Google Monopolizes Contextual Ads Market Further – Buys Russian Begun

Today we have another proof that Google intends to control internet advertising in any way that it can. Today we are witnessing another acquisition by the global search giant - this time it's the largest contextual advertising company in Russia, Begun.

Begun is currently owned by Rambler, one of the major providers of various internet services to Russian users. Rambler is also one of the best known search engines in Russia as well with its third position in the market (with Yandex leading the game and Google on the 2^nd position).

Graph of search engines' market shares courtesy of Liveinternet

It is rather well known that Google is having a hard time breaking into the Russian search market and it looks like they have realized that even trying to compete in online ads market in Russia is not realistic at all. I think the major problem is that while many webmasters and bloggers are willing to adopt Google's Adsense to monetize their traffic, all the procedures related to actually been paid are too complicated for a normal user to want to deal with them (in fact, after you get the check from Google in your mail box, you will spend at least a month - and usually much longer - before you can turn it into real cash). So many users simply have no choice but choose the local analogue - Begun. Logically, Google decided to buy into the market instead of trying to promote its own contextual advertising service.

Begun is the largest player in the contextual ads market in Russia: it serves 40 thousand advertisers and 143 thousand publishers and has all the procedures required to ensure efficient cooperation between them. Now that the company is acquired by Google, the service will obviously receive more advertisers that are willing to target fast-growing Russian market. The amount of the deal is $140 million and the acquisition will be completed by September. The agreement also stipulates for the ads by Google-owned Begun to continue to monetize Rambler websites, including the search engine (together with Google's Adsense for search and for content so Google got itself quite a large additional publisher as well).

This deal clearly makes Google a monopoly in the Russian contextual advertising market as there are virtually no other significant players in the market. I am very uncomfortable about monopolies myself but this one has good chances to succeed here since Google definitely knows how to make contextual ads a standard and commonly-used solution for online marketing and websites monetization - and this is what the Russian market definitely needs.

Moreover, after the acquisition was announced, the Russian bloggers started to discuss heavily if Google has any further plans for Russian internet companies, like buying Rambler itself to significantly increase its market share in the Russian search market. I think this step could be very probable if the advertising deal proves to be a success for Google - in this case Google will be monetizing its own search traffic instead of someone else's. But we'll have to wait and see since it is the first major buy into the Russian internet market by Google and negative opinions are already heard here.

UPDATE: I may have been wrong naming Begun the largest contextual ads company in Russia. Unfortunately there is no authentic stats here, the only information that rings true is that two leaders (Begun and Yandex Direct) together hold about 90% of the market with each of them claiming the leading position (Begun clearly states its leadership position in today's press release and in its research of the state of the Russian internet advertising market while Yandex Direct claims its own top position in an analytical document of its own - all the documents in Russian only). Unfortunately I have not found any independent studies but clearly Google has good chances of monopolizing the market by adding its existing share to Begun's one and grow them together - and we all know that Google is very good in growing advertising-related businesses.