JP Morgan recommends investors to buy shares in Yandex and Mail.ru Group, the two Russian Internet giants listed on the NASDAQ and the LSE respectively, Bloomberg reported yesterday.
The Russian online advertising market could grow even faster than generally expected, JP Morgan analyst Alexei Gogolev argues in his report. Yandex and Mail.ru Group are “likely to overtake state owned TV channels by daily reach of the population” and may see a compounded annual growth rate of more than 40% between 2010 and 2013.
The advertising revenues of Mail.ru Group reached $124 million in 2010 – up 56% from the previous year – representing 38% of its overall revenues.
Yandex revenues are generated almost exclusively (97%) by advertising. In 2010, they amounted to $439.7 million with a net income of $134.3 million.
Advertising spending on the Russian-language Internet grew to 21.86 billion rubles ($729 million) in 2010, an increase of 40% from 2009, MindShare Interaction estimated earlier this year. Contextual advertising represented 13.7 billion rubles ($457 million) or 63% of the total.
A March 2010 study by PricewaterhouseCoopers and the Interactive Advertising Bureau estimated that by 2013, the total amount being spent on online advertising in Russia will reach $1.3 billion.
