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23 Jul, 2008 08:05

Russian internet advertising market hots up with Google's Begun buy

Global Internet search engine Google is buying one of Russia's leading Internet advertising service – Begun – from portal Rambler for $140 million dollars. The deal comes at a time when there are doubts about the resilience of the a

Russia's contextual ad market – which links advertising to the web page, depending on what the user is viewing – was valued at $230 million last year. Begun is number-two in the market, with a partner network of 140,000 sites.

Russian-language online advertising is expected to to grow by about 50% each year – reaching $1 billion by the end of the decade.  Aleksey Basov, General Director of Begun, says this means that Google can build on Begun’s strengths.

It’s very clear at this stage that Begun is going to retain its independence for a certain period – both as a brand and as an organization.  Any changes that will take place will be smooth and aimed at preserving Begun’s business strengths and enriching them with Google’s global expertise and developments in the field of contextual advertising.

The deal also offers the chance for Rambler to work with Google, using the Internet giant's search and ad technology. Maria Chernitskaya, General Director of iConText, says this means that the market leader – Yandex – will come under increasing competition.

When we're talking about money, market share, and rank, I don't think there can be any sort of “co-operation”. We have a local leader that occupies more than 50% of both search traffic and also contextual ads. This is, Yandex, and it's understood that the competitive battle has only gotten stronger, and now it's going to take place between two players – Google and Yandex.

With the Russian contextual ad market seeing continued growth, Google’s acquisition of Begun may be key to boosting its share of the country’s Internet users.