Marketing in the Post-Communist ‘Capital of Consumerism” (Hint: Digital ALONE Won’t Cut It)

This $1.3T market is worth mentioning, since the Russian ketchup market alone is worth $250 million to $300 million in revenue, and they imported roughly $9B in trade from the US in 2007. At 6.5M sqare miles, Russia is the largest country; but its population is predominantly urban, and sparse, with 73% of its population of 141,903,979 citizens residing in or near Moscow of St. Petersburg. (Wikipedia, 2009) While the Russian internet penetration rate is close to 45%, (Gallop media 2008), broadband penetration is significantly less available compared to America.
It’s also worth mentioning that a recent Twitter blog (http://twitter.com/oscarcarreras) shows that 60% of their traffic is non US; however, the 140 character limit microblogging requires is a huge problem for the Russian alphabet. (And likely the Chinese as well). Likely, you will not drive sales by targeting Twitter.
Same goes for using Google, which lags far behind in search engine optimization in the Russian market. It seems Yandex is your best bet for targeting the online masses there.
According to a blog posted by oskarokupa in December 19th, 2008 in MultilingualPPC, the leading Russian Search engines in 2008 were:
• Yandex. Share has decreased slightly. Audience growing exponentially
• Google.ru
• Mail.ru(using yandex search technology). Steady share. Mail hosting is their main service.
• Rambler. Decreasing as a result of their deal with Google
The Russian Internet advertising market has increased exponentially since 2001with Russian contextual advertising much higher in terms of spend than display ads (which will be accelerated by the current economic crisis). Yandex Direct is contextual ad serving solution that serves ads on Yandex and on websites participating in the Yandex Advertising Network. Advertisers pay only for clickthroughs, which means they pay only for each visit to their website.
According to their corporate blog, Yandex (and English-friendly Yandex Direct) is the 6th largest worldwide search property (after Google, Yahoo!, Baidu, Microsoft, and Naver and ahead of eBay, Time Warner, and Ask), earning $167M in annual revenue in 2007. They channel 1.5B searches per month (50M searches per day) throughout the Russian market, including searches made on partner sites: Mail.ru, Tut.by, Quintura.ru, and Yandex.XML search result-powered sites.
Yandex.Direct contextual ads now reaches more than 10 million Russian users through its partners including Mail.ru, Mamba.ru and Livejournal.com, as well as several web search services of the Russian, Ukrainian and Belorussian Internet Aport.ru, Gogo.ru, Nigma.ru, Km.ru, Ukr.net, Tut.by, All.by, and Quintura.ru. Odnoklassniki.ru is number the 3 site in Russia by monthly reach with 10.4 million users.
Yandex seems to have been able to lure both Russian marketers and Internet users. Although Google keeps growing in Russia, if any company wants to do online business in Russia, or simply raise brand awareness among the countries or Russian confederation, Yandex Direct, Yandex paid service is the tool to use first in order to maximize reach.
However, when you consider the geographic scale of this market (namely Moscow, which contains 70% of Russia’s online users), it becomes apparent that it will require an integrated strategy based on personal relationship building to penetrate this market with any significant returns. Especially to account for the rampant distrust throughout the Russian world.
Last week, Edelman Russia presented this year’s trust findings in Moscow at the International Council for Cooperation and Investment forum.The data quantified the significant level of distrust Russians have for those outside the country, and ranked Russia at the lowest (external) trust score globally, along with China. This distrust extends to online advertising, and according to a 2008 blog article posted on Multilingual PPC , Russians do not (on the whole) speak English, and prefer one-on-one contact.
According to the article, Strategic Marketing in Russia: The Evolutionary Step to Extend Technology Development Centers and Maximise Your Marketing Efforts in Russia by Gary Fowler, There are two critical concepts relevant to US companies entering the Russian market. These two tactics will compress your time to market and increase market penetration and expansion at an aggressive pace:Technology Development Center (TDC), and the second concept is that of Relationship Asset Management (RAM). TDCs reduce your risk of introducing new products and services in the Russian market by leveraging local relationships and understanding of local culture, and expediting the distribution process by allowing you to outsource your technology development and infrastructure. RAM is a relatively new concept that is rapidly becoming a significant determinant of success for U.S. companies entering the Russian market, by leveraging the power of existing relationships enterprise-wide to provide the management infrastructure needed in the Russian market.
But you need only leave the Moscow region to see a very different country: no running water, and no central heating a land of villages which people of working age have largely left in search of a better life. (BBC, 2008)
According to ManagementParadise.com’s “Contemporary marketing practices in Russia” post, “Contemporary Russian marketing practices cover only a narrow spectrum of the diversity of marketing practices observed in other nations, and the overall intensity of marketing activities is low in comparison with international benchmarks. Overall, the relevance of the traditional transactional marketing concept holds for current practices and market conditions in Russia. Relational activities are considered as merely additional rather than as alternative options of developing organisations’ marketing. Practitioners can adjust their marketing to the patterns of profitable activities revealed by this investigation. In particular, the new possibilities arising from IT-based marketing are found to be not utilised by vendors who are already established in Russian markets. “

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One Response to Marketing in the Post-Communist ‘Capital of Consumerism” (Hint: Digital ALONE Won’t Cut It)

  1. Whew – I counted about five points in this post that could make for good insights. The Moscow area having over 70% of the Internet users in Russia, the character limit reducing the potential for Twitter, how Russians prefer 1 to 1 contact, and the issue of distrust of media being just a few. As this post was put together, though, those points could easily be lost in the flow and it seemed a bit too reliant on information repurposed from other locations. Missing some formatting such as bold subheaders or paragraph breaks also make this post (and your insights) tough to extract. Next time, see if you can choose to hone in on one and make a key point about it that gets your reader thinking. That will also help you to reduce the length of your post and only pull in the most useful data and quotes. (3)

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