Now This Is What Google Lost In Russia

Some of the loyal Profy readers may remember the story of Google trying to acquire Begun, Russian contextual advertising network. The acquisition price amounted to quite nice $140 million and the technology blogosphere admitted at the time that this was a nice investment for Google with Begun reporting amazing growth rates: only during the first half of 2008 the company had profit 25% higher than that for the entire 2007.

But later on everything changed after the Russian anti-monopoly authorities banned the deal claiming that Google did not provide enough information for the transaction to be reviewed so that the authorities could make sure the deal would not hurt the competition in Russia. Today there’s an interesting piece of news that is not really related – after all, now that we know Google is not buying Begun this information can’t be considered as related – but is interesting from the point of view of what it is that Google lost in the country where it tried to buy into contextual advertising market.

The thing is that today Rambler Media (the company that owns Begun that Google did not manage to buy here) announced preliminary financial results of 2008 and they are good enough even despite the global financial crisis. The consolidated revenue of the company during 2008 amounted to $62 million. The money arrived from more than 40 thousand advertisers who had their ads appear on 260 thousand websites. Unfortunately there’s no information on the net profits for the company – this will probably arrive when the final financial results are announced.

In the fourth quarter of 2008 the advertising company witnessed significant decrease in revenues due to the overall financial crisis with banking, real estate and automotive companies being the major advertisers that have been damaged significantly. But the future for 2009 is promised to be pretty good as advertisers rearrange their budgets and many of them turn to the internet from traditional mediums (the trend we have already noticed here with many brick-and-mortar stores going for local websites from large-scale TV campaigns) and many companies discover contextual ads as a reliable way of driving sales.

Unfortunately for Google’s Adsense the internet giant still does not have anything that could be described as a significant market share here in contextual advertising with two local search engines – Yandex and Rambler – controlling the market with their respective advertising divisions: Yandex Direct and Rambler’s Begun. This must be even more disappointing for Google given the fact that Russia is one of the four countries in the world where Google is not the most popular search engine – especially taking into account the fact that Russia is the country with the fastest-growing Internet population in Europe. And while it is quite understandable that Google don’t seem to be able to build leadership on its own, it must be a surprise for the global internet giant that it is equally difficult to buy into the market as well.

Via (in Russian)