PWC AND IAB RUSSIA PRESENTED A 2018 – 2020 FORECAST OF CHANGES IN THE INTERACTIVE ADVERTISING MARKET IN RUSSIA.
In the coming years, the Russian interactive advertising market will continue to grow at a rate outpacing the growth of the ad market as a whole. The greatest contribution to the market development will be made by the dynamics of mobile formats and online video use.
According to Russian Interactive Advertising Market 2017-2020, a joint study by PwC and IAB Russia, the expected growth in the interactive ad market in 2018 will reach 22.7%, 19.3% in 2019 and 17.0% in 2020. The interactive ad market is expected to continue its growth, but the growth rate will decline.
Comparative data on changes in the volume of the interactive ad market for 2018-2020 from open sources.
Despite the difference in absolute values, there is a general downward trend in the growth rate of revenues from the sale of interactive advertising. This is due to the fact that the majority of solutions and products in the interactive ad market are now at the stage of transition from active growth to maturity, meaning that the market volume and sales continue to grow while the growth rates are declining. The main growth of the market today accounts for products that were absent 3-5 years ago.
Growth dynamics of interactive ad segments
According to the survey of market participants, the Performance CPx segment will account for the largest share of the advertising budget (an increase of 33.1% in 2018). The Branding video segment will grow at a faster pace, with growth rates of 31.8%, 28.9% and 28.4% for 2018, 2019 and 2020, respectively.
The growth dynamics of the Branding video segment, according to market participants, is determined by the new generation of consumers who are much more into "media" than the previous generation and are used to consume content in a different way.
There is also a decrease in the share of the Branding banner segment, showing the smallest growth rate (an increase by 11.7% in 2018), which is associated with a drop in advertisers' interest to the desktop format and a shift towards advertising on mobile devices.
It is interesting to note that if the shares in the Branding video, Performance search, and Branding banner segments remain at the same level, ranging from 1.5 to 2.0%, then the budget share of the Performance CPx segment expects a fall from 33.1% in 2018 to 25.5% in 2019 and down to 20.0% in 2020, which is close to the average growth rate of the online advertising market as a whole. Such a significant growth in 2018 is primarily due to changes in the segment over the past 1-2 years, the main of which is the emergence and active introduction of new products (native advertising), the use of new technologies and analytics capabilities, including online and offline data analytics.
The study participants note a decline in advertisers' interest in the desktop format, which is connected to the growth of mobile advertising, an important factor in the growth of interactive ad. 70% of respondents agreed that in the near future the bulk of interactive ad would go to smartphones and tablets, while 80% of respondents expressed confidence that mobile advertising could be compared to desktop advertising in terms of ad budgets. The division into mobile and conventional advertising will gradually disappear with the growth of mobile inventory and budgets: 90% of respondents expect such a division to disappear over the next few years.
According to PwC Media Outlook and Emarketer, the share of mobile advertising is expected to grow rapidly. PwC Media Outlook predicts an increase of 3.8% by 2019 and 2.8% by 2020. According to Emarketer, the increase will reach 9.2% by 2019 and 10.3% by 2020. Moreover, Emarketer's forecasts are more positive not only for growth, but also for the share values themselves. Emarketer believes that the mobile ad share will reach 68.7% by 2020, while PwC Outlook Media's estimates arrive at only 36.1% by the same year.
This trend will continue to determine the ad market development in the next few years. The share of mobile Internet users continues to grow at a record pace. According to GfK, it amounted to 67 million people at the end of 2017 and will continue to grow further. The situation is affected by the growing popularity of smartphones, attractive terms for interest-free installments or loans offered to Russian consumers, as well as by an increase in the number of subscribers with mobile Internet access. According to PwC Media Outlook, there were 97 million subscribers with mobile Internet access in Russia in 2017 (68% coverage). This number is expected to grow to 117 million subscribers (or 82% coverage) by 2022.
Ad growth on mobile devices in Russia will also be supported by the development of social media. According to PwC Media Outlook, about 100 million people join the same social media website daily in Russia. Most often, consumers use their mobile phones to browse social media; statistics show that mobile devices account for 70% of social media visits. The market gradually begins to treat social networks as a full-fledged media with the amount of time spent on content consumption commensurate with traditional communication channels. However, advertisers do not yet allocate separate marketing budgets for mobile ad and buy inventory together for mobile and desktop audience. Audience measurement remains a constraint in mobile applications.
Russian Interactive Advertising Market 2017-2020, a joint study by PwC and IAB Russia presented at a special session of the 3d National Advertising Forum and Mixx Russia Conference, covers a wide range of issues related to the development of the interactive ad market in Russia until 2020.The study used actual data for 2017 from market players such as agencies, sites, sellers, and technology vendors, including open sources, as well as forecasts.
All forecasts are based on historical data gathered from a variety of sources, together with analysis of many factors, including economic, demographic, behavioral, technological, competitive and regulatory conditions, as well as a number of specific growth factors that will affect market changes.