The president of IAB Russia has predicted that interactive advertising will play a major role in helping to rebuild the country’s business sector and its overall economy ahead of an expected recession next year.
The country has witnessed its currency lose almost half its value against the dollar this year, and with sanctions against it issued by the West and a fall in oil prices, recent weeks have seen Russia’s economic fortunes worsen.
Speaking to The Drum, Boris Omelnitskiy, who has headed up the IAB in the country for three-and-a-half years while also working for Yandex as business development director for Adfox, was pragmatic in his view of how the digital advertising industry has been affected by recent events following record sales in November and December for electronics, furniture, new cars and consumer goods.
“Most ecommerce or retail advertisers stopped any advertising because of the demand from people right now, who are ready to exchange their rubles for goods,“ he began to explain of retail client behaviour. “Demand is so high that all retail players are absolutely happy to freeze their warehouses. But they have no ideas about what the currency exchange rate will be in January. They will need to buy more goods for sale in Russia. This is a short term effect.”
According to IAB Russia’s most recent industry survey in September, the Digital Advertising Barometer 2014, 16 per cent of brands planned to increase their interactive advertising overall by between 20-50 per cent, while overall advertising budgets were set to be increased by the same margin by 14 per cent of brands.
However, since the economic crisis developed, those estimates have been affected, with Omelnitskiy stating that more attention will be paid to performance tools through content, search marketing, performance and cost per action activity, with search advertising predicted to increase by 5 - 15 per cent in rubles. Meanwhile display market will decrease by around 20 per cent - although no exact measurement or research has yet been delivered to back these predictions up.
“Through our Digital Advertising Barometer research, we think that most advertisers will continue to spend money for interactive advertising as this is effective. During any crisis, it is necessary for effective business plans and interactive advertising is the main thing that will help businesses go through crisis’s and come out the other side.”
He added that the current situation will help allow the advertising industry to educate business on using effective advertising measurement, and that its infrastructure built around search, programmatic sales and audience volume of interactive users, would mean that major players such as Google, Facebook and Twitter would continue to develop their sales forces in Russia.
“From my experience of living and working in Russia, it will find new drivers for development of business and we have a lot of local resources for rebuilding the economy and interactive advertising will be useful and important part of that construction.,” he predicted, concluding that the IAB would also continue to be connected to the global market, which he claimed was “very important” in order that the country’s digital advertising industry can remain open and connected to the global infrastructure.
Meanwhile, Apple has reopened in Russia after it pulled out of the country following US sanctions being imposed.