Which types of advertisements yield higher returns in Russia?

Marketers and company leaders encounter numerous challenges each year:

• How to effectively allocate the marketing budget?
• Which channels yield better results in specific industries?
• What performance indicators can be anticipated from advertising campaigns?

To address these questions, Nielsen conducted research on the return on investments (ROI) from advertising campaigns across various media channels. In a similar vein, Roistat conducted a study in 2018 specifically focusing on Internet channels. Here, we present data from these studies that will provide valuable insights into answering the aforementioned questions.

*Nielsen’s marketing mix model encompasses the timeframe from 2014 to 2018. In 2018, they conducted an extensive analysis to evaluate the effectiveness of over 1,000 omni-channel advertising campaigns. These campaigns were carried out across a wide range of communication channels, including TV, radio, web banners, online video, social media placements, out-of-home ads, and other digital and traditional media. The total budget allocated for these campaigns exceeded 8 billion rubles, and they encompassed more than 120 brands. The analysis primarily focused on the FMCG market, with 85% of the campaigns belonging to the FMCG sector and the remaining 15% representing non-FMCG industries.

Which advertising channel proves to be more efficient?

In 2017, the average return on investment (ROI) across all media channels was 0.97, indicating that every ruble invested in advertising generated 97 kopecks of short-term sales impact during the placement and up to 3 months thereafter. In Europe, the average ROI ranged from 0.2 to 0.4, which can be attributed to the higher advertising costs in the Western world.

Nielsen’s study reveals an increasing influence of media channels on customer demand. In comparison to 2015, when the ROI dropped to 0.6, subsequent years exhibited positive trends.

Specifically, in 2018, social media (2.18 rubles), online video (1.90 rubles), and web banners (1.74 rubles) demonstrated the highest return rates.

On average, banners and online video generate a return on investment (ROI) that is twice as large as TV advertisements, while social media (including bloggers) exhibit even higher rates. Consequently, TV is the least suitable option for achieving short-term sales impact, with an ROI of only 90 kopecks for every ruble invested. However, it’s worth noting that the volume of aftersales resulting from TV ads surpasses the combined volume of sales via other channels by two and a half times.

In the long run, TV remains the most consistent channel, exhibiting minimal fluctuations in return on investment (ROI). On the other hand, social media platforms are characterized by significant variations in ROI across different advertising channels. In the realm of digital media, the scenario is reversed: higher average rates are accompanied by considerable disparities in ROI from one campaign to another, and in certain instances, it can even be lower than that achieved through TV advertising.

Optimizing Media Strategy

We strongly emphasize the significance of an omni-channel approach in order to achieve optimal results in promotion. According to Nielsen experts, the ideal number of advertising channels for a campaign is four. Utilizing this specific number of channels concurrently yields the highest return on investment (ROI). With three advertising channels, the ROI reaches 0.7, while using four channels results in an ROI surpassing 1. However, as the number of channels increases beyond four, the ROI gradually declines, but the outcomes become more stable.

Further Insights into Online Advertising

Roistat, an end-to-end analytics system, conducts an annual study to assess the effectiveness of advertising tools based on aggregated and anonymized data from thousands of advertisers. In 2018, a sample of 5,000 advertisers was analyzed.

Return on investment (ROI) was calculated using the following formula:

ROI = ((profit – self-cost – advertising expenses) / advertising expenses)) * 100%

Key Findings of 2018:

• Similar to the findings of the 2017 study, search ads maintained their lead in terms of return on investment (ROI). They were followed by ads in the display network, with social media ads coming in third.
• When examining the major players, it is evident that both Yandex.Direct and Google Ads continue to deliver satisfactory ROI and are effective platforms. However, Yandex.Direct remains the champion in both search and thematic platforms.
• In the search domain, Yandex.Direct outperformed Google Ads in terms of effectiveness for 60% of advertisers in 2018. In the context network, Yandex.Direct demonstrated superior results for 70% of advertisers.
• Analyzing ROI across industries, Google Ads proved to be most efficient in the B2B and FMCG sectors, while Yandex.Direct maintained a significant lead in all other sectors.
• Regarding geographical efficiency, ads in Moscow and Saint Petersburg showcased the highest effectiveness, while the regions significantly lagged behind. This discrepancy may be attributed to many advertisers failing to properly segment their campaigns based on regions and major cities, resulting in budget overruns.

Industries and Their Conversion Processes

FMCG exhibits the highest conversion rate from bids to sales, likely due to the combination of low average transaction amounts and the fast turnover of consumer goods. When customers place orders for FMCG products like dog food, there are fewer reasons for them to cancel their purchase at the end.

Recommendations

Utilize a diverse range of communication channels for promotional purposes.

When focusing on online promotion, it is crucial to emphasize geotargeting when configuring contextual ads in search engines and networks. Any modifications made to advertising campaigns can impact return on investment (ROI), so it is essential to closely monitor statistics, analyze data, and draw accurate conclusions.

Alternatively, entrust media planning and advertising configuration to the proficient experts at the Quarter Billion Agency marketing agency. We will select the most suitable promotional channels for your business in the Russian market.

Furthermore, feel free to download our White Papers, which provide valuable insights into the Russian advertising market, allowing you to expand your knowledge.