Alliance Taps Into Russian Online Ad Sales

By Lyubov Pronina  |   2008-7-19  |     NEWSPAPER EDITION

GOOGLE Inc, the world's most-used Internet search engine, has agreed to buy a Russian advertising company controlled by Rambler Media Ltd for US$140 million to tap growth in the country's online ad sales.

Google will buy 100 percent of ZAO Begun, Moscow-based Rambler said yesterday. Rambler, which runs Russia's third-largest Internet search engine, will pay US$69.9 million to Bannatyne Ltd for its 49.9-percent stake in Begun.

Rambler also signed an agreement to use Google's contextual and search advertising technology on its Website in exchange for displaying Google ads next to search results. The two companies look to benefit from growing ad sales on Russian-language sites, which reached US$225 million last year.

"Russia's market of paid advertising is growing fast and Google hasn't been able to achieve great results," Konstantin Belov, a telecommunications analyst with UralSib Financial Corp, told Bloomberg News yesterday.

Rambler will gain about US$50 million and will spend the proceeds on further development and acquisitions.