages. This involves utilizing DMP-platforms, exploring the integration of CRM-systems with advertising placements, conducting experiments with native video, and more.

• Secondly, there is a trend towards integrating different technologies. For instance, automation and optimization of advertising campaigns now incorporate modules for analyzing targeted calls and web analytics.

• Lastly, there is a strong drive to automate existing repetitive processes to the maximum extent possible through API integrations and data visualization tools. This enables streamlining of routine tasks and enhances efficiency in performance marketing operations.

The significance of the analytics department in the context of performance marketing in Russia

The analytical department serves as the central hub for gathering and consolidating information, ultimately facilitating decision-making regarding future actions.

Utilizing analytics services and specialized software is of utmost significance. The advancement of these technologies represents a crucial market trend in performance marketing. Among the well-known and widely used options are Google Analytics and Yandex.Metrics, both offering free web analytics services. Their codes are implemented by a substantial 82% of companies. This widespread adoption indicates that these systems effectively meet the fundamental analytical requirements for the majority of businesses and serve as the benchmark for other analytical platforms.

Numerous professionals acknowledge their utilization of data visualization software, such as Tableau, Power BI, and similar tools, in their work. Companies that have been actively involved in gathering and analyzing customer data for an extended period often encounter the challenge of not lacking information but rather dealing with its excess. Data visualization programs assist in selecting pertinent characteristics from the vast pool of collected and analyzed data, enhancing the effectiveness of daily routine analysis.

The performance marketing market in Russia is continuously evolving, driven by the adoption of new technologies and the successful collaboration between clients and advertising companies.

To delve deeper into the Digital Marketing Landscape in Russia, we invite you to explore our informative White Paper titled “DIGITAL MARKETING IN RUSSIA 2018. Finding your customers on the internet in Russia — how to go about it?”

We are well-equipped to support you in conquering the digital market in Russia! Reach out to us through the “Contacts” tab to explore how we can help.

Source: Research conducted by the “data insight” company.