Google to pay US$140M for Russian contextual ad firm

The business has a network of 143,000 Russian-language websites

Google said Friday it will pay US$140 million for a Russian contextual advertising company as it seeks to expand its services to advertisers and website publishers outside the US.

The 6-year-old company, Zao Begun but known as Begun, has a search and contextual advertising business, with about 40,000 advertisers and a network of 143,000 Russian-language websites.

It is majority-owned by Rambler Media, a Russian company that runs a search engine, instant messaging service, an online newspaper and a price-comparison site, among other internet properties. Rambler said Friday it also signed an additional agreement to use Google's AdSense technology on its main portal.

Rambler said it will buy the remainder of Begun from Bannatyne, and then sell all of Begun to Google. Rambler said it expects to clear US$50 million from the deal.

Revenue from search-related text advertising in Russia jumped from US$110 million in 2006 to US$225 million in 2007, Rambler said. The company thinks revenue will increase 50% year-over-year, fuelled by text and display advertising.

Begun made a profit of US$3.4 million in the first four months of this year, Rambler said, although those are preliminary, unaudited figures before taxes.

Last month Begun launched a contextual video advertising service, Begun.Videocontext, the first such service in Russia, according to Rambler. The service is wrapped into Rambler Vision, a video-sharing website. Advertisers can place ads that match users' search queries.

Videos are tagged with metadata, and Begun's system takes into account the viewer's location along with demographic information. Advertisements appear below the main content, and users have the option of closing that window completely.

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