Just in the end of last year I wrote about relatively low numbers of mobile Internet users in Russia. Guess what, since then the numbers increased by 2,5% and it keeps growing. Looking at 2011, Internet traffic from mobile devices, actually, doubled.

One interesting fact is that mobile traffic to YouTube in Russia increased by 500% in 2011, which is much higher than the general increase in mobile traffic and much higher then world-wide statistics.

Market of mobile devices and platforms in Russia

Russia has always been a great market for cell phone producers and telecom companies. Like in many other emerging markets, mobile usage, coming from very low levels, has exploded in the last 10 years. The number of mobile phones in Russia doubled in the last 6 years. Today 90% of Russian population own a mobile phone (in comparison, only 56% of households have a landline phone installed).

The most popular mobile phone brands are Nokia and Samsung. Nokias are popular among Moscow inhabitants, while Samsungs – among people with lower income (source: http://digit.ru/technology/20120417/391034739.html – in Russian).

When it comes to platforms used in Russia, the ration looks as follows, according to the latest analysis from Yandex (in Russian):

Smartphones and tablets are becoming very popular, especially in the capitals (Moscow and St. Petersburg), but a lot of people still use old WAP phones for accessing Internet resources (source: http://company.yandex.ru/researches/reports/internet_regions_2012.xml – in Russian):

This, combined with no real possibilities for quality mobile advertising, makes the Russian market quite special. The user base is growing very quickly, but the advertising technology is not yet there. Who will become the “Yandex” of Russian mobile space – Yandex itself, Google ..or? What do you think?

The market of electronic currencies is Russia is quite young, but already very aggressive. Just like with social networking and search, it is dominated by local players, leaving the world-known brands far behind.

Online payments in Russia

Even through cash is still the most common way to pay for online purchases in Russia, other means of payment are becoming more and more used. According to the latest TNS research (in Russian), 35% of the respondents use credit cards for making online purchases, 27% – electronic currencies, and 17% – online banking services. Among these, e-currencies usage demonstrates the fastest growth. The turnover of the market doubled in 2011 reaching 125 billion Russian rubles (around 4.2 billion US dollars).

Electronic currencies in Russia

There are 34 million active e-currency accounts in Russia. The leading electronic money transfer system is Yandex-owned Yandex Money (15%), followed by Qiwi purse (10%) and WebMoney (10%). PayPal is still struggling in Russia holding 6% market share. e-Currency from Mail.ru Money.Mail.Ru managed to gain 2% market share since the launch in 2010.

In certain segments electronic money are more used than in others. 36% of all payments for mobile/ telecom services and 38% of all social networking services are paid with e-currencies, for example. The respondents of the TNS research say that they used electronic money at least ones for paying for the following products or services during the last 6 months:

I must, however, note that survey was conducted on a specific target group: people who are between 18 and 45 years old, and live in larger cities (from 800 000 inhabitants and up). The country-wide statistics would be slightly different, of course.

In one of my old posts I mentioned WebMoney being the absolute market leader when it came to online payments in Russia. Yandex Money was a relatively new system at that time, but it has been aggressively expanding, acquiring new customers not only in traditional ways, but also through a series of large scale partnerships with world’s largest companies like Opera and Skype.

PayPal, being the world’s leading electronic money transfer provider, is having a hard time in Russia. With its 6% market share, PayPal is mainly used when buying products on eBay (up to 90% of all Russian PayPal transfers). Interestingly, the competitors, who more or less copied their business model, are very skeptical about PayPal’s chances in Russia. “I don’t see where their competitive advantage is”, said Boris Kim, Kiwi’s chairman of the board. “The only offer they have is foreign online shops”, comments Evgenya Zavalishina, CEO of Yandex Money, “It is interesting, but it is a niche”.

Nice piece on Russian top tech companies from France24 (in English): the leading search engine Yandex, one of the larges anti-virus software brands Kaspersky and Russian Silicon Valley to be – Skolkovo. Check it out: only 8 min and a lot of interesting insights!

Russian eCommerce demonstrated astonishing growth in 2011 increasing its turnover by 29% ending up at 310 billion Russian rubles (around 10 billion US dollars), according to Data Insight latest report. While it is a well-known fact that Moscow region has the best buying ability in the country, most of the growth in 2011 came from other regions in Russia.

In the regions supply is not catching up with fast growing demand: a lot of products are impossible to buy there, or are imported by small local businesses and therefore cost more that in large chain stores in Moscow. In search for better assortment and better deals the population starts moving online. Interestingly, the most active online shoppers (outside Moscow) live in the most remote places like Sakhalin, Magadan, Kamchatka and Yakutia (see map below for reference):

Moscow region is responsible for 45% of all online sales in Russia, followed by Saint Petersburg (11%) and Ekaterinburg (4%). All in all, 45% on all eCommerce sales in 2011 came from regions outside Moscow.

Top eCommerce categories in Russian regions

According to Data Insight, the most popular items purchased by non-Moscow residents via Internet are airplane and train tickets, apparel, computers and electronics, as well as books and products for children:

The largest online retailer Ozon.ru reports a different breakdown though: 30% – Books, 30% – Electronics, the rest is divided among multiple categories, where some of the popular ones are household appliances, products for children and products for pets (source: interview with Maelle Gavet, CEO of Ozon.ru; in Russian). This could be, however, because Ozon.ru, just like its American “big brother” Amazon, was initially a book store.

Hurdles and opportunities in Russian eCommerce

Russia has a reputation of a difficult place for doing business, due to bureaucracy and corruption among other things. However, a lot of online businesses run by Russians and by foreigners succeed and prosper. A lot of business owners, in fact, say that Internet is one of the “cleanest” areas of business in the country, one of the being Oskar Hartmann, German entrepreneur and CEO and founder of KupiVIP.ru in his interview to Forbes (in Russian).

The most difficult part of running an eCommerce store in Russia is logistics. The country is huge: some places don’t have paved road connections, some places are isolated by ice and snow for months. Russian Post, although able to deliver packages to any village or town in the country, is slow and not always reliable (from my personal experience at least). Ozon.ru has created its own delivery network with couriers driving around with packages in larger cities. It works perfectly for Ozon, but how many businesses can afford creating one?

Another problem, as I see it, is processing payments. Apart from limited usage of credit cards and unusual online payment options, Russians prefer to pay in cash. For Ozon.ru ‘cash on delivery’ stands for 80% of all received payments, followed by credit card payments (10%) and 18 different electronic payment solutions, such as Yandex.Money and WebMoney (10%). The situation is different only in travel industry, where 60% of customers choose credit card payments. Obviously, handling cash on delivery is not as easy as processing credit cards and PayPal directly on a website.

The prospects of the Russian market, however, I believe are great. While being the largest online market in Europe, only 7% of Internet users shop online, and eCommerce today makes up for only 1% of Russian retail market. Data Insight predict another 25% jump in Russian eCommerce turnover in 2012.

In one of my posts in the end of last year I was writing about social signals and Yandex SEO. Back then I said that social as such did not affect organic rankings, but I also mentioned that had a feeling that it was about to change. The step towards social was logical for a NASDAQ company, which Yandex is. Google and Bing use social signals in their search algorithm, and Yandex was bound to follow.

Some month ago Yandex started displaying links to social profiles in site snippets in their SERPs. Then it became obvious that something was about to happen, and indeed, just a month later Yandex announced Twitter integration and Search in social networks.

What Yandex social network search is really about

The service, so-called “People Search” went live on February 17. By then Yandex had indexed 250 million social profiles from all popular Russian social networks. Facebook, Twitter and Live Journal provide Yandex with data feeds to power “people search”. Odnoklassniki, vKontakte and Moi Mir @ Mail..ru do not provide the feeds and are being indexed by Yandex bots (hence the information is not updated as quickly as in case with dedicated feeds).

The search algorithm for social profiles in not exactly sophisticated: right now the profiles that have most information rank higher. There is no regional influence in the current version of the algorithm, meaning that, unlike web search, the SERPs will be the same for users in any place in our outside Russia. The parameters for social profile search currently are: name, city, age, education, work.

Let’s try to find Nina Ivanova (a very common Russian name), who lives in Moscow and studies at Moscow State University:

Yandex People Search found 2 profiles matching the parameters: one in Odnoklassniki and one vKontakte.

Searching for my name, I managed to locate my profiles on Twitter and Google+ (the first two results are not me!). It seems like People Search does not take in LinkedIn data, otherwise my profile would have shown up as well, since it is also public.

According to Ilya Segalovich (Yandex CTO), about 4% of all search queries in Yandex are people’s names (or 2% excluding celebrities – which is 2 million per day!).

Having social network search in Russia totally makes sense: while in most Western countries pretty much anyone can be found on Facebook, in Russia there are several popular networks, which makes it more difficult to find and connect with people.

How will this affect Yandex SEO?

Obviously, the data from social networks is extremely valuable, and once getting hold of it, Yandex will use it to its maximum potential.

In his recent interview to Lenta.ru Ilya Segalovich said that social products will appear in Yandex News (similar to Google News service). He also noted that if the information is “liked” and shared, that means it is important, and this gives the whole new way of looking at it (read the new way of ranking it).

Reading the interview, I got a general impression that social signals will mainly be used in ranking fresh content (breaking news, current events etc.). “7-15% of all searches in Yandex are related to fresh information, and more than half of them are somehow affected by social signals,” said Segalovich, and added that a lot of content is produced around the web every minute, but not all of it is interesting to the society. By incorporating social signals Yandex should be able to determine which content people like and want to see, and rank it accordingly.

The pressure is on! SEO-optimized content will no longer be enough for traffic generation. Or what do you think?

Reading my usual dose of Russian press, I stumbled on an interesting interview with a CEO of one of the largest SEO companies in Russia in Kommersant.ru. Although 90% of the interview is company’s self-advertising, I found their evaluation of Russian market of SEO services quite interesting.

The CEO in question estimates that the value of the market of SEO services in Russia is somewhere between 16 and 20 billion Russian rubles (around 690 million USD), where 9 billion were spent on links and the other 7 to 12 billion – on service fees to agencies and freelancers. Apparently, large agencies (which are few) are responsible for only 20-30% of this amount. The rest of the money is distributed among smaller SEO agencies and freelance SEO specialists.

The CEO also says that with all the recent changes in Yandex ranking algorithm, SEO for Yandex became more complicated and more time consuming. Hence prices of SEO services increased, and in some cases doubled. An average Russian business is estimated to spend around 80-100 thousand Russian Rubles (2.7 – 3.5 thousand USD) per month.

I personally feel the numbers are blown out of proportions. I’ve seen prices 10 times lower than this. But that’s an opinion.

What do you think?

This afternoon Yandex published a press release about their new feature. The catchy title claims that now Yandex “Understands Users’ Search Intentions”, but in reality the new feature is just a different type of search suggestions, referred to as “dialogue-like” in Russian press.

In essence, it is quite similar to Google’s related searches: when a search query is too broad, Yandex will show more specific suggestions.

Compare, for example, searches for “Байкал” (lake Baikal) in Yandex and Google.ru:

Yandex suggests “photos”, “vacation”, “map”, “Wikipedia”, “hotel”.

Google suggests “Baikal photo”, “Baikal tours”, “Baikal weapon”, “vacation on Baikal”, “Baikal gun”, “Baikal Izhevsk”, “Baikal map”, “Baikal vacation”.

So the suggestions from Google and Yandex are very much the same, but Yandex displays them as some sort of navigation (which people will actually use) and Google shows it in the bottom of the SERP (where nobody looks). The feature itself is quite useful though.

Russian Internet usage is increasing rapidly, and a large increase there comes from mobile devices. Russia is still behind the Western world in terms of mobile Internet usage, but it is quickly catching up. According to the recent numbers from Mobtop.ru (a Russian directory of mobile sites as well as mobile Internet statistics provider), reports Searchengines.ru, Russian mobile Internet audience increased by 2,5% during the first two months of 2012.

Russian mobile Internet in numbers

The majority of the users of mobile internet are men (67%).

The mobile Internet audience is quite young. Most users are 18 – 34 years old. This age group in Russia is believed to have the highest buying ability.

Interestingly, Nokia holds by far the largest market share in Russia. While in the West Android and iPhone are the most popular operating systems, in Russia they are barely seen as competitors to the market leader. Android shows a very strong growth, due to a large variety of devices in a lower price range than iPhone.

25% of all visits to mobile sites are made via Wi-Fi, the rest – though 3G and WAP.

Everyone knows that Russia is a very big country. Not everyone knows, however, that Yandex has a very advanced local search technology that is able to deliver local SERPs to all 83 regions of the country.

Yandex started actively working with local search results in 2008-2009 and has been perfecting the formula ever since. In the past I wrote several posts about regional SERPs and how to change the regional affinity in Yandex Webmaster, but haven’t really touched the topic of how to correctly configure regional settings for Yandex SEO from the beginning. This is what this post is about.

Regional settings are important if you work with so-called “geo-dependent” search queries, such as “Italian restaurant”, “flower delivery” and other product and service that can be purchased locally. If you are dealing with geo-independent queries, for example “online games” or “pasta recipes”, no need to worry about regional affinity at all.

According to Yandex’s own recommendations (in Russian) on how to deal with regional settings for websites, the basic actions for the site owner should be:

1.  Provide full company address, including post code, and contact phone numbers, including area code for the relevant region, on the website.

2. Assign the relevant region via Yandex Webmaster and Yandex Spravochnik (Yandex’s product similar to Google Places).

3. If a business operates in several regions, provide full contact information for all regional offices.

Although Yandex does not explicitly advises so, it is always good to submit a website to Yandex Catalog and assign relevant region there as well.

Multi-regional websites

Even though Yandex claims that it is possible to have several regions associated with one website, there seems to be a limit. For example, Yandex Catalog allows only 7 regions to be connected to one listing.

In cases when a company provides services in all (or a large number) of regions, the most common practice is to create directories, subdomains or even separate websites for each of them.

The procedure for assigning region to each directory or subdomain is the same as described above.

Here are some good examples of how large websites handle their regional-specific sections:

1. Region-specific directories

2. Region-specific subdomains

Yandex SEO strategies for multi-regional websites

1. Content

Be as local as possible. Write region-centered content, for example, use “restaurants in Moscow” instead of just “restaurants” in your text copy, try to use local terminology, where applicable.

2. Domains and URLs

No matter how the regional sections are organized (directories, subdomains or separate domains), the name of the region should be present and prominent in the URL. This will help Yandex to classify the site correctly.

Russians often use abbreviations for region/ city names such as “spb” for St. Petersburg, “msk” for Moscow, “nsk” for Novosibirsk. It is fine to use them in directory / domain names; Yandex will understand the meaning.

Good examples:

http://www.kras.mts.ru/?fromgt=1 for targeting Krasnoyarsk

http://pyaterochka.ru/shops/ekaterinburg/ for targeting Ekaterinburg

http://www.tomsk.tele2.ru/ for targeting Tomsk

Bad example:

http://www.sportmaster.ru/store/490/ for targeting Vladivostok

3. Links

Local links are very important when it comes to ranking in regional SERPs. Make sure to register the company in local directories, and make sure than all incoming links you acquire have the right regional affinity.

4. Moscow

The capital is the toughest region for Yandex SEO. Depending on keyword difficulty, you might even want to assign region Moscow to your homepage to be able to match the competition.

In 2010 Russia became the fastest growing market in Europe in terms of online advertising revenues, and continued strong growth throughout 2011. According to the Russian Association of Advertising Agencies (AKAR), the market reached 1,4 billion USD, which is a 56% increase comparing to 2010.

According to AdScore (in Russian), Yandex holds the largest share of Russian contextual advertising market, followed by Google Russia and Begun:

Russian Contextual Advertising Market

Although Yandex has lost some of it’s market share in 2011, it is still by far the largest player of Russian online advertising market. The company reported $622.2 million in revenues by the end of last year.

Yandex Direct is said to have 270 000 active advertisers in 2011. The average spend per advertiser per month is 2500 Russian Rubles (approx. 85 USD). In 2010 the number was higher (3000 Rubles/ 100 USD per month), and decreased due to the fact that more and more small business with low marketing budgets start advertising online.

According to AdScore, vKontakte PPC platform is showing very fast growth in Russia. Advertising budgets of Deal-of-the-Day type of sites (Groupon and alikes) as well as local services providers are quickly shifting towards social networks from search and traditional media.