Impact of Google Ads Withdrawal from Russia on Contextual Advertising in E-Commerce: So Far Not So Bad. But that’s for now.
It seemed that after Google’s withdrawal, the advertising market in Russia should collapse. But so far, not everything is so definite: some of our projects enjoy revenue growth. In this article we are looking into why this is so and which tools work best now.
In early March, many contextual advertising specialists and regular businessmen in Russia logged into their Google Ads accounts and, to put it mildly, were surprised. They were told, “Guys, no offense, but we don’t want to work in Russia anymore.” Google stopped showing ads on all its sites and the market went into panic: what should we do now?
We are the Jam Agency, our business is setting up contextual advertising for online stores, half of which are located in Russia, and here we’ll be talking about those. Many of our clients received almost half of their sales from contextual advertising with Google Ads, and we had to adapt to the new reality. In 3 months, we were able to transfer all the processes to Yandex, and now we will share the results.
In this article we will tell you how Google leaving affected the contextual advertising market, how Yandex (the local search engine) is doing, what advertising tools work well now and how online stores can deal with the situation.
Let us tell you a bit about our sampling for the research
The agency’s portfolio includes about 35 projects for Russia with contextual advertising budget anywhere between $4,000 and $200 per month. For the study, we selected 15 of the largest online stores in different market segments to get an averaged overview. Of course, this is not sufficient, but the conclusions between the projects are very similar.
Disclaimer: as much as this article could benefit from more input about the revenue of our customers, we couldn’t share this information as it is commercial secret. When we mention any figures, we apply a certain factor. Therefore, the data in the article is generally correct and provides valid insights, but not in absolute terms.
Why Google Ads was So Important
After Google’s withdrawal, online store revenue from Google Ads dropped to zero. However, revenue from other channels has grown. Let’s figure out why this happened.
There were two large contextual advertising tools in Russia: Google and Yandex. Google Ads accounted for 30–70% of our customers’ sales, the rest came from Yandex. To lose such a source of sales is very unpleasant, as if one of the top managers in your company did not show up to work one morning and sent a letter about an indefinite “leave”.
The most effective tool in terms of return on invested time and profit were Smart Shopping campaigns. The buyer typed the product name into the search bar and immediately saw its picture and price at different stores. Viewing it did not require clicking on various sites.
An example of how Google Smart Shopping campaigns work. Rather, how it used to work.
After clicking, the user was taken directly into the product card, so the conversion rate was higher than average. Our clients used to earn very good money with them — for example, a sportswear store had 37% of all its paid traffic coming from Smart Shopping campaigns.
For this sportswear store, Google contextual advertising accounted for 17% of revenue, which is about 2 million rubles per month
77% of the revenue from contextual advertising for this store used to come from Google Smart Shopping campaigns.
Obviously, stores do not want to lose half of their revenue. If there are no sales from Google, then they need to be brought in from somewhere. That’s why we tried to scale up advertising in Yandex and look for new sales tools.
Sales from Yandex exceeded what used to come from Yandex and Google combined. Does this really happen?
In March and April, we noticed a significant increase in demand from buyers, people began to buy more. Compared to February, sales almost doubled in March and were 30% higher in April. Thanks to this, our clients began to sell more with Yandex alone than with Google before.
Sales from Yandex contextual advertising for a bathroom equipment store. In March, purchases increased 2.5 times compared to February
The auto parts store had a similar situation. In March, there was a sharp surge in sales, and from Wordstat it is clear that this is not seasonal demand.
In May, sales returned to the February level again. But still — people were buying more than a year ago from Yandex and Google combined.
In April and May, our client had more sales from Yandex than a year ago from Yandex and Google together. We are not going to comment on March at all, it is all clear without words
We checked the Wordstat, people really started buying more in March. Demand for many categories of goods greatly increased but began to decline already in April.
The demand for laptops in March last year was much lower than in March this year
The number of people who wanted to buy TV sets in March was as high as before the New Year.
The demand for sneakers surged in March and continued in April
Clients also noted the high demand. For example, one manager of a sportswear store told us directly that people rushed to grab everything. The store jacked the price up threefold, people were still buying. Because of this, they even stopped advertising for a week, they could not cope with the rush of orders.
In our opinion, such a spike in demand was caused by the uncertain economic situation in the country. People were scared of currency devaluation and rushed to spend it right away, while they still had the opportunity. What if the products disappear from the shelves or prices rise again? Something similar had already happened in 2014.
The cost per click hardly changed
At first, we expected a rapid rise of bids on Yandex and advertising price increase. It seemed that after Google’s withdrawal, all would rush to Yandex and start raising bids heating up the auction. However, our concerns did not prove true, the cost of advertising in Yandex increased only a bit.
The cost per click for a medical products store did not change much. The cost increase began only in May with rising average bids. A similar pattern can be traced for other projects.
The situation is similar for a gun project — the cost per click decreased slightly and began to grow in May
And it is precisely because of this heightened demand that the cost of advertising in Yandex did not increase. If people didn’t buy more, certainly the transaction cost would have been higher. But as it turned out, even though new advertisers came to Yandex, there were enough buyers for everyone.
Some of the Google Ads users started buying through organic search results
The graph below shows that after the Google Ads withdrawal, revenue from organic Google search results increased. Naturally, one wants to know why. The answer seems to lie on the surface: if earlier users clicked on Google Ads, now they just clicked on links in organic search results. And this is certainly the case, but there are some nuances.
There are cases where a store launches paid ads while being Top 3 in the search. Such ads pull over 30–40% of users, as they could go to the site for free, but it’s easier for them to click the first link. Accordingly, if the store had a good position in organic search, then after advertising was disabled, it will see an increase in organic traffic.
It is difficult to make any accurate estimates: this is a different story, and we simply do not have such projects to draw research from. We already disable client ad impressions if their site is in the Top 3 for the same search query. However, it can account for 10–20% of the paid traffic.
Which Tools Work Well Now?
We began to scale up advertising in Yandex and look for new sales tools. Here’s what worked best for us after Google left.
The graph shows how the revenue from Yandex advertising changed for our projects
Campaign Wizard.
In April 2021, Yandex launched the Campaign Wizard, a tool that helps to launch advertising campaigns quickly and without needless glitches. The wizard automatically analyzes the site, finds the keywords and launches advertisement.
The graph shows those segments where the Campaign Wizard performed well; there were also as many projects with no results.
The Campaign Wizard allows you to write several titles, texts and images. It can mix them by itself and choose the ones that give the best results
For some stores, the Campaign Wizard works very well: in some cases it becomes nearly the main source of sales.
For this fabric store, the Campaign Wizard brings in 65% of its revenue, which it’s about $30k.
For a hunting goods store, the Campaign Wizard accounts for more than 70% of Yandex traffic.
Another example was a project for delivery of organic food, where customer who were used to ordering delivery from somewhere else hardly bought any food from us. On the other hand, the Wizard managed to find an audience that was interested in beauty and fitness: these people began to order organic food.
Product Advertising Campaign.
Here is an example of what a Yandex Product Campaign looks like.
The tool looks very similar to the Smart Shopping campaigns from Google: the buyer puts the product name into the search bar and sees offers from stores. Previously, the ads directed users to Yandex Market, but now it began to show offers from regular online stores.
Product Campaigns bring in the customers at a low cost, and they are easy to manage, just as the Campaign Wizard. Yandex can download all the products from the store all by itself and generate ads from them, or it can be done manually.
The children’s goods store launched a product campaign on March 23rd, but it already brings in 30% of the store’s revenue
The next day after Google leaving, Yandex announced the upcoming launch of Product Campaigns. It is not surprising, as Yandex has been copying Google Ads for many years, and suddenly it had such an opportune moment for a release.
At the moment, Product Campaigns are in beta and do not work fully. They bring sales, but for certain projects the sales numbers are way behind the Smart Shopping campaigns from Google. Hopefully, the sales will increase when the tool starts working without restrictions.
What are the Key Takeaways and What should Online Stores do Now?
Whether Google will return or not, we don’t know, but we can suppose. First, take a look at the these facts:
- In 2021, Russia accounted for 1% of Google’s revenue.
- Google closed its offices in Russia.
- FAS fined Google for billions of rubles.
- Google filed for bankruptcy in Russia.
It seems to us that the company is unlikely to change its mind and suddenly come back to Russian advertisers. Yet they did not announce their complete withdrawal from Russia: all services are still available, and there are still a lot of users. It remains to be seen.
In absence of Google,Yandex will strengthen its position, but it will not become a full-fledged replacement for the competitor. The share of Google as a search engine in Russia is 49%. It’s unlikely that people will stop using it just because they don’t see ads. This means that Yandex search share will not increase dramatically.
As long as Yandex Direct existed, it tried to copy Google Ads. They often do a crude job of it, but it is good enough to take half of the revenue. We expect that nothing will change drastically in this regard and new tools will appear, such as Product Campaigns.
As for online stores and business in general, we can only speak about our clients: they are doing well. These are mainly small and medium-sized businesses and they did not sell popular brands that withdrew from Russia.
Now the agency is being contacted by stores that are experiencing market growth. For example, the owner of a couch store targeting the middle segment is saying that the premium segment is gone, and all the demand has shifted to them.
But everyone understands that it can’t be like this forever: the exchange rate may soar, purchasing power may fall, and then systemic problems will begin. Some are already experiencing supply disruptions, and given the current economic situation, we must hope for the best, but prepare for the worst.
Here’s what we can advise the stores to increase sales or at least stay at the February level:
If you have an online store and you are dealing with issues related to Google Ads, please write to us. We will conduct an audit and think about the ways to help you.
