In October 2013 VKontakte announced the launch of its first marketplace for paid posts. The main feature of the platform is that communities or sites, which have lots of subscribers, can sell their space for advertisers, who want to promote special posts. VKontakte acts here as a broker and gets a fixed commission from every sale. The managers of VKontakte expect that the marketplace will become a popular advertising instrument to achieve the target group in thousands of communities. The main focus lies on “big players”, the first clients come from FMCG and Mobile telecommunication industries. The platform is already open for all users and includes for now about 400 publishers.
The Russian guys from siliconrus.com made a detailed analysis of the platform and found some hacks, which can make it unattractive for both potential advertisers and publishers.
#1: Huge commission
As already mentioned the price per ad includes also the commission, which goes to VKontakte for marketplace usage. During the first announcement the named commission was by 20%. But later Pavel Durov explained that the commission per ad will be calculated based on progressive scale: if the particular community has 10K subscribers or less, the commission amounts to 20%. If the number of subscribers is about 500K and more the maximal commission is about 45%. Just use the linear formula derived from 20 – 45% and the estimated number of subscribers.
For example if the publisher sets an initial price per post 4.500 rubles:
The end price varies according to the number of community members and potential reach. Still according to Pavel the commission building stays in discussion.
As to the payment, there are so many questions to answer. The publishers must definitely pay VAT; the physical persons pay 13%, single entrepreneurs – 6% and limited companies pay 20% from their income. According to status quo it is not possible to make any money transfer, which means there is no possibility to get your online cash on your banking card. VKontakte promises that in the future the publishers will be able to run money transfers on contract basis and through the local e-payment services WebMoney and Yandex.Money, both involves additional commissions amounting to 2-3%.
#3: The Paid Posts are not highlighted
If you setup your paid post ad, no one will know about its existence, because there is no highlight at all. This means your post looks actually like a normal post made by community owner, it has now marker, no label “promoted post” or colorful background. Sure you can include some special words like “Click here”, “Buy here” and similar. But do you want it as advertiser, who pays much money for a qualitative ad? Certainly not! Either Facebook, Instagram or Twitter would never get away with such an impudence.
#4: Questionable ROI
The guys from siliconrus.com setup a promoted post ad and paid 10K rubles. At the end of campaign they got 200 clicks, which leads to CPC = 50 rubles. If you setup a usual CPC campaign, you can achieve much more output. So the whole story arouses many efficiency questions.
#5: What about the external marketplaces?
After the announcement of the VKontakte marketplace for paid posts there were lots of discussions in terms of other similar suppliers, who offer the ad space within the communities of the Russian social media network. Especially the further destiny of Sociate.ru was most doubtful as far as it is a direct competitor of VKontakte.
The clear statement of Pavel Durov: “For now we are not going to liquidate any external suppliers”. This means the poor guys should count their days and hope that one day they won’t lose their business. One more big question!
#6: No lead tracking is possible!
After the end of an ad campaign there is a limited possibility to measure its performance. There is absolutely no information about the users, who clicked on the ad post, whether a particular click leads to any further actions and whether these clicks are worth of investment.
As far as you can see, there are so many questions to discuss and so many bugs to fix. Certainly this ad instrument is new and not stable as it should be, that’s why it is recommended to wait for the next version in order to invest money without any doubts.