Alexey Belyaev
Head of Internet Research
Video International
Alexey Belyaev and Tatyana Firsova (not pictured) research internet technology at Moscow-based analytical center Video International. They spoke with eMarketer’s Lauren McKay about internet usage in Russia and what will drive the most significant changes to internet and mobile adoption in the country.
eMarketer: What kind of internet access do those living in cities outside of Moscow and St. Petersburg commonly have?
Alexey Belyaev: We can separate it into two—maybe two and a half—large groups. The first large group is DSL, which is provided by local telecoms. The second large group is home Ethernet networks, which connect nearby flats, apartments, houses and even entire blocks and towns. The smaller half-group is mobile networks, such as 3G and EDGE. They’re mostly popular in small cities and in suburbs, where there are not a lot of landlines. People in rural areas also widely use 3G and mobile networks.
“The most popular means for accessing the internet is still fixed broadband.”
Firsova: The most popular means for accessing the internet is still fixed broadband, though. Even in small cities of 100,000 people, the mode of access is roughly the same as it is in the capitals, Moscow and St. Petersburg.
eMarketer: In small cities and rural areas, is it likely that consumers will go online via mobile devices before fixed broadband?
Belyaev: Yes. That third smaller group is using mobile devices of all kinds. They often use small 3G mobile devices, which we call whistles. They are also using feature phones to get online.
eMarketer: To what degree are Russian consumers adopting smartphones?
Belyaev: We expect smartphone adoption will continue to rise. The main factor will be price, especially as Chinese smartphone models are introduced to the Russian market.
Firsova: Smartphone penetration in Russia is 22%, according to TNS. They are mostly used in large and medium cities in Russia with populations of more than 100,000.
eMarketer: What sort of growth do you see in smaller cities and rural areas?
Belyaev: Our opinion is that smartphone penetration in rural areas is low because for some social groups that are more represented in rural areas, there is less need for smartphones. They are happy with their devices that they have for the moment. Moreover, they cannot afford a smartphone at current prices. According to the latest Google and J’son & Partners study, the price of a smartphone in Russia is about $350, and for rural consumers that is a really big price.
eMarketer: How are marketers adjusting for the rise of mobile internet and mobile internet advertising?
“The price of a smartphone in Russia is about $350, and for rural consumers that is a really big price.”
Belyaev: For the moment it’s too early to talk about real adoption. We are currently in a stage where we have some early experiments. Yes, we have several companies that provide mobile ad services and a number of international companies work in Russia that sell mobile ads, but there hasn’t been an explosion of mobile advertising.
eMarketer: What are some of the barriers?
Belyaev: One barrier, in my opinion, is the quality of the mobile network, of mobile communication itself. As is true in other European countries, Russian mobile operators are heavily loaded—and even overloaded—with mobile internet traffic. It’s really a problem for them. In crowded areas, say in traffic jams, there’s very high probability that the phone will not be able to connect to the mobile internet. Returning to the question of marketing and mobile ads, it’s one of the things that stops marketers from aggressively using this medium.
Another issue is the audience that relies on mobile as a means to the internet is mostly rural. Those consumers tend to be less wealthy—and that’s less appealing for advertisers.
“As is true in other European countries, Russian mobile operators are heavily loaded—and even overloaded—with mobile internet traffic.”
eMarketer: What are the fastest growing types of internet advertising?
Firsova: The two largest sectors of the internet ad market are search advertising and display. By display, we mostly mean banners, and for the moment, we don’t include rich media. Advertisers and marketers are becoming more experienced in internet advertising. They are finally educated in using this media, and are using it in ways other than supporting TV advertising. Internet advertising is also quite affordable in cost.
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