Group sees user payments boost as it turns down advertising

Here is a fascinating tale out of Russia, where the number-two web operator  is turning down some advertising but is, instead, buoyed by payments from its users.

The diversified search, email and portal firm Group has seen half-year user payments from its community services rocket 106.9 percent since last year to 3.2 billion rubles (98.5 billion) – becoming its biggest single revenue line, and helping grow profit by two thirds.

“The main driver of this growth is the increase of paying user engagement,” CEO Dmitry Grishin reported on Wednesday, ” – especially in virtual gifts and services, as well as in our API platform and self-developed social games.”

The payments are coming from the Odnoklassniki social network, which owns; its own My World social service; the dating site and from social games syndicates to third parties.

Russian online advertising is still a booming market. But is now turning down some of that growth…

“While context advertising continued to grow in line with the market, we have seen moderate slowdown of growth in display revenue, primarily driven by planned reduction in advertising inventory on some of our properties,” Grishin explained. Some of those sites have begun courting user payments harder than advertisers.

Nevertheless, display ad revenue grew 30.2 percent. earns twice as much from display ads as it does from ads against its search results. Most of its user metrics except ICQ grew. But’s search share in Russia is just 8.2 percent.

Company net profit hit four billion rubles ($123 million) on 48.8 percent higher revenue of 9.7 billion rubles ($3 billion).