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How Yandex’s Most Important Business Is Performing

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Advertising revenue rose 18%

Advertising is Yandex’s (YNDX) most important business, as it contributes the vast majority of the company’s revenue. Yandex’s advertising business will likely be on the radars of many investors when the company releases its first-quarter earnings results on April 25.

In the fourth quarter of 2018, Yandex’s advertising revenue rose 18% to 29.5 billion Russian rubles ($460 million), contributing 76% of the company’s total revenue. Google’s (GOOGL) advertising revenue rose 20% YoY, while Baidu’s (BIDU) advertising revenue rose 10% YoY in the quarter. Facebook (FB), Twitter (TWTR), and Yelp (YELP) recorded advertising revenue rises of 30%, 23%, and 12% YoY, respectively, in the fourth quarter.

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Yandex’s advertising revenue increased steadily from quarter to quarter throughout 2018. Its advertising revenue increased 18% YoY in the third quarter and 17% YoY in both the first and second quarters of 2018.

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Global digital advertising market to expand 17.6%

Yandex and other digital advertising companies are benefiting from the trend in which marketers are ditching traditional advertising channels such as TV commercials and running marketing campaigns online instead.

According to eMarketer estimates, global digital ad spending will increase 17.6% YoY to $333.3 billion in 2019, which will see digital advertising account for about half of the world’s total advertising outlays. 

Russia, Yandex’s domestic market, is one of the countries in which advertising dollars are rapidly shifting online. This year, Russia will join the United States and China among the countries for which digital advertising accounts for 50% or more of the advertising market. Digital spending accounted for 45% of total ad spending in Russia in 2018.

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