Mobile TeleSystems : Russian SMEs Rapidly Shifting to Online Advertising — MTS Survey

As digitalization accelerates cross all sectors of the economy, many businesses are putting online marketing and digital advertising at the core of their strategy for customer acquisition and engagement. Recently, MTS carried out a survey of small and medium enterprises (SMEs) in Russia that found SME demand for targeted online ads surged more than 75% year-over-year in the first 11 months of 2020. This rapid rise reflects a broader shift during the COVID-19 pandemic as businesses seek to digitalize customer relationship management, including by leveraging tools for tailored advertising solutions, such as our MTS Marketer service.

Rising spending in online advertising
The MTS survey revealed a number of notable trends. Of the nearly 2,000 respondents, more than a quarter (27%) indicated they had boosted their company's digital advertising budgets during the COVID-19 pandemic - on average by more than a third (34%). Moreover, one out of three recently established companies (less than a year old) reported that fully 100% of their marketing budget is allocated for online channels, with targeted advertising being their number one preference. At the same time, a majority of businesses (52%) held ad spending roughly steady, while 21% were forced to cut marketing costs among macroeconomic headwinds.

Respondents estimated they spent around $250* per advertising campaign - whether via email or on social media (*CBR USD/RUB rate as of Jan 2021). The survey also found that SMEs tended to spend significantly higher on cross-channel targeted advertising campaigns - around $400 on average - as compared to campaigns for external content marketing ($380) and contextual advertising ($340). In addition, the respondents indicated year-to-date that they had spent approximately $520 on SEO initiatives, over $700 on ecommerce campaigns, and some $1,700 on video-based advertising progams. The priciest projects were joint initiatives with influencers and bloggers, with spending coming in around $1,860.

Overall, these figures indicate a significant market opportunity given that Russia has around 5.5 million SMEs and sole proprietorships, according to the Federal Tax Service.

Digital advertising preferences
According to the survey, around 12% of SMEs rely solely on digital channels for advertising. Among these were over 30% of newly established businesses less than a year old, followed by 19% of SMEs established 1-5 years ago and just 8% of older business that were more than 5 years old.

As a whole, the majority of SMEs leveraged multiple approaches to online marketing. The most popular category were targeted ads, with 47% of companies reported having engaged in targeted marketing campaigns. In addition, 42% of Russian SMEs surveyed reported they had invested in improving their corporate image on social media, while 41% had pursued contextual advertising initiatives. Russian SMEs were less likely to report they had spent on online influencers (25%) or email-based marketing (22%), and just 5% said they were pursuing crowd marketing.

Overall, the survey indicated demand for targeted online advertising surged 76% year-over-year in the first 11 months of 2020, reflecting increased spending across all major advertising channels, including SMS/MMS, messaging apps, banner ads, and social media. Moreover, businesses reported they had increased the number of advertising campaigns in 11M20, up some 9% year-over-year.

Advertising decision-makers
Among Russian SMEs, the CEO was most likely to be the executive responsible for taking decisions related to online advertising (49% of companies), followed by the CMO (27%) or an SEO team member (24%). Notably, the majority of businesses reported that they oversee their online ad campaigns themselves - only 9% used external PR agencies for digital marketing, and only 5% outsourced online promotion functions.

About the research
The research is based on an online survey of 1,967 representatives of small- and medium-sized enterprises from multiple regions of Russia, as well as data from MTS's online advertising services from January to November 2019 and 2020.