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Media3: a mature strategy in emerging digital giant Russia

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World News Publishing Focus
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Media3: a mature strategy in emerging digital giant Russia

What is also unique is the fact that the big pure players such as Google and Facebook have not managed to dethrone the local players. “The Russian market is dominated by local search engine Yandeх, holding 60% of the market, and local mail service Mail.ru,” says Melnikov, “and Yandex is ranked fifth largest in the world (after Google, Baidu, Yahoo! and NHN). The company’s value is around $8 billion [thousand million], which makes it one of the top 25 leading online businesses in the world. Mail.ru is the second largest Russian digital company presenting mail, search, social network services, along with news and games portals.”

Melnikov discloses some figures on the growth of the advertising market that show the high potential for the development of media in general, and of course digital in particular. “In 2011 the Russian advertising market grew by 20% to $8.9 billion,” he says, and “is expected to grow by 16% in 2012, and to join the top 10 global advertising markets by reaching $12.6 billion in 2014. The online advertising market is by far the fastest growing segment. In 2011 it grew by 56%, reaching $1.4 billion, and became the second largest segment after TV advertising – the position formerly held by print media. The most dynamic growth in the digital ad segment is expected in video (+50%) and contextual advertising (+34%)”.

The second big development opportunity in the digital area is in the e-commerce market, which is significantly larger than the online advertising spend ($10.3 billion vs. $1.2 billion in 2011) and “has even more potential for growth compared to the one of developed countries. It is expected that the Russian e-commerce market will grow at 23% CAGR until 2015, reaching $23.7 billion,” says Melnikov.

This high potential led Media3 to change its strategy, focusing on external growth to quickly gain of market share in the fastest growing segment.

Media3 owns Arguments and Facts (AiF), the largest weekly newspaper in Russia, operating 54 regional offices and reaching an audience of more than 10 million people worldwide. The group is one of the largest media groups in Russia, with revenue exceeding $410 million and leading positions in three business segments: publishing, printing and print distribution.

“We have set for our company an ambitious goal to build a strong digital portfolio with cash-positive assets worth 500 million euros,” says Melnikov, who admits that he is inspired by Axel Springer, and the more than 700 million euros invested in building a digital portfolio in the last seven years. Media3 itself has a four-year investment plan of 100 million euros: “We have over 100 targets under consideration in the segments of e-commerce, coupons, content, delivery and CPA networks. Ideal targets are to be three years old, breaking even (or close to that), have strong management teams and potential for further growth,” says Melnikov.

Author

Valérie Arnould's picture

Valérie Arnould

Date

2012-04-17 17:52

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