Google gobbles up Russian ad service provider

Stephen Withers
Monday, 21 July 2008 08:29

Business IT - Networking

In yet another move to consolidate its seemingly unassailable online advertising empire, Google has agreed to acquire Russian contextual advertising service ZAO Begun for $US140 million. Is there no end to the consolidation of web advertising companies?

The deal comes at a time when Microsoft, Yahoo! and AOL are reportedly discussing various merger and acquisition deals that seem largely aimed at increasing Microsoft's search - and therefore advertising - share.

Earlier this year, Google completed its acquisition of DoubleClick. Previous takeovers in the advertising space include Adscape, dMarc Broadcasting, and Primedia's Sprinks division.

"The entire industry will benefit from this transaction as there is a high potential for synergies," said Alexey Basov, general director of Begun. "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."

Basov appears to be wearing rose-tinted glasses, but that's understandable. While the companies claim the deal will benefit advertisers and publishers by providing an enlarged network of sites and a wider range of ads, it also reduces the number of ad providers in the market.

Furthermore, it increases Google's pool of information about Internet users.

"Begun is an excellent business which can fully develop its potential under Google's ownership," said Mark Opzoomer, chief executive officer of Begun owner Rambler Media. "Google has the technological and financial capacity to improve Begun's established advertising service in Russia."

While Google goes about increasing its market share through both acquisition and organic growth, the market is still waiting for Microsoft and Yahoo! - whether together or separately - to come up with a credible response.