Internet giant Google has agreed to purchase Russia's ZAO Begun advertising agency for $140 million from  Rambler Media Ltd., which operates the country's third largest search engine, the Mountain View, California-based Google and British-registered Rambler announced Friday. The deal, which is expected to close in September, was made in part to give Google a stronger position in the emerging online advertising market in Russia. Rambler also signed an agreement to use Google's AdSense contextual advertising program on its www.rambler.ru search engine site. AdSense Agreement Also Reached The agreement will see Google providing enhanced search technology to the Rambler search engine, which will display Google ads amidst search results. ZAO Begun, more commonly known as Begun, provides a service in Russia similar to Google's targeted text advertisement program AdSense. Begun is owned by Rambler, which controls 50.1 percent of the agency, and Bannatyne Limited which controls the remaining 49.9 percent stake. Rambler said that it will purchase Bannatyne's stake in Begun and sell the firm to Google. Rambler is Russia's only listed Internet company and is controlled by the country's Prof-Media -- a holding firm led by billionaire investor Vladimir Potanin -- and expects to take in a net gain of some $50 million once it completes the sale of Begun. Bannatyne Limited, which is a part of the Finam group of companies, was expected to account for $69.9 million of the sale price, and Rambler said in a Friday statement (.PDF file) that the anticipated $50 million net gain would be used for future acquisitions and to strengthen its investment program. Rambler Media ZAO stock rose Friday after the deals with Google were announced, increasing by over 4 percent on the London Stock Exchange in its biggest gain since June 20. Looking To Make Gains On Russia's Leader Yandex Yandex is Russia's top search engine, followed by Google and Rambler, according to figures from Liveinternet. In June Yahoo senior vice president of search Vish Makhijani announced that he would be depart the  company's San Francisco area operations to take a position at Yandex, according to unnamed Yahoo insiders. Google, which already has roughly 100 employees in Russia located in the cities of Moscow and St. Petersburg, said it expected the Begun and Rambler deals to help expand its presence in the country. "This agreement illustrates our commitment to investing in Russia, where online advertising is currently experiencing rapid growth," said Google managing director for emerging markets Mohammad Gawdat in a statement released Friday. "Google is very committed to giving Russian users, advertisers and partners the best possible service and experience," Gawdat added. "This agreement will result in better search results and more relevant advertising for our Russian users and publishers," said Gawdat in the Friday statement from Google. Google's Increasingly Global Reach Seen In Thursday Earnings Report On Thursday Google reported second-quarter revenues of $2.8 billion outside the United States, accounting for 52 percent of its total revenues and an increase over both the previous quarter's 51 percent and the previous year's 48 percent during the same quarter. The online advertising business has shown rapid growth in Russia, where it is expected to reach a total of $685 million in 2008, according to a study from Mindshare Interaction. Rambler said in the Friday announcement that it estimates the online advertising industry in Russia will climb to in excess of $1 billion by 2010, "with an approximately equal split between text-based and display advertising," the company said. Rambler Media chief executive Mark Opzoomer said Google's financial strength will help Begun. "Begun is an excellent business which can fully develop its potential under Google's ownership," Opzoomer said. "Google has the technological and financial capacity to improve Begun's established advertising service in Russia," he added. Google Buys Begun Ad Agency From Russia's Third Largest Search Engine Firm Rambler Rambler said that it hopes to become Russia's "favorite homepage," by partnering with Google to provide "new opportunities for Russian users, publishers and advertisers." Begun's general director Alexey Basov said his firm's experience in Russia would mesh well with Google's technology. "The entire industry will benefit from this  transaction as there is a high potential for synergies," Basov said. "It brings together Google's visionary technology and Begun's six years of successful experience in building advertising and dealer networks and direct sales in Russia," he added. The sale of Begun to Google must receive regulatory approval before completion, and is subject to certain closing conditions the two company's did not disclose in Friday's announcements. Began has more than 40,000 advertisers in a partner network of Web sites in Russia totaling more than 143,000 Russian language properties, the company said Friday. Related Links:
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9:48 pm on July 18, 2008 (utc 0)