Russia: The Unknown Internet

April 2014

About Hermes

Hermes NexTec

– e-commerce projects development for clients: platform,

logistics, payments, digital marketing, client support services, etc.

• Hermes NexTec countries of operation: the EU, USA, China, Brazil, Russia.

– Launching e-commerce projects for global

brands in the Russian Internet.

• The unique e-commerce experience of Otto Group & Hermes.

Clients of Hermes NexTec

EU

USA

Brazil

China

Russia

Content

• Internet-addicted

• No more growth of Internet audience?

• Internet audience growth: new paradigm

• Unknown Internet users: who are they?

• Children of Internet Age

• Elderly in Internet

• Internet speed measurement: megabytes vs. megabits

• Russia’s broadband connection: here and there

• Mobile Internet: might be better

• Russia: more Internet devices than residents

Monthly, Weekly, Daily Audience

• Through the last 6 years

the difference between

daily, weekly and monthly

Internet audience has

almost faded away

53

63

66

Daily Internet Audience

Weekly Internet Audience

Monthly Internet Audience

mln, 2014 year

Source: TNS, FOM

Caught in Web

THROUGH SOME YEARS THE INTERNET HAS BECOME THE DAILY

LIFE PHENOMENON, IT’S NOT LONGER AN EPISODIC ONE

IF SOMEONE USES THE INTERNET, HE DOES IT EVERY DAY. 80% OF

THE INTERNET AUDIENCE DO IT DAILY.

Russia’s Internet Audience: No Growth Any More?

• FOM and TNS show the same picture:

there is no growth of Internet audience

in Russia through the last year (Winter

2013 – Winter 2014)

• This phenomenon is typical for Russia

in general and for major cities in

particular.

Source: FOM, TNS

That Will Do

OBVIOUSLY THE PREVIOUS GROWTH DRIVERS OF INTERNET

AUDIENCE RUN DRY

CITIES ARE ‘FED UP’ WITH THE INTERNET. NOW THE GROWTH IN

QUALITY RATHER THAN IN VOLUMES IS POSSIBLE HERE

Data Sources & Measurement Specifics

• TNS Web Index – panel study. Cities with population 100k +, age 12-64.

Selection = 20k participants*

• FOM – representational survey. Population under research – Russians,

age 18+. Selection = 30k persons**

http://www.tns-global.ru/services/media/media-audience/internet/description/

http://runet.fom.ru/ *

Children

Youngsters

Rural population

Aged

Small town residents

**

Growth Drivers

GROWTH POTENTIAL: COUNTRYMEN AND SMALL TOWNS

RESIDENTS, KIDS AND YOUNGSTERS, AGED PEOPLE

THE CATEGORIES MENTIONED ABOVE ARE NOT WELL-STUDIED

WHILE THEIR VOLUME AND INTERNET PENETRATION GROWTH

RATE ARE SUBSTANTIAL

Unknown Internet Users

Difficult and Not Interesting Yet

• Kids (3-12), aged people (64+) and countrymen are not attractive for the advertisers in

the Internet yet.

• These population categories are highly specific and difficult to study.

One Doesn’t See Them

THESE AUDIENCE SEGMENTS ARE DIFFICULT TO SURVEY, BUT

IMPOSSIBLE TO IGNORE

NEARLY 20 MLN OF THE INTERNET USERS ARE NOT TAKEN INTO

ACCOUNT IN STANDARD SURVEYS

«Invisible Users» of the Internet

Kids 3-12 yo

13 mln

5 mln use the

Internet

Countrymen

37 mln

13 mln use the

Internet

Aged 64+

19 mln

4 mln use the

Internet

Source: Rosstat, Hermes NexTec Russia, experts estimates, TNS, FOM

Kids in the Internet

The Internet penetration, kids & youngsters 0-15 yo, Russia, 2013, %

• In the early childhood (up to 6 yo) not more than 10% of kids use the Internet

• The breakdown occurs during the growing age when the share of teenagers using the

Internet sharply increases – form 35% up to 72%

• According to TNS for cities with population 100 000+ the share of the Internet users among

12-17 yo is 98%

Source: Hermes NexTec Russia, eMarketer, TNS, experts esimates

yo yo yo yo yo

Children as the Internet Future

CHILDREN 7 YEARS+ BECOME THE MAIN LONG-TERM DRIVER OF

THE INTERNET AUDIENCE GROWTH

OBVIOUSLY THE AGE OF INTERNET USAGE FOR KIDS STEADILY

DECREASES. THERE ARE 5 MLN CHILDREN (3-12 YO) IN RUSSIA

WHO ALREADY USE THE INTERNET

Internet for 64 yo+

• A share of the Internet users for female and male Russia’s population among all age

categories is quotable. Though within the category 64 yo+ gender differences are

significant: only 12% women and above 28% men are the Internet users.

Source: TNS

Internet for Aged

AGED PEOPLE CATEGORY IS THE LESS ACTIVE PART OF THE

INTERNET AUDIENCE, BUT THERE IS A POTENTIAL

THERE ARE 19 MLN PEOPLE 64YO AND ABOVE, 4 MLN OF THEM –

ARE ALREADY INTERNET USERS. YOUNGER PEOPLE (USUALLY

CHILDREN AND GRANDCHILDREN) HELP THE AGED TO GET FEEL

OF THE INTERNET

Add-On: Internet Speed in Russia

Measuring the Internet Speed

MEGABYTE DIFFERS FROM MEGABIT EIGHTFOLD

THE TYPICAL MISTAKE IS TO THINK THE INTERNET SPEED IS

MEASURED IN MEGABYTES PER SECOND

Internet Speed: Megabytes vs. Megabits

• 1 byte = 8 bits. It means if the announced Internet speed is 10 Mbps then

the data transferring speed is 1,25 megabyte per second.

• Thus the file of 1 Gb size can be downloaded in 13,7 minutes.

Broadband Internet Connection

• The average broadband Internet speed in Russia is quite comparable to the leading

European countries – Germany, France, UK. In absolute terms it is 21,6 Mbps

• The price of 1 Mbps decreased by 28% in a year and now equals $1,05. The Internet price

in Russia is extremely reasonable – the 6th place in the world (among 100 countries

surveyed).

Mbps

Russia 21,6

Germany 25,8

Spain 20,3

Italy 8

Sweden 41,9

UK 24,5

France 26,9

Ukraine 20,2

Poland 19,3

Hungary 24,6

Austria 19,8

Nerherlands 40,1

Czech Rep. 24,6

Source: NetIndex

Fast Internet

RUSSIA HOLDS THE 34TH POSITION AMONG 189 COUNTRIES BY

BROADBAND INTERNET SPEED

THROUGH THE LAST YEAR (MARCH 2013 – MARCH 2014) THE

AVERAGE BROADBAND INTERNET SPEED IN RUSSIA INCREASED

BY ALMOST 18%

Mobile Internet: Could Be Better

• The average speed of the mobile Internet in Russia in absolute terms

reaches 5,5 Мbps

• In a global ranking of the mobile Internet speed Russia holds the 59th place

among 105 countries

Mbps - mobile

Russia 5,5

Germany 9,9

Spain 9,9

Italy 6,9

Sweden 13

France 15

Poland 6,8

Source: NetIndex

Mobile Internet

RUSSIA HOLDS THE 59TH PLACE IN A GLOBAL RANKING OF THE

MOBILE INTERNET SPEED AMONG 105 COUNTRIES

THROUGH THE LAST YEAR (MARCH 2013 – MARCH 2014) THE

AVERAGE SPEED OF THE MOBILE INTERNET INCREASED BY 2,8

TIMES

Internet Devices in Russia and Across the Globe

3,6

5,7

3,1

6,3

The number of the Internet devices per 1 household, pcs.

Russia

USA

UK

France

Source: Kaspersky Security Network, Ofcom, Gfk, NDP

The Internet in Devices

THERE ARE ABOUT 150 MLN DEVICES WITH THE INTERNET

ACCESS IN RUSSIA

AT THE SAME TIME JUST 1 MLN RUSSIANS SURF THE INTERNET

WITH THE HELP OF MOBILE DEVICES ONLY

Head of Internet Marketing Oleg Zhukov

Oleg.Zhukov@hermes-europe.de

Phone: +7 (495) 775-86-87 ex.1176

https://www.hermesworld.com