The document discusses online display advertising, focusing on attracting advertisers, standards, pricing models, and management. It describes how display advertising works, common elements like ad sizes and weights, and pricing approaches like fixed pricing, cost per thousand impressions (CPM), and cost per action. CPM pricing is standard for national advertisers but more complex for locals. The document also outlines technologies for managing ads, from manual to CMS-based to external ad servers, and stresses addressing different advertiser needs as sites grow.

1. Growing Online Revenue:
Advertising, Sales and Classifieds
Moscow, Russia
27 – 28 September 2012

2. Agenda
Topic Presenter
 Online Advertising Market Overview Ross
 Sales Teams: Organization & Motivation Ross
 Advertising Networks Ross
 Online Classifieds: Local Opportunities Ross
 Social Media: Building Audience & Revenue Kevin
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3. Online Market Overview
Growth in regional Internet audiences has created a growing market
for online advertising.
Total Internet Population Growth Rates 2010 vs 2011
(millions)
46% 33% 51% 41% 54%
Penetration Rates
Source: iabEurope 2012; Gemius, 2012.
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4. Online Market Overview
But these audiences are mostly concentrated in Moscow, Kyiv and St.
Petersburg.
Regional Internet Penetration, 2010
Russia Ukraine*
Est. Audience Penetration Est. Audience Penetration
(millions) (%) (millions) (%)
Moscow 8,421 73% Kyiv ~ 4,500 ~90%
St. Petersburg 2,863 59% Odessa 1,193 44%
National Average -- 46% National Average -- 33%
Chelyabinsk Oblast 1,760 51% Zaporizhia Oblast 528 28%
Tomsk Oblast 421 40% Lviv Oblast 695 27%
Perm Krai 846 32% Crimea Republic 362 18%
Tula Krai 485 31% Kherson Oblast 136 12%
Altai Krai 703 29% Chernivtsi Oblast 76 8%
Buryatia Republic 280 29%
Rostov Oblast 945 22%
Russian Source: Рейтинг регионов по доле пользователей сети Интернет по итогам 2010 г
Ukrainian Source*: Estimated from Kyiv Post, “Report: Ukrainians browse more, online advertising yet to boom”
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5. Online Market Overview
Internet advertising in 2011 grew dramatically in Russia and Ukraine
and will likely continue to grow until it reaches European averages.
Total Internet Ad Spending, 2011 Estimated Spending/User, 2011
(millions) European Avg = € 33
+ 56% +59% -16% +26% +23%
Growth Rates
Source: iabEurope 2012; Gemius, 2012. Note*: Russian estimate does not include €50 to 70 million in online classified spending.
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6. Online Market Overview
Over the next two days we will discuss the three major types of
online advertising.
Description
Display Related to site audience/content
Sold directly
Multiple pricing models
Directory/database driven
Search/Context Sold directly or self-serve
High volume, low price or free
Search engine driven
Sold by technology companies w/
Classifieds/Directory specialized sales teams
Driven by page views and clicks
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7. Online Display Advertising
First we will start with Online Display Advertising and focus the
discussion on the following elements.
Display Advertising Elements
Advertisers: Who are they?
Advertising Standards: What
are they?
Pricing Models
Advertising Management
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8. Online Display Advertising
Online display advertising is dominated by national, international
advertisers in Russia.
Distribution of Online Advertising Spending, 2011
By Industry By Advertiser
(rubles millions)
1. Renault-Nissan 885
2. Proter & Gamble 590
3. Nokia 472
4. MTS 472
5. Samsung 448
6. Megafon 448
7. Beeline 413
8. Unilever 342
9. Sberbank 295
10. Microsoft 283
Source: ACAR, 2012
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9. Online Display Advertising
Local advertisers tend to adopt online advertising much more slowly
than national/international advertisers.
Local Online Advertising Trends
Online Ad Mix – US Example Obstacles to Local Advertising
(US $ billions)
 Relative risk to the business
 Lack of
understanding/familiarity
 Target audience (local) too
small or difficult to track
 Measurement
 Generational issues
Source: Borrell Associates, 2012; eMarketer, 2012.
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10. Online Display Advertising
The sales and marketing challenge to generating online advertising
revenue is two-part.
1.How to attract a portion of the national/international advertising budgets?
- Do you offer sufficient size to interest them?
- Is your online reach to the local market important?
- Is some aspect of your market important for the sales/marketing of
their service (e.g. sports equipment, airlines,…)
- Is it easy to buy your ads? Credit process? Sales channels?
2.How do you encourage local advertisers to trust you and try online ads?
- Do you have any ability to educate them?
- Do you have any way to reduce the risk in trying online advertising?
- Can you work with the advertiser to develop a verifiable way to prove the
value of online advertising.
Find creative ways to use your traditional products to introduce your online
products to both types of advertisers.
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11. Online Display Advertising
One of the most common actions to attract local and national
advertisers is “standards”.
Value of Standards
Cost: Lowers the costs of ad creation and ad serving
Creative and Clarity: Allows for greater creativity in ad design and
creates a clear distinction between ads and editorial.
Access: Helps support media’s ability to deliver online sites quickly, with no
delays because of large non-standard ads.
Support: Provides media with support to argue against unreasonable
advertiser requests.
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12. Online Display Advertising
Online advertising standard are fluid, global and set in most
European markets by an industry association of advertisers and
media – The Internet Advertising Bureau.
iab Europe
 Education and Events
 News and consulting
 Research and measurement
 Standard setting
 New standard development
IAB Contacts:
 iab Europe =
www.iabeurope.eu
 Iab Ukraine (affiliate) =
www.uair.org.ua
 iab Russia = iabrus.ru
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13. Online Display Advertising
Online advertising standards are defined by two key attributes of
each ad.
Ad size: Defined in terms of the width and length of an ad unit measured
in pixels.
Weight: Defined as the size of the advertising file in megabytes (MB).
Other: For new or emerging ad units there are new attributes constantly
being defined:
- Length of video play
- Automatically play or user initiate play
- Duration of ad placement in games
Ad standards are constantly evolving – let’s look at the current standards ad
standards most commonly used for news media sites.
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14. Online Display Advertising
Pricing for online display advertising must address two questions:
What is the revenue model? What are you selling the advertisers?
- Fixed Price by position; by time of day or week
- Price per thousand ad impressions (CPM Pricing)
- Price Per Action taken by the reader
- Hybrid pricing of two of the above times
What is the price level? For each unit purchased how much does
the advertiser pay?
Setting pricing levels require you to consider several factors. The three key
factors are:
- Competitive Prices
- Ad Availability/Inventory
- Audience size/reach/uniqueness
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15. Online Display Advertising
Fixed price models offer many advantages for local news media and
advertisers who are still new to online advertising.
Fixed Price Models PRO’s:
 Used broadly worldwide:  Familiar sales pitch
- Schibsted (Norway)
- SCMP (Hong Kong)  Easy to verify/document for advertisers
- Gannett (USA)
 Ad positions are fixed and
 Easy to price
limited in number
 Each ad position has a price for
some fixed period of time:  Easy to track and serve
For example: 1 leaderboard on CON’s
the homepage for 1 week  Not easily included in national
advertising pricing models
 Inventory grows by adding
positions or splitting positions  Creates some risk of under
by time of day/day of week.
performance for advertisers
 Price levels generally set
 May under value sites with high traffic
relative local TV, print and
growth rates.
outdoor.
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16. Online Display Advertising
Increasingly CPM Pricing models are the standard for national and
international advertisers.
CPM Pricing Models
 Driven by national/international agencies
and advertisers. Calculating Ad Inventory:
 Ad inventory determined by 1.5 million page views
- Number of ads on each page X 3 ads/page
X Number of pages served (Page Views) 4.5 million ad impressions
= Total Ad Impressions
 Advertisers purchase blocks of ads by the
Price Calculation:
thousands.
 For large sites (> 1mm page views), ads are Advertiser purchases 2 million ad
often run in “rotation”, called “run of site” impressions for P 300 per thousand
ROS.
2,000 (thousands) x P 300 = P 600,000
 Price levels are set in relation to competitive
online price ranges. Range has two ends:
- High = price points of competitive media.
- Low = Ad Network Price + cost of sales.
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17. Online Display Advertising
CPM Pricing models also have pros and cons.
Pro’s of CPM Pricing:
Easily understood and incorporated into national/international advertiser
programs.
Maximizes inventory value in high demand situations
Rotating ads keep site fresh and up-to-date
Con’s of CPM Pricing:
Complicated sales and verification process for advertisers new to online
Requires ad serving technology – AdRiver, OpenX, Google DoubleClick
Can result in substantial unsold inventory in low demand situations
Can result in advertisers “cherry-picking” only the best times/days of the
week to run their ads
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18. Online Display Advertising
Price per action advertising is the most sophisticated and often used
by e-commerce advertisers like ozon.ru or amazon.com.
Price per Action Models PRO’s:
 Used extensively by e-  Direct link to ad effectiveness
commerce advertisers
 High yields on very highly targeted
 Advertisers only pay when the content – electronics, travel, directory…
reader performs some pre-
defined action:  Simple to implement
- Click
- Register
- Purchase CON’s
 Does not perform well on most daily
 Used heavily by ad networks news sites; performs best on “features
like Yandex Direct and Google related content” like travel or product
AdSense reviews
 Frequently added as a bonus on  Can be difficult to track and verify for
top of CPM purchase. actions beyond “click”
 Works best when content is
related to advertising category.
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19. Online Display Advertising
Depending on a website’s media mix, there are progressively
sophisticated technologies to manage advertising.
Manual CMS Based Ad Server
Description
 Staff managed  CMS includes a simple  External technology
tool to upload and which manages
manage advertisers display/tracking of ads
 Often linked to external
ad networks
 Best for:  Low volume fixed price  Moderate to high
Uses
- Fixed price models or CPM priced models volume CPM/Network
- Low ad volume sites advertising
- Local advertiser sites
Examples
 ___
 Bitrix, WordPress,  AdRiver, DoubleClick,
Joomla OpenX
 Staff salaries  Software – free  Software – Priced Per
Costs
 Staff salaries Thousand Ads Served
 Staff salaries
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20. Online Display Advertising
Media sites over 1 million monthly page views use one of three
different ad serving technologies to manage ad placement and
tracking.
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21. Online Display Advertising
Russian Version:
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22. Online Display Advertising
Developing online display advertising requires focus on advertiser
needs, standards and pricing, and efficient management.
Advertiser Needs:
Be prepared to address very different needs from national/international and
local advertisers.
Standards and Pricing:
Online ad standards help attract advertiser by reducing costs and increasing
flexibility
Ad Serving and Management:
As site traffic and advertising volume grow, ad management needs will
become more complex and require more sophisticated tools.
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