The purchase seemed to have been wrapped up three months ago, when Google and Rambler Media (Begun’s old owner) agreed to the price of $140 million.  Russia’s online population is growing fast, so the advertising company represented a good way for Google to get its foot in the door and start making money.

 

But either Google forgot to fill out some forms, the paperwork was lost, or the Russian government disapproves of the deal.  Svetlana Gladkova writes, "[T]he authorities claim that Google has not submitted the complete information on all the personnel of the company working in Russia.  Absence of this information was supposed to prevent the antitrust agency from evaluating the consequences of such a deal correctly."

She then continues, "I believe it is quite obvious that the authorities have decided that increasing Google’s presence in the Russian contextual advertising market could potentially damage the market and the competition."

So we’ll just have to see whether the issue is resolved quickly or not.  Google’s no doubt got emails, faxes, and traditional letters on their way to Russia’s Federal Antimonopoly Service at this moment.

Google profits from international business more than domestic business. It’s a simple fact of the company’s earnings announcements; more revenue comes in to the Googleplex from outside the United States.

The situation prompted Google to continue its expansion by purchasing Begun for $140 million. They may have picked up a steal of a deal.

At Profy.com, Svetlana Gladkova cited Begun’s announcement of a bountiful start to 2008. First half profits exceeded all of 2007′s by 25 percent, she said.

“The profit achieved is explained not only by the mere number of new advertisers it attracted – advertisers also spend more on contextual ads: an average monthly spending limit is 9% higher now,” said Gladkova.

Begun reaches some 173,000 publishers, and has relationships with numerous advertising agencies in the country. That influx of Google cash should help this growth continue, while competitors simply watch as Google builds dominance abroad.

Google will make a stronger play for the Russian Internet audience for contextual online advertising. The company announced the purchase of Begun this morning.

Rapid growth of the search ad business in Russia served as the motivation. With shares of Google’s stock underperforming the major indexes in 2008, the need for international growth became paramount for Google’s leadership.

Begun’s advertisers should see their marketing appear on Google’s network of sites, while Google expands the reach of its advertising into Begun’s network. Begun has been in operation for six years, giving it plenty of time to build up local expertise with sales and its networks.

Despite its American roots and origins, Google’s bread and butter revenue stream comes more from outside the US than within. During their Q2 2008 earnings call, Google said 52 percent of revenue for that quarter, $2.8 billion, came from international business.

Although Google reported total revenue of $5.37 billion for Q2 2008, earnings missed Wall Street estimates, with the usual punishment coming as investors fled in after hours trading. Shares dropped almost 8 percent after market close, making the need for international growth all the more important.