From the first mouth: “Yandex. Verticals” is separated from “Yandex” and challenges the largest ad service of Russia

Source: PCWeek

In January 2016, Yandex will allocate two units into separate structures that bring him non-advertising income, Yandex.Taxi and Yandex.Vertical ad service. The provision of services will help diversify risks and reduce the advertising share in the revenue structure of Yandex, which now amounts to almost 99%.

Yandex.Vertical includes all Yandex ad services - Avto.ru , Yandex.Realty, Yandex.Rabota and Yandex.Travel . Yandex.Vertikali plans to compete with the leader of the Russian market Avito . Avito's revenue almost doubled in 2014 - to 4.3 billion rubles - and continues to grow.
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Anton Zabannykh told RBC about the plans and prospects for the development of Yandex.Vertical. He will lead this company in 2016.

"Megamind" leads the most interesting quotes from the interview .

About the reasons for separation

Legal separation of companies is an attempt for several teams to create full-fledged market conditions of work. This is an attempt to make so that for us de facto and de jure, including financially, the main task was not project activity and not only product development, but the creation of a business. It is difficult to count the costs, the effectiveness of decisions made when you live in the general budget in the general conditions. And independence generates more speed and responsibility. In general, a bet is being made that in a few years we will become a significant percentage in the revenue of the entire Yandex group of companies.

About the most profitable direction and revenue

[The most profitable direction -] Cars. This is despite the fact that this segment of advertising suffered in 2015 much more than the rest. We managed, despite the fall in sales of new cars by more than 40%, used cars - by 20–30%. They managed just due to the growth of non-advertising revenues - money that private users and dealers pay us to advertise their ads. Now non-advertising revenues in our revenues are more than half, and their share continues to grow.

In 2016, we want to grow by about 50%. If we talk about the prospect of three years, we count on the growth of revenues and capitalization of the separating company several times. However, planning for such a period is an ungrateful thing.

About external financing

When I first started writing about our allocation in the media, I received questions from several people: “Is it possible to invest in you?” We have no plans to attract foreign investments. All business units of Yandex are profitable, we have free money for our development. And we will remain profitable in the medium term, even taking into account the large expenditures on our own product and marketing projects. So it is not clear why we need to attract external funding right now.

About the Yandex.Avto and Yandex.Real estate ads services

In 2010, the aggregation services Yandex.Avto and Yandex.Realty opened. Their goal was to “dust out” all the ads on the Internet inward and give them a convenient search. Thus, the partners received traffic, and we monetized through advertising. Now we are gradually leaving this model - the market is changing, other formats are becoming interesting to its participants.

With the purchase of “Avto.ru,” we have left the previous model altogether: we do not distribute traffic, but buyers and calls, and no longer aggregate ads. With “Yandex.Real Estate” the same story: originally the service was an ad aggregator, but in December 2014 we started receiving ads directly. True, with this approach there are a lot of problems, but we solve them.

The key is the quality of information. You know, in general, everything that we do is very uncomfortable for people. Let's say you want to buy a car. It would seem that buying a new car is a more comfortable scenario than trying to find a good used car. However, having decided on the brand, you will not be able to see anywhere which cars are now available in salons. We'll have to go around these salons, to communicate with the manager, who will busily read out the list of options for each car, without naming the price.

With used cars still worse. There are ads that seem to be about some objects from the physical world, but how true they are is generally not clear to anyone.

We want this opacity, this chaos, to eliminate. We do not want to be just bulletin boards, we want to become an objective means of choice.

About the most expensive purchase of “Yandex”

In 2014, the company purchased the Avto.ru service announcements for $ 175 million.

Create a service for receiving ads - easy. It is difficult to make a strong brand out of it. Avto.ru managed to do this, but under the pressure of competitors, this project was already beginning to lose its position in the market. Therefore, for us, this purchase was a time saving, purchase of a ready-made business, which is clear how to further develop.

I do not presume to talk about the price, because then I did not take direct part in the transaction. I was one of those guys at Yandex who looked at the news of the purchase and thought why Avto.ru? But if you analyze the market and look at other countries - autotrader.co.uk in the UK, in the USA autotrader.com or any other - then it becomes clear that the price of our purchase is not so great: the prospects for the development of such services are good, and their capitalization is constantly growing.

However, it seems to me that if this transaction were not, the monopolist in the face of Avito would appear on the market, or Avto.ru would simply melt. I think this is an important point: for a year and a half [from the moment of purchase] we managed to correct skepticism towards Avto.ru, including the thousands of people working at Yandex.

On the results of the work of Avto.ru from the moment of purchase

When we bought Avto.ru, the service was the leader only in the capital. We have an interesting statistic: when you rent an ad from Avto.ru, we ask about the reason. The answer options are: sold on Avto.ru, sold somewhere else, decided not to sell. If you impose statistics on response options to the statistics of Avtostat and other sources that publish data on the number of vehicles registered, you get an interesting picture: it turns out that every second car in Moscow and the region is sold with the help of Avto.ru. If we take only Moscow, then 140% of the machines are registered and sold through Avto.ru. This is due to the fact that cars are sold from Moscow, and disperse throughout Russia. Now we are leaders in sales not only in Moscow, but also in St. Petersburg and in a number of central regions.

We are now in the process of combining Yandex.Avto and Avto.ru under the brand of the latter - this process will be completed by the end of spring 2016.

About the Yandex.Work service

Yandex.Rabota is still an aggregator. You can not do everything at the same time, so we are not actively developing “Work”. This is still a useful service - you can find all more or less significant vacancies on the site. After all our launches with Avto.ru and Real Estate, we were expected to stop being just an aggregator at Yandex.Work, some even disconnected. I had to explain to the partners that we are not planning anything like that. There are a lot of good players in the job market now, we don’t want to push.

About the Yandex.Travel service

The first time we planned to run in 2008, but was postponed due to the situation. This year they launched it, but again “on time”: people began to travel much less abroad, and the number of countries to which they can go is decreasing. But we have not only tours abroad, we also sell Russian tours. Last summer, Abkhazia unexpectedly became the fastest growing service region.

"Play" in the "Travel" we have long wanted. By analogy with other services, package tours - the market is absolutely wild. There are some stalls on the street, you go in there, they sell you something. Now Yandex.Travel is a convenient service. You press the button - dates, prices, options are shown to you. The service aggregates the offers of travel companies that sell tours. These firms pay us for accommodation and sales commissions. The service turned out to be pleasant, but this is not yet a business.

"Kill" the service just will not. Yandex.Travel for us is a startup inside a startup in which several people work. It makes sense to try and develop similar venture projects - suddenly something will grow out of it.

About development plans

Next year we will definitely spend on developing existing services. At the same time, there are still a lot of places “in which people are uncomfortable”, just not all areas are now ready for change. With medicine, for example, horror - everything is so regulated that you cannot start doing anything in this area right now. In general, not all areas are now ready for change. We on our small front try to fight chaos and opacity in order to save people time, nerves and money.