Major companies aspire to the new role of online advertising record keepers

In September, amendments to the law “On Advertising,” according to which a unified system of advertising accounting must be implemented, will enter into force. Advertising clients, agencies providing services to them and the online platforms themselves will have to transfer the information regarding all the campaigns carried out on Runet to the Federal Service for Supervision of Communications, Information Technology, and Mass Media (Roskomnadzor).

Initially, advertising market players were supposed to be able to transfer such information (e.g., contract prices, campaign durations, etc.) either directly or via advertising data operators. However, additional amendments were adopted in June and signed by Russian President Vladimir Putin on July 14. According to the commentary given by Roskomnadzor, from now on it will be possible to interact with the agency only through intermediaries, that is, advertising data operators. However, the administrative liability imposed on those who fail to comply with the new norms has not been established, as acknowledged by the agency.

The total number of such operators is not limited, but those aspiring to the new role must establish a Russian legal entity with an authorized capital of at least 200 million rubles. They must also prove with documentary evidence that advertising systems and distributors whose total annual revenue received from providing such services exceeds 2.5 billion rubles are ready to cooperate.

A special commission established by Roskomnadzor will announce the application deadline for those aspiring to be advertising data operators in September. RBC found out who had already expressed the desire to become an intermediary between Roskomnadzor, advertisers, and online platforms. The agency’s press office also assured RBC that it is not anticipated that the entry into force of the amendments will be postponed.

Who aspires to the role of advertising data operators?

Two media market sources told RBC that Yandex and VK are the prime candidates for the role of advertising data operators. The information was confirmed by representatives of the companies. According to Yandex, the company’s commitment to work on creating its own operator is based on the desire to “help partners and customers comply with the law.” A VK representative refused to reveal any details.

It is Yandex and VK, previously known as Mail.ru Group, that are the key advertising distributors on Runet. According to the calculations of the Association of Communication Agencies of Russia, in 2021 total online advertising spending reached 313.8 billion rubles. Last year, Yandex’s advertising revenue amounted to 166.6 billion rubles, accounting for 53 % of all field-specific spending, while VK’s ad revenue amounted to 48.7 billion rubles (15.5 % of the spending). Therefore, together these two companies account for at least two-thirds of all online advertising spending. Google, which manages not only a search engine but also the YouTube video platform, used to be an American company considered the third key player, with a share previously estimated to be 10–12 %; however, now Google is not selling online advertising in Russia.

Yandex and VK are not only the biggest platforms serving for placing ads but also the biggest advertising clients. According to the estimates of AdIndex, a field-specific outlet, last year Yandex spent 8.6 billion rubles advertising on five primary media, 3.6 billion of which was spent online. The same year VK’s advertising budget probably amounted to 3.3 billion rubles, 495 million of which was spent online.

According to RBC’s sources, MTS and VimpelCom, which provides services under the BeeLine brand, are working on their own advertising data operators as well. As confirmed by an MTS representative, the company expects one of its subsidiaries to be included in the list of companies aspiring to the role of advertising data operators. The company is already “discussing the possibility of further cooperation with the market.” The VimpelCom’s press office refused to comment on the matter.

MTS and VimpelCom are listed among the top 30 major Russian advertisers, too. According to AdIndex, in 2021 MTS’ ad spending reached almost 7.3 billion rubles, 3.4 billion of which was allocated for online advertising. These numbers are similar to those of VimpelCom (5.7 billion and 3.6 billion rubles, respectively). 

Ozon, also, confirmed its willingness to create its own advertising data operator. “Over 80 thousand merchants are already using our advertising services, and their advertising campaign data are already stored in our system,” a representative of the marketplace explained. According to him, the advertising data operator, for which a separate legal entity has already been established, will automatically receive information about the ads placed on the platform, but the operator is ready to cooperate with third-party advertising clients as well. 

As indicated in the company’s financial statements, in 2021 Ozon’s advertising revenue amounted to 9.3 billion rubles. That said, the online platform spent almost 6 billion rubles on marketing, of which over 3 million was spent online, according to the estimates of AdIndex.

And finally, another platform aspiring to become an advertising data operator is AmberData, that has been committed to analyzing online user data since 2011. From 2017 to 2019, 100 % of its shares belonged to NMG. Later, the holding’s share decreased to 50 %. Now Konstantin Leonovich acts as an NMG partner in the project. He confirmed that the company is “working on its own operator.” The media group’s press office declined to comment on the matter.

Will the operators charge for their services?

Stanislav Danilov, a partner at Pen & Paper Attorneys at Law, believes that the advantage of working via an advertising data operator is that the advertiser will not bear the risk of incomplete or unreliable data provisioning.

Neither the law nor the bylaws already issued provide any kind of rules or recommendations regarding the cost of advertising data operators’ services. A Roskomnadzor representative assured that the agency “does not have the authority to set prices for advertising data operators’ services.”

So far only VimpelCom has determined the possible price of the services of its advertising data operator: according to two RBC’s sources, it can be 1 % of the value of the primary act of work performed signed by an advertising client and distributor. One of the sources added that other advertising data operators are ready to offer their services free of charge during at least the initial period.

This, for instance, is precisely what Yandex is planning to do. Its press office assured that the company wants to make the “ad labeling service free for current partners during the testing period of up to six months.” A company representative noted that the details of further tariffication are still being worked on.

MTS stated that its pricing strategy is “under elaboration.” Ozon hasn’t yet determined the price for its services either. A company representative pointed out that the pricing will depend on the “infrastructure cost as well as data storage costs” (according to the law, data should be stored for a period of not less than five years).

There is a lack of vision regarding the final economic scheme of the operator’s performance among potential players, Mr. Leonovich stated, adding that “even the revenue generation scheme is not obvious” to them.