Mail.ru earned 1.8 billion rubles from advertising / S. Porter / Vedomosti

Yandex's advertising revenue in the first quarter grew by 36% compared to the same period last year to 7.8 billion rubles, while Mail.ru Group's advertising revenue grew by 19.3% to 1.8 billion rubles, the companies reported yesterday. Only these two Russian Internet companies disclose quarterly results; the Association of Communication Agencies of Russia (ACAR), which evaluates the advertising market as a whole, has not yet published its data.

Played 60%

revenues were generated by Mail.ru games and paid services in social networks. Revenue of the entire Mail.ru Group in the first quarter increased by 29.4% to 6.3 billion rubles.

Yandex's main income in advertising comes from contextual ads, while banners (media advertising) account for only 10.7% of advertising revenue. On the contrary, Mail.ru Group's 60% of advertising revenue comes from banners. But if Mail.ru Group used to receive the lion's share of all revenue in the RuNet from media advertising, earning 3-4 times more than Yandex, then in the first three months of this year the holding attracted only 2 times more budgets for banners than the search engine (1.1 billion versus 623 million rubles).

At the same time, Yandex is growing much faster in media advertising than Mail.ru Group (plus 48% and plus 5% in the first quarter). Mail.ru has practically stopped selling banners in the ICQ instant messaging service, in addition, in some advertising spaces (primarily in the Odnoklassniki social network), banners have been replaced with contextual ads, explains Mail.ru Group Vice President Alexey Katkov. If we take comparable sales, the company's revenue from banners in Russia in the first quarter grew by 18-20%, he claims. According to Katkov, the company increased the area for contextual ads, because it already has enough space for banners, and there is good demand for context. If Mail.ru Group's revenue from media advertising grew less than that of the search engine, then from contextual advertising - more (plus 48% against 35% in the first quarter), he says. However, Yandex earns an order of magnitude more from such ads than Mail.ru Group: 7.2 billion rubles versus 736 million rubles.

Yandex Commercial Director Lev Glazer explains the rapid growth of the search engine's revenue from banners by the increase in traffic and the emergence of new clients: "These are companies that previously placed only in contextual ads, but now they have realized that it is profitable for them to increase their budgets for media advertising." These are, for example, travel agencies, Glazer specified. Yandex recently introduced another banner - next to the search results.

Advertisers have seriously increased their demands for the quality and effectiveness of online advertising, says Arsen Revazov, chairman of the board of IMHO VI (which sells banners on Yandex): the corruption component (the payment of so-called super commissions by advertising agencies) has ceased to play a decisive role in choosing a platform, and the main argument has become the quality of this platform. And premium platforms like Yandex always skim the cream, he adds.

After such a successful start to the year, Yandex increased its forecast for annual revenue growth from 28–32% to 30–35%. However, such growth in the first quarter is a lucky coincidence; it is unlikely that the company's revenue will grow by the same amount in the second quarter, warns Glazer.

Overall, the media market growth in the first quarter was, according to Revazov, 10-15%. Glazer believes that the market has grown by 15-20%. According to him, an increasing share of budgets is accounted for by the largest platforms – Yandex and Mail.ru Group. “There is not much more money on the market compared to the very difficult end of last year for the Internet, and the market is strongly centralized around two platforms,” confirms Katkov. Overall, growth on other platforms where IMHO VI sells advertising was 23% (including a 300% growth in video advertising), Revazov claims.

The market has skewed in favor of the largest platforms, in favor of video advertising and in favor of small industry sites, continues Andrey Chernyshov, CEO of the AdWatch Isobar agency. Revazov claims that IMHO VI sales for video advertising have grown 4 times, and for all clients as a whole (except for Yandex) – by 23%. Chernyshov doubts that second-tier platforms could grow faster than the market.

Yandex shares on the New York Stock Exchange rose by 13% to $24.2, Mail.ru Group GDRs in London increased in price by 1.46% to $26.9 (as of 20:30 Moscow time).

Yandex and Mail.ru collect internet budgets