Expansion of the presence of Company X in the digital advertising market in Kazakhstan
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Statement on the independent completion of the course work 2
Introduction 5
Research goal 6
Research objectives 6
Research object 6
Research subject 7
Methodology overview 7
Description of the sources of information used 7
Structure 7
Chapter 1: Description of Company X's current position in the digital advertising market in Kazakhstan 9
1.1. Description of Company X 9
1.2. Business model of digital advertising business in Kazakhstan (AS-IS) 10
1.3. Investigation of current problems from within the company 12
Chapter 2: Analysis of the external environment 14
2.1. Analysis of the digital advertising market in Kazakhstan 14
2.1.1. Market size, investments and key trends 14
2.1.2. Portrait of the end user 17
2.1.3. Analysis of search advertising segment 19
2.1.4 Analysis of geomedia advertising segment 22
2.2. Competitive environment analysis 25
2.2.1. Analysis of the key success factors 26
2.2.2. PARTS-analysis 28
2.3. External environment analysis: PESTL-analysis 34
Chapter 3: Description and implementation of the TO-BE business model 42
3.1. Business model of digital advertising business in Kazakhstan (TO-BE) 42
3.2. Prioritization of the initiatives 49
3.3. Analysis of risks and measures to deal with them 50
3.4. Roadmapping and calculation of spends for the implementation 55
Conclusion 57
References 59
Appendix 62
Questions for conducting individual interviews (customer development) 62
Calculation of costs for implementation 64
Introduction 5
Research goal 6
Research objectives 6
Research object 6
Research subject 7
Methodology overview 7
Description of the sources of information used 7
Structure 7
Chapter 1: Description of Company X's current position in the digital advertising market in Kazakhstan 9
1.1. Description of Company X 9
1.2. Business model of digital advertising business in Kazakhstan (AS-IS) 10
1.3. Investigation of current problems from within the company 12
Chapter 2: Analysis of the external environment 14
2.1. Analysis of the digital advertising market in Kazakhstan 14
2.1.1. Market size, investments and key trends 14
2.1.2. Portrait of the end user 17
2.1.3. Analysis of search advertising segment 19
2.1.4 Analysis of geomedia advertising segment 22
2.2. Competitive environment analysis 25
2.2.1. Analysis of the key success factors 26
2.2.2. PARTS-analysis 28
2.3. External environment analysis: PESTL-analysis 34
Chapter 3: Description and implementation of the TO-BE business model 42
3.1. Business model of digital advertising business in Kazakhstan (TO-BE) 42
3.2. Prioritization of the initiatives 49
3.3. Analysis of risks and measures to deal with them 50
3.4. Roadmapping and calculation of spends for the implementation 55
Conclusion 57
References 59
Appendix 62
Questions for conducting individual interviews (customer development) 62
Calculation of costs for implementation 64
In today's world, advertising plays a major role in attracting customers and selling products or services. Companies advertise their products to increase their brand awareness, product familiarization, special offers, etc. Today, companies use a large number of platforms where they place their advertisements. The most dynamically developing segment is digital advertising.
Digital advertising is a set of analytical, technological and supporting tools that are directly interconnected with each other. It includes a system of methods and tools that use digital channels to promote a product or brand, attract and retain customers. The key feature of digital advertising is its interactivity and the formation on its basis of analytical resources (consumers, their preferences, products, channels, etc.) that provide personalization. In essence, personalization is the process of understanding the real intentions, desires and needs of a person, as well as the transfer of relevant, targeted and meaningful experience for this person. In practical terms, it means building and using a customer model and managing the customer experience1.
The primary platforms for digital advertising include mobile advertising (both in-app and mobile web), desktop advertising, digital TV, and others. Digital TV involves the transmission of television signals through digital technologies rather than analog. Various ad formats encompass digital display ads (both programmatic and non-programmatic transactions), internet paid search, social media, online video, and more. These formats are utilized by sectors such as media and entertainment, consumer goods and retail, banking, financial services, insurance, telecommunications, IT, travel, healthcare, manufacturing and supply chain, transportation and logistics, energy, power, utilities, among others2.
The global digital advertising market was valued at USD 365.37 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 15.5% from 2023 to 2030. This significant growth is driven by increasing internet penetration and higher advertising expenditures by businesses aiming to reach their target audiences. Additionally, the rising importance of social media platforms such as Facebook (Meta), LinkedIn Corporation, Twitter (X Corp.), Instagram (Meta), Snapchat (Snap Inc.), Pinterest, TikTok, and YouTube for branding and customer engagement is reshaping the market outlook3.
The digital advertising market is characterized by a high degree of IT development, a large amount of investment required to maintain the infrastructure of the platforms on which ads are placed. Global practice shows that, as a rule, the national and cross-national markets are dominated by global players. They multiplicate the business model, prioritizing geographic expansion as one of their development paths. Players resort to geographic expansion to occupy niches before competitors, but they don't always succeed. This is what happened to the company to which this paper is dedicated4.
This paper is a consulting project for Company X, which is developing its digital B2B advertising business in Kazakhstan. The main areas of digital advertising are: search advertising, geomedia advertising, banner advertising, video advertising and contextual advertising. As part of the geographic expansion and development strategy in Kazakhstan, the Company X failed to achieve its market share and revenue targets for 2022 and 2023 and my aim in this paper will be to develop recommendations to improve its business model in order to increase its market share in the near future.
Research goal
The goal of this paper is to develop recommendations to improve the business model of the digital advertising department of Company X in Kazakhstan in order to increase its market share by 3 times by 2027.
Research objectives
1. To describe the current business model of the digital advertising business in Kazakhstan (AS-IS).
2. To identify key development challenges in Kazakhstan based on internal perspective.
3. To identify the most significant macro-environmental factors influencing the digital advertising market and company in Kazakhstan.
4. To elaborate desired business model of the digital advertising business in Kazakhstan (TO-BE).
5. To formulate initiatives that will allow to to implement a new business model.
6. To assess the risks on implementation and come up with strategies of their leveling.
7. To evaluate expected spends of implementing suggested initiatives.
...
Digital advertising is a set of analytical, technological and supporting tools that are directly interconnected with each other. It includes a system of methods and tools that use digital channels to promote a product or brand, attract and retain customers. The key feature of digital advertising is its interactivity and the formation on its basis of analytical resources (consumers, their preferences, products, channels, etc.) that provide personalization. In essence, personalization is the process of understanding the real intentions, desires and needs of a person, as well as the transfer of relevant, targeted and meaningful experience for this person. In practical terms, it means building and using a customer model and managing the customer experience1.
The primary platforms for digital advertising include mobile advertising (both in-app and mobile web), desktop advertising, digital TV, and others. Digital TV involves the transmission of television signals through digital technologies rather than analog. Various ad formats encompass digital display ads (both programmatic and non-programmatic transactions), internet paid search, social media, online video, and more. These formats are utilized by sectors such as media and entertainment, consumer goods and retail, banking, financial services, insurance, telecommunications, IT, travel, healthcare, manufacturing and supply chain, transportation and logistics, energy, power, utilities, among others2.
The global digital advertising market was valued at USD 365.37 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 15.5% from 2023 to 2030. This significant growth is driven by increasing internet penetration and higher advertising expenditures by businesses aiming to reach their target audiences. Additionally, the rising importance of social media platforms such as Facebook (Meta), LinkedIn Corporation, Twitter (X Corp.), Instagram (Meta), Snapchat (Snap Inc.), Pinterest, TikTok, and YouTube for branding and customer engagement is reshaping the market outlook3.
The digital advertising market is characterized by a high degree of IT development, a large amount of investment required to maintain the infrastructure of the platforms on which ads are placed. Global practice shows that, as a rule, the national and cross-national markets are dominated by global players. They multiplicate the business model, prioritizing geographic expansion as one of their development paths. Players resort to geographic expansion to occupy niches before competitors, but they don't always succeed. This is what happened to the company to which this paper is dedicated4.
This paper is a consulting project for Company X, which is developing its digital B2B advertising business in Kazakhstan. The main areas of digital advertising are: search advertising, geomedia advertising, banner advertising, video advertising and contextual advertising. As part of the geographic expansion and development strategy in Kazakhstan, the Company X failed to achieve its market share and revenue targets for 2022 and 2023 and my aim in this paper will be to develop recommendations to improve its business model in order to increase its market share in the near future.
Research goal
The goal of this paper is to develop recommendations to improve the business model of the digital advertising department of Company X in Kazakhstan in order to increase its market share by 3 times by 2027.
Research objectives
1. To describe the current business model of the digital advertising business in Kazakhstan (AS-IS).
2. To identify key development challenges in Kazakhstan based on internal perspective.
3. To identify the most significant macro-environmental factors influencing the digital advertising market and company in Kazakhstan.
4. To elaborate desired business model of the digital advertising business in Kazakhstan (TO-BE).
5. To formulate initiatives that will allow to to implement a new business model.
6. To assess the risks on implementation and come up with strategies of their leveling.
7. To evaluate expected spends of implementing suggested initiatives.
...
The digital advertising business is a fast-growing industry nowadays. With the increasing integration of gadgets into a person's life, their consumption of digital advertising is growing. That is why this channel is becoming one of the most relevant for enterprises to disseminate information about their services and products. An increasing number of businesses are turning to digital advertising to inform consumers and customers about their products and services. The world digital advertising market is dominated by global players who prioritize geographical expansion for themselves to increase revenue and profits. Such a strategy implies the development of the business model with its adaptation to national characteristics. This strategy implies the use of an existing business model with adaptation to the national characteristics of a particular country. It is easy for some players to enter a new market due to a financial cushion, while others are defeated.
This paper is devoted to a case where a Company failed to adapt its business model from the beginning. Company X did not take into account the impact of macro factors and was unable to achieve the planned values for financial indicators. This work aimed to develop recommendations for improving the business model, which would contribute to increasing revenue and market share. To do this, several methods have been proposed to assess the problems, the AS- IS and TO-BE states.
For a detailed description of the current business model, a canvas business model was used, which was filled out thanks to an interview with a company representative. After filling it out, it was necessary to identify the problems that the company faced. These problems have been considered from different perspectives. To assess from an internal perspective, a strategic session was held, where representatives of the company shared their opinions on this matter. As a result, it became clear that the company lacks human resources and that customers do not understand the value of the Company's services.
Speaking of an external perspective, several environmental analyses were conducted. Thus, the market analysis highlighted the key trends in its development, for example, identified the key industries that drive it. To assess the perception of the end user, an initial study was conducted in which more than 2,000 people answered what habits they use a particular service. As a result of the research, it became clear that Company X could enter unoccupied niches. To determine the unique competitive advantages and strengths in the market, it was decided to use the key success factors, which were derived based on 4 interviews conducted with key clients in the Kazakh market. They showed that the company is able to compete with market leaders and benefits from the availability of innovative advertising formats. Since the market is an oligopoly, the hypothesis of whether coopetition cases are possible in the market was tested using PARTS analysis. As a result, it became clear that companies can pool resources to educate the market.
In addition to analyzing competitive forces, it was important to assess how the industry is influenced by macro factors and the external environment. For this purpose, a PESTL analysis was conducted, as a result of which important conclusions were obtained about the increasing influence of the Kazakh language, the increase in the number of SMEs, as well as legal features affecting the market.
Based on the results of the analyses conducted in the first and second chapters, a new business model was formed, which was described on canvas. To achieve this, 14 initiatives were invented, which find their origins in the analysis of the internal and external environment. In order to effectively focus resources, it was decided to rank them by priority, using the Implementation Effect-Velocity of implementation matrix. According to the results of the ranking, it was possible to identify 3 initiatives of the first priority or "Quick wins" and 5 initiatives of the second priority or "Heroic breakthroughs".
To prevent unpleasant surprises during implementation, a risk analysis was carried out, in which the risks for each initiative were highlighted. These risks were also ranked according to their effect and probability of occurrence. For the most dangerous, measures have been proposed to eliminate them, adhering to one or more strategies, for example, Mitigate, Avoid, Adopt, etc. An upper-level roadmap has been drawn up to implement the initiatives. It is accompanied by a calculation of the financial costs that may arise during their implementation.
Thus, in the course of this work, it was possible to achieve the set goal, namely, to develop recommendations for improving the business model, contributing to an increase in revenue, and the tasks were completed. It is worth noting that further steps play an important role in the implementation of initiatives. Initiatives and calculations for them are described at the top level and further coordination and discussions with representatives of the company are necessary to start their implementation. Depending on their intentions and the chosen methods of implementation, the potential effect and the costs necessary to achieve it will depend.
This paper is devoted to a case where a Company failed to adapt its business model from the beginning. Company X did not take into account the impact of macro factors and was unable to achieve the planned values for financial indicators. This work aimed to develop recommendations for improving the business model, which would contribute to increasing revenue and market share. To do this, several methods have been proposed to assess the problems, the AS- IS and TO-BE states.
For a detailed description of the current business model, a canvas business model was used, which was filled out thanks to an interview with a company representative. After filling it out, it was necessary to identify the problems that the company faced. These problems have been considered from different perspectives. To assess from an internal perspective, a strategic session was held, where representatives of the company shared their opinions on this matter. As a result, it became clear that the company lacks human resources and that customers do not understand the value of the Company's services.
Speaking of an external perspective, several environmental analyses were conducted. Thus, the market analysis highlighted the key trends in its development, for example, identified the key industries that drive it. To assess the perception of the end user, an initial study was conducted in which more than 2,000 people answered what habits they use a particular service. As a result of the research, it became clear that Company X could enter unoccupied niches. To determine the unique competitive advantages and strengths in the market, it was decided to use the key success factors, which were derived based on 4 interviews conducted with key clients in the Kazakh market. They showed that the company is able to compete with market leaders and benefits from the availability of innovative advertising formats. Since the market is an oligopoly, the hypothesis of whether coopetition cases are possible in the market was tested using PARTS analysis. As a result, it became clear that companies can pool resources to educate the market.
In addition to analyzing competitive forces, it was important to assess how the industry is influenced by macro factors and the external environment. For this purpose, a PESTL analysis was conducted, as a result of which important conclusions were obtained about the increasing influence of the Kazakh language, the increase in the number of SMEs, as well as legal features affecting the market.
Based on the results of the analyses conducted in the first and second chapters, a new business model was formed, which was described on canvas. To achieve this, 14 initiatives were invented, which find their origins in the analysis of the internal and external environment. In order to effectively focus resources, it was decided to rank them by priority, using the Implementation Effect-Velocity of implementation matrix. According to the results of the ranking, it was possible to identify 3 initiatives of the first priority or "Quick wins" and 5 initiatives of the second priority or "Heroic breakthroughs".
To prevent unpleasant surprises during implementation, a risk analysis was carried out, in which the risks for each initiative were highlighted. These risks were also ranked according to their effect and probability of occurrence. For the most dangerous, measures have been proposed to eliminate them, adhering to one or more strategies, for example, Mitigate, Avoid, Adopt, etc. An upper-level roadmap has been drawn up to implement the initiatives. It is accompanied by a calculation of the financial costs that may arise during their implementation.
Thus, in the course of this work, it was possible to achieve the set goal, namely, to develop recommendations for improving the business model, contributing to an increase in revenue, and the tasks were completed. It is worth noting that further steps play an important role in the implementation of initiatives. Initiatives and calculations for them are described at the top level and further coordination and discussions with representatives of the company are necessary to start their implementation. Depending on their intentions and the chosen methods of implementation, the potential effect and the costs necessary to achieve it will depend.
