Now all businesses who want to launch applications on Vkontakte for promotional purposes will need to sign a contract with the company. They will also need to pay a daily fee, the level depending on whether they include external links in their application or not.

The fee is 0.035r (without external links) or 0.070r (with external links) per visitor. A minimum fee will be 3500r or $118 (without external links) and 7000r or $236 (with external links) per day. All prices include VAT. There will be a minimum placement period of 14 days and users will be told they are using a commercial application.

It’s a bold move from Vkontakte who must assume this fee will be small-change to brands looking to promote themselves on the platform. Even a minimum charge of 49’000r ($1656) or 100’000r ($3380) will hit small campaign budgets hard.

In this author’s opinion, this was not a smart more by Vkontakte. While it may bring in money in the short-term, it will push commercial usage to Facebook where this activity is free. They may have just chased off many high-quality content producers. Vkontakte just provides a platform, in the long-term the content determines the audience engagement.

Example 1: Search for term “c++ adjacent_find

Example 2: Search for css term “css float”

It’s a smart feature and certainly returns more useful in-search information than the same search on Google.

This feature should be popular among tech-savvy users, a key group of influencers. It’s already active on Yandex.com, their international portal.

Like Google, Yandex’s business model is based principally on contextual advertising. In 2010, contextual ads accounted for 88% of the company’s revenues. Revenues from contextual advertising grew 45% year-over-year. According to the Russian Association of Communication Agencies (RACA), during the first nine months of 2010, the overall Russian ad market increased by 14%, while the online advertising market showed a 37% growth. In 2010, the number of advertisers on Yandex increased by over 40% year-over-year and totaled more than 180,000.

“The highlight of 2010, as we see it, is that by constantly improving our product quality we managed to increase our share in the search market,” says Arkady Volozh, CEO. “The considerable revenue increase we report this year reflects two important trends — a post-crisis revival of the small and medium-sized businesses and a shift in advertising expenditures from other channels towards online advertising”.

Despite increased competition from Google, who holds 23% market share, Yandex has increased their control by 5.2% to 64.1%. With their Ukrainian market share going up 6.2 pp (to 27%) and its market share in Kazakhstan increasing 4.6 pp (to 24.4%). According to comScore, from November 2009 to November 2010, Yandex’s monthly audience has grown by 64%, peaking at over 54 million in November 2010.

Yandex has weathered the current economic climate well. Unlike many Russian companies they have not downsized but did maintain a hiring freeze for 2010. Opening their doors now will place them in a good position to pick up talent from companies still struggling to maintain or raise salaries. As recruitment is a key factor in Runet, given the relatively shallow talent pool, this will give them a key advantage going into 2011.

The latest revival of the law began this month, with 3 companies having action taken against them, for using English words in their advertising material. Apparently this is only the start. According to Deputy Head of the Moscow Anti-Monopoly Service, Alexander Tarkhov, interest will not subside and if anything, they will pursue lawbreakers with renewed vigor.

He only attributes the lack of action on the 2006 law to date, to the “small” size of his department and resources.

Foreign words are permitted as long as they are accompanied by a translation. But if they are part of a registered brand name, trademark or service mark, or the name of a television or radio show, they do not have to be translated. Companies use this clause as a loophole by registering slogans as trademarks.

Advertisers maintain that often when a translation is included, it is either done in such a tiny font that it is meaningless or a bigger one that destroys the creative concept and aesthetics. Puns are often lost in translation as well.

The law stems from the fear that foreign words may confuse or mislead consumers, a point hotly contested by advertising specialists. However it is true that some Russian companies use foreign words to add an aura of prestige to a product and lead people to believe it is imported. Foreign-made goods are still valued and trusted over locally produced items.

The ruling on the three companies targeted over this law is expected within the next few days, so expect another update soon.

** deluxe shopping by Gregor Fischer one of the artists who release their work under a Creative Commons license at Flickr – thank you!

The article was packed with facts on the cigar industry in Russia – summarised below for your convenience:

• 600’000 cigar smokers in Russia (according to magazine “Smoke”).
• Typical Russian cigar smoker is male, 30-65, smokes once a day and owns a humidor.
• Habanos controls 70% of the Russian market for cigars
• Russia is second fastest growing market for Habanos after China
• Habanos has built up a network of 260 retailers throughout the country, with a focus on Moscow and St. Petersburg.
• Trend is for shorter, fatter cigars so aficionados can get same enjoyment in shorter time.
• Anti-smoking trends have not affected industry sales to date
• Average Cuban Robusto can cost 240 rubles ($8)
• Newly introduced Cohiba Behike cost 2,100 rubles ($70) each
• Russia has one domestic cigar producer, “Pogar Tabacco Factory” in Bryansk, it produced 1.5m cigars last year.
• These domestic cigars mostly retail in Russia for between 100-120 roubles ($3-$4) each.

** ulybug and a larger cigar by ulybug one of the artists who release their work under a Creative Commons license at Flickr – thank you!

The .РФ (RF) domain extension is the first of a new generation of completely Internationalised Domain Name (IDN). Although some Registries have allowed foreign character registrations (IDN) of the domain term, the domain extensions (COM/NET etc) were only available in Latin characters.

This marks an important step for the Runet. Besides the obvious issues of language comprehension, users will no longer need to change their keyboard layout while typing a .РФ (RF) domain URL into their browser or search bar.

Although it should be noted here that Google has done a great job at dealing with Russian-queries in English (see this search for “дом” (house) which correctly appears when you type “ljv” in the English keyboard layout).

The .РФ (RF) domain launch has not been without controversy. ICANN had pushed hard for the Russian Registry to relinquish the old .SU (Soviet Union) domain name. They “urged the current .SU operators to make it clear to the .SU registrants the issues surrounding the domain, as well as to freeze new registrations until its future is clear.”

Their delegation was promptly sent to Moscow and returned with assurances of compliance and “understanding” which they made public. These were strangely at odds with the public statements from the Russian Registry, in the Russian press. Shortly after the Registry lowered the SU price and introduced an IDN version.

This trail of events led me to believe that the .РФ (RF) and honor of the first global IDN might be a peace offering to get closure on the SU saga. In any case, Russia is the only country to be represented by three domain name extensions!

If you’d like to pick up an .РФ (RF) domain name then I can recommend GlobusDomains. As way of disclosure, I am connected to the company but they do a great job on Russian registrations.

Well I visited there this week and discovered that they now host a series of Cyrillic fonts. Definitely one to bookmark if you create Russian sites and content.

We are pleased to announce that, through cooperation with mobile operators, MTS and Beeline are free to use a lightweight version 0.vkontakte.ru.

This means that if you are a subscriber listed operators, regardless of your rate you can go to 0.vkontakte.ru from your phone for free. 0.vkontakte.ru – Light version of the site which allows you to read and send personal messages, share with friends, news and other textual information.

Mobile phone penetration in Russia has now topped 140%, with more than 209m SIM cards bought by a population of 143m.

Russian mobile users are already keen web users. According to a Neilson Mobile Media Marketplace report carried out at the end of 2008, Russia now scores 3rd place in Europe and 4th in the world in terms of mobile penetration.

This year Russia ranks 4th in Mobile Internet Penetration, as 11.2% of Russian mobile users access the web through their cell phones, trailing only the U.S. (15.6%), UK (12.9%), and Italy (11.2%) and staying ahead of France, Germany and Spain

While 11.2% is impressive in terms of world mobile internet penetration, this deal by Vkontakte opens their platform up to the other 88.2% – given they own a web-enabled phone. “Free” is an attractive sales proposition to new users who normally wouldn’t sign-up for expensive web tariffs.

So why are the losers in this deal? The obvious ones are their main competition, Facebook. Already lagging far behind Vkontakte on user numbers this will not help their position. Verifiable statistics on this point are hard to come by – the TNS report of March shows reach figures for both sites – but Vkontakte claims 97m users against Facebook’s 1.3m.

Less obvious losers are the search engines. The new generation of web users are increasingly turning to Facebook for their online activity. Rather than using search engines, social platforms have become their destination with friends and networks delivering the information they want.

This deal will accelerate this process for Vkontakte in Russia. Users do not have free access to Yandex, Google or Mail.ru so will turn to their services instead. More importantly, as they are indexes rather than self-contained platforms, mobile providers are unable to offer search engines the same deal.

Update: I can confirm that Facebook have signed the same deal with Beeline and MTS to provide free access to their light version, http://0.facebook.com or http://m.facebook.com (as promoted outside Russia).

The companies targeted include Yaposhka-City, which owns Yaposha, a chain of Japanese fast-food restaurants; Trade Retail, owner of Bogner sportswear store; and Potential, owner of Bar BQ Cafe, the Moscow branch of the Federal Anti-Monopoly Service said in a statement Monday.

Yaposha faces punishment over a banner reading “Happy New Menu,” which only had the last word — Menu — in Russian. Trade Retail’s English-language banner read “Bogner New Collection,” and Potential’s October advertisement for Bar BQ Cafe used the English word “Halloween.”

While many modern English words have been phonetically translated into Russian, English words are often selected over their new Russian alternatives. Partly because the English word has already entered the Russian vocabulary (e.g. “Halloween”) but sometimes because the English word is shorter and more concise, e.g. “email” is often used online over the Russian phrase “electronic post” (электронной почты).

As with many Russian laws, this law has been somewhat selectively applied. Many companies use English words in their advertising and the anti-monopoly service have not explained why these firms were singled out or whether this is part of a larger crackdown.

Coca-Cola famously fought this law when it was introduced in the 90′s, as authorities wanted them to change their logo into Cyrillic. Maybe this was an additional consideration when Yandex returned to a Cyrillic-only logo in 2008.

As a marketing agency operating in Russia we’ll be following this case with interest. The anti-monopoly service will consider punishment against Yaposhka-City on Nov. 24, Trade Retail on Nov. 25, and Potential on Nov. 29.

While there are good reasons to localise your branding into Cyrillic, the authorities seem concerned with general use over brand terms. We’ll be advising clients to fully translate and localise their material for the Russian audience and not use English words without good reason.

A large part of the success story has been put down to Mail.ru’s stake in Facebook but the engine has been doing exceptional well over the last 3yrs. From relative obscurity on the search scene they now control 10% marketshare, with their own search platform. They are well placed to grow fast over the next few years, especially if they develop a professional PPC engine to rival Yandex.Direct and Google Adwords.

Mail.ru owns 2.4 percent of Facebook, the world’s largest social networking service, according to an Oct. 11 statement. Mail.ru also has a 5.1 percent stake in Chicago-based Groupon, the Daily Deal web site with 20 million subscribers, and 1.5 percent of Zynga Game Network, the maker of the “FarmVille” and “FrontierVille” games.

Revenue at Mail.ru may increase 51 percent this year to $301 million, while earnings before interest, tax, depreciation and amortization are likely to rise 70 percent to $104 million, analysts at Goldman Sachs said in a note last month.

Mail.ru’s success will no doubt encourage other Russian tech firms to reconsider the IPO path. There were many reports that Yandex, Russia’s largest search engine was considering an IPO before the global downturn.