Results and prospects of the Russian digital video ads market
Online video advertising is a highly promising form of media advertising globally, including Russia.
The primary factors driving the growth of video advertising are as follows:
- Increased interest from advertisers and their expanded options through the introduction of new advertising products (such as mobile, out-stream, and social media formats).
- Accessibility of video advertising formats for medium and small-sized enterprises, providing them with opportunities to enter the market.
- Advancements in video advertising personalization and the utilization of various targeting techniques to enhance its effectiveness.
Mobile Video Ads: Accelerating Momentum
The year 2018 marked a significant breakthrough for mobile video, both in terms of audience and advertising budget. According to GPMD, the largest seller of video ads in the Russian Internet, advertisers who previously underestimated this form of advertising experienced a more than twofold increase in their expenses. GPMD estimates that mobile video ads accounted for 40% (4 billion rubles) of the total in-stream volume in 2018, compared to only 20% (1.6 billion rubles) the previous year.
According to the NSC expert group, the video advertising market witnessed a 20.4% growth in 2018, reaching a total of 10 billion rubles. It is important to note that this evaluation includes ads displayed within a video player during the demonstration of video content (in-stream), while ads integrated into website content, including text-based placements (out-stream), are not considered in this figure. NSC experts anticipate an in-stream growth rate of approximately 15% for 2019.
Surge in Mobile Video Consumption Among Older Viewers
In 2018, the number of video viewers in Russia across various media platforms reached an additional one million users, totaling 40.9 million people or 77% of the country’s population, according to Mediascope (in cities with populations of 100,000 or more). This marked an increase from 39.9 million people (75%) who were online video consumers in 2017.
The growth in viewers can be attributed to the older demographic, as they increasingly turned to online video content. Notably, users aged 35-64 exhibited a trend of watching more videos on mobile devices (+24%) and fewer on desktop (-17%). As a result, there was an average growth rate of 9% in video consumers within this age group.
Driven by the rising interest in watching videos on smartphones, the mobile video audience witnessed an 11% increase. By December 2018, it accounted for 58% of the population in Russian cities with more than 100,000 inhabitants, equivalent to 30.9 million people.
The exclusive mobile video viewership reached a staggering 14 million individuals, reflecting a notable 21% increase. In 2017, this exclusive mobile audience accounted for only 22% of the entire Russian population, but by 2018, it had risen to 27%.
Nevertheless, desktop computers and laptops remain dominant in terms of time spent watching videos. In 2018, Russians spent an average of 48 minutes per day watching video websites on these devices, compared to 29 minutes using mobile devices.
The Growth of Targeted Video Ads Soars
In 2018, the usage of targeted placement or targeted ads, employing data to display videos specifically to the desired audience, continued to rise. According to GPMD, the utilization of demographic and behavioral targeting in advertising increased by nearly 7% compared to the previous year.
However, the most sought-after method remains demographic targeting, which enables brands to determine the gender and age of their audience. This approach is favored by the majority of brands, while the proportion of campaigns using behavioral or interest targeting remains steady at approximately 8%. Nevertheless, certain categories of advertisers may exhibit significantly higher utilization of interest-based targeting. For instance, according to GPMD, in 2018, 37% of placements in the financial services sector were targeted based on users’ interests, along with 30% in real estate, and 19% for car manufacturers and related products.
Conversely, the number of brands opting for non-targeted video ads continued to decline and reached its lowest point in recent years. GPMD reports that in 2018, such non-targeted ads accounted for no more than 25% of the total placement volume. Moreover, within specific advertiser categories, the percentage of non-targeted ads was even lower, occasionally as low as 5%.
Out-stream vs. In-stream
Mail.ru Group, a prominent Russian Internet conglomerate, has observed a significant increase in advertisers’ inclination towards not only video content but also out-stream technology, which now constitutes 77% of their total investments. The preferred format within the out-stream category is native video posts that automatically play within social media feeds, accounting for 92% of expenses. The remaining 23% of video ad expenditures are allocated to in-stream videos, such as pre-rolls displayed in social media and within Mail.ru Group projects, including the affiliate network.
Video ads play a crucial role in assisting companies in enhancing brand awareness and loyalty (image tasks) while also encouraging users to take desired actions (performance tasks). In-stream video clips primarily address the former objective, while out-stream videos allocate 85% of investments towards image tasks and 15% towards performance tasks. Both in-stream and out-stream video formats have the ability to effectively captivate audiences, driving traffic to websites and boosting conversion rates. These formats also allow for the inclusion of a call-to-action button, motivating users to visit a company’s online store or webpage, or even to install a mobile application.
A comprehensive analysis conducted by experts examined the allocation of advertising budgets between out-stream and in-stream video formats across different product categories in the marketing mix. The findings revealed that in all segments, over half of the expenses are dedicated to out-stream clips, although in certain categories, in-stream videos only slightly trail behind. Notably, the greatest proportion of investments in in-stream videos were observed in the medicine and health sector (49%), followed closely by telco (45%) and mass media (43%). Conversely, the preference for out-stream video ads was significantly higher in the games category (97%), education and work (96%), and retail trade (92%).
Among all the categories, FMCG (Fast-Moving Consumer Goods) emerged as the largest in terms of investments, accounting for 26% of all investments in in-stream video ads and 27% in out-stream video ads. The top three leaders in the in-stream format are medicine and health (11%) and beauty ware (10%). In the out-stream format, leisure and entertainment claim the second position with 17% of investments, followed by e-commerce at the third spot with 7%.
Recommendations
The momentum of video ads continued to grow in 2019. If you haven’t yet utilized video to promote your business, now is the perfect time to start. By following our recommendations, you can maximize the effectiveness of your ad placements:
- Ensure high-quality video production. While it may sound obvious, many overlook the fact that video content is more engaging than text. The quality of your video will influence the impression your brand and product leave on the audience.
- Utilize both in-stream and out-stream formats. Combining these formats is essential for achieving maximum reach and impact.
- Embrace experimentation with video formats and ad placement technologies. Trying out different approaches is the key to optimizing the efficiency of your video ads.
- Seek collaboration with experts. Quarter Billion Agency experts can assist you in budget planning and creating a media placement strategy that will effectively capture the attention of the Russian audience.
If you’re interested in gaining further insights into the Russian digital market, we invite you to download our White Paper on Russian Digital Market Overview 2019. Discover how to attract Russian customers through online channels and enhance your business prospects.