Russian Online Advertising Market Could 'Leapfrog' The West

jp morgan russian online advertising

Photo: JP Morgan

Russia has become the biggest internet market in Europe by users, and that has lots of investors and companies excited.We spoke this morning with an entrepreneur at a prominent European company with an international presence, who told us he is investing heavily in Russia and spending a third of his time in Moscow. 

Right now, this source said, internet usage in Russia is driven primarily by commerce, with digital media lagging. A JP Morgan report last year noted that, in Russia, online advertising spend as a share of consumer time spent lags the rest of Europe (which itself lags the United States). But, this means that most of the upside is still up for grabs, as you can see in the chart at right.

More strikingly, our source argued, this means Russian digital companies are “leapfrogging” the West in terms of usage and ad technology. Innovative social services are seeing tremendous uptake, he said. What’s more, the Russia digital media companies our source sees are making full use of cutting edge ad technologies and formats that are still experimental here, like video advertising, ad retargeting, and so on. “They don’t waste their time on boring, CPM banners”, he said. 

This suggests that digital media in Russia is not just an attractive opportunity, but that the sector might actually pioneer business models for the rest of the world. That makes it very much worth paying attention to, which we will increasingly be doing. 

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