BREAKING NOW: Google is buying Russian contextual advertising company ZAO Begun for $140 million from UK-registered Rambler Media (many Russian firms now base themselves in the UK). Rambler owns 50.1 percent of Begun, so to secure the deal it is buying the remaining 49.9 percent stake from owner Bannatyne Limited and then selling the entire firm to Google. Rambler says it expects to net about $50 million from the deal which will finance its investments and potential acquisitions.
Simultaneously Google announced (fairly obviously) that Rambler will now use Google AdSense for Search and AdSense for Content services.
The contextual advertising market in Russia is worth $225 million billion but Google has, until recently, not made much indent into the market which has grown over two and a half times since 2006. Yandex, the Russian search engine and one of the biggest Russian Web portals online since 1997, could account for 64% of the market , accounting for $145 million. [UPDATE: MindShare Interaction recently predicted the Russian online ad market would hit $685 million this year].
From the press release:
Rambler Media Ltd. (“Rambler” or “the Company”), operating one of Russia’s most popular internet brands, announces that it has agreed to sell its contextual advertising company ZAO Begun (“Begun”) and related subsidiaries to Google. Rambler currently holds 50.1% of Begun. The transaction will consist of Rambler buying the remaining 49.9% stake in Begun from Bannatyne Limited, affiliated with the Finam group of companies, immediately after which Rambler will sell 100% of Begun to Google subject to certain approvals and conditions precedent for a total cash consideration of US$140 million, of which US$69.9 million is attributable to Bannatyne, with customary closing adjustments.
Rambler’s net gain from the disposal is expected to be approximately US$50 million after all direct costs associated with the transaction. Proceeds received in respect of the sale of its holdings in Begun will be retained by the Company for further investments and potential acquisitions in line with Rambler’s stated strategy. The Company’s net cash position after the completion of this sale is expected to reach US$100 million. The Company’s directors consider, having consulted with its nominated adviser, ING, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.
Google is the world’s most popular search engine. Begun is one of Russia’s leading search and contextual text based advertising services with local expertise, efficient sales systems and the number of its advertisers exceeds 40,000. Begun’s partner network includes over 143,000 Russian language sites.
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Hmmm.
Good for Google. Bad for Microsoft!
. Go Google, you own the (internet ad) world!
Yes, definitely own - and in Russia they will really become a monopoly in contextual advertising after this move. Google still is number 2nd in the Russian search market but this will probably be their next move - what’s the point in monetizing content for Rambler when you can afford buying it and monetizing your own search traffic instead.
And they prepare for partnership with Yahoo to reach 90% , like Microsoft says. Yahoogle will be everyware.
Well this is a very interesting move and actually seems like they have found a really good deal. Im actually thinking i might write about it on http://crenk.com
Great move, Russia is a growth market and Google is a challenger on the search field there, not the leader.
Yes, that’s why Russian users are already frightened that Google’s next step will be buying into the search market by an acquisition of Rambler itself.
[spam]
IMHO Goohoo sounds better than Yahoogle
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http://superblog.crazyengineers.com
“The contextual advertising market in Russia is worth $225 billion”
Wow! $225 billion, bigger than the video game and movie industry combined!
Actually, according to Begun own presss release, russian paid search market is about $225 million, not billion. Typo probably.
@Yabadabadoo: it’s worth $225 million, of course - there is mistake in the post
Wups, forgot my tags.
… sarcasm tags that is.
Haha.
Russia is a GOOOOOOOOOOOOOOOOLD MINE. Or more accurately in recent financial market trends, an OOOOOOOOOOOOOOOOOOOOOOIL Field.
Looks like Duncan Ballantyne from Dragons Den will be quids in on this deal
)) yes the market size is slightly overstated))
I actually know the team that created begun. they are very very very smart people, congrats and good luck in your current (stealth) projects.
or should I say Duncan Bannatyne!
Seems like they got themselves a bargain here. A profitable company operating in a growing market. That’s almost a usp these days. How much did they pay/blow on YouTube again?
Very interesting. If you can’t compete in search, just buy the biggest ad company. Makes sense.
No it is 225 BBillion, since 64% of that is 145 Millions
Congrats to Begun/Rambler!
Joining the Google family now will make them even a stronger competitor in Russia. As for Google, I guess it must feel good to have access to even a bigger market share of the world online advertising.
Google will probably be “the most powerful company” for a very long time .. I thought someone was mentioning about the most powerful company.. so there you go.. you have your answer!
Google is like a big kahuna company with the speed of a startup that is unprecedented!
Best regards,
Darren Lee
AdExcel.com (in alpha)
i do not have the impression that the russian internet market is so big. really.
I’m not surprised. Most americans have no clue what’s happening outside their state and don’t even bother. The most common question I get in US is about whether people in Russia have microwave ovens or not. Stupid.
No, that is not the most stupid. The most stupid that I was asked once was “Where exactly is it now?”
Its predicted that by the end of this year the Russian internet market will be 2nd in size (in europe) to germany.
This is the first reall strategic move by Google into the Russian space - which is still largely untapped
Sigh..
again, currently russian market is $225 MILLION, not billion. Head of Google Russian, Vladimir Dolgov, said that in 2010 it will be $1 billion.
Now if we talk about growth potential…
225 billions? probably millions mike?
I though with the departure of Duncun, TC got rid of all the clueless foreign bloggers. Come on Mike, 225 billion? Do you have any idea what the population of the Russia is?
Do the math, please. These posts are a disgrace to TC.
Overreaction? Its a typo.
Are you for real? It’s a typo. Just like the grammatical error in your comment where you talk about “the Russia”. Or the spelling error, “though” instead of “thought” in the 1st sentence.
Get off your high horse. Your ignorant comment is a disgrace to TC.
What’s wrong about this number ?
Wow, Google IS taking over the internet world. http://blabtech.blogspot.com
Hopefully with the use of contextual, targeted advertising users will be less prone to use ad-blockers. According to this article, 27% percent of the U.S. household with Internet connections will have some sort of ad-blocker. The rest of the market is big enough, but the trend is for it to keep increasing.
Yet another strategic acquisition in the works by Google. Does anybody know when google will be releasing (or if they are currently playing with) any form of semantic contextual search engine vamp up their adsense?….www.readtheanswer.com/index.php?RTA=web2
My humble apologies to all - I made a typographical error (I was running to catch a flight when I wrote the post). The contextual advertising market in Russia was worth $225 million NOT billion last year. But in fact, it is predicted to hit $685 million by the end of this year according to the advertising agency MindShare Interaction (post updated to reflect this).
Yet another reason why Google will own the “cloud.” Search touches everthing!
See http://www.lawtechtv.com/home/.....e-own.html
I strongly believe that this deal is more about buying search market share from Rambler than about advertisement firm Begun.
http://www.ramblermedia.com/ob....._Final.pdf
quote: “Through this agreement with Google, … we will offer
Rambler users the best search available … we will focus our search resources towards accelerating our development of key, vertical search businesses, (including product (price.ru), property and auto) …”
In other words it means that Rambler web search will be closed and replaced by Google
Ok, I got it. Google bought Begun. But my question is this: Will it become an English-language website??
The main reason Google bought Begun was to close the gap with Yandex, the market leader in Russia. Yandex is about twice more popular than Google in searches (50% vs. 25%). But more importantly, Yandex is more than 10 times bigger than Google in revenues from contextual ads ($145 million vs. $10 million). Together with Begun, Google will have about 40% of the contextual ads market.
All numbers are estimates (of iConText, PwC, MindShare etc.), as the Russian internet market is much less transparent than the western markets. But percentages are close to real-life stats we get from our Internet Strategy Audits in Russia.
With the price of Oil so high Russia is one of the few economies that is growing - educational standards are high and its got to be a good move though a long term one.
Russian websites appeal to many of the former Soviet states such as the Ukraine etc.