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Summary:

Should websites charge users or advertisers? Russia’s number-two operator does both, but has this year seen payments from its user base quickly become its top revenue line, in a positive sign for Russian content payments.

Mail.ru

Here is a fascinating tale out of Russia, where the number-two web operator  is turning down some advertising but is, instead, buoyed by payments from its users.

The diversified search, email and portal firm Mail.ru Group has seen half-year user payments from its community services rocket 106.9 percent since last year to 3.2 billion rubles (98.5 billion) – becoming its biggest single revenue line, and helping grow profit by two thirds.

“The main driver of this growth is the increase of paying user engagement,” CEO Dmitry Grishin reported on Wednesday, ” – especially in virtual gifts and services, as well as in our API platform and self-developed social games.”

The payments are coming from the Odnoklassniki social network, which Mail.ru owns; its own My World social service; the love.mail.ru dating site and from social games Mail.ru syndicates to third parties.

Russian online advertising is still a booming market. But Mail.ru is now turning down some of that growth…

“While context advertising continued to grow in line with the market, we have seen moderate slowdown of growth in display revenue, primarily driven by planned reduction in advertising inventory on some of our properties,” Grishin explained. Some of those sites have begun courting user payments harder than advertisers.

Nevertheless, display ad revenue grew 30.2 percent. Mail.ru earns twice as much from display ads as it does from ads against its search results. Most of its user metrics except ICQ grew. But Mail.ru’s search share in Russia is just 8.2 percent.

Company net profit hit four billion rubles ($123 million) on 48.8 percent higher revenue of 9.7 billion rubles ($3 billion).

Announcement.

  1. Error ,”rocket 106.9 percent since last year to 3.2 billion rubles (98.5 billion) – “, should be in millions.

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  2. Greg Golebiewski Friday, September 7, 2012

    No matter how many such stories we hear, it seems that internet “experts” still doubt direct user payments as a valid alternative to the ad-supported models. An information gap?

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