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Russian search engine Yandex seems to be doing pretty well.

I believe Yandex is the best-known Russian internet company for the English-speaking technology community. The company resembles Google in its operations quite a lot - but a smaller one, playing mainly on the national level and only making its first steps to achieve international expansion, like opening an office in the Silicon Valley and hiring former Yahoo search expert.

For Yandex the main field of business is web search same as it is for Google and both companies rely on contextual advertising network to monetize search and other online properties as well as generate revenue off working with numerous publishers belonging to their ad networks. Yandex has been planning to go public for a while now but the company decided the time was not right this year (understandably) and reportedly delayed IPO.

Google and Yandex share a lot of similarities in their businesses which makes Yandex quite an interesting company to watch for the technology blogosphere and experts. Besides, rumors are that it was because of Yandex powerful lobby that Google was not allowed by the Russian antitrust authorities to buy contextual advertising company Begun as this acquisition could put Yandex ad business into direct competition with the almighty Google - and it is quite understandable that this is hardly what Yandex wants to have in Russia.

And these similarities is exactly why I think it is worth mentioning here that today at a SEO conference in Moscow head of the Yandex advertising division has shared some statistics on the company’s contextual advertising business performance recently to demonstrate how the world financial crisis impacts a local company.

Living in Russia I can definitely say that many industries have already started to experience negative effect of the world crisis and the damages are often very significant to all players in this or that market. And of course Yandex’ point of view on its own advertising business and the future of contextual ads in the Russian internet segment must be a good indication of the overall state of this particular industry.

First of all, even the inveterate optimist like me will have to admit the negative factors are here with Yandex reporting 10% decline in the average CPC price in the ad network. Besides, there are problems with money transfer from regional customers to Yandex because of the troubles in banks operations in the country.

But fortunately for the company and for the market, Yandex seems to be doing pretty well and having good prospects for the future. The reason is that even the 10% decline in CPC rates can easily be compensated by purchase of larger volumes of clicks by advertisers and this is actually exactly what the ad network is watching: the overall volume of clicks purchased actually continued to grow as rapidly as it did a year ago.

The Yandex executive quoted the usual measurability and efficiency of contextual advertising as a proof of the assumption that Yandex will do pretty well in a recession. He also expects that the contextual advertising market will be seizing customers and money from the traditional display advertising. For example, outside of Moscow and Saint Petersburg contextual advertising is told to be rather weak with websites adopting the advertising model traditional for newspapers. The good part for contextual ads business is that the financial crisis is supposed to teach advertisers in the province how to use contextual ads efficiently - hence generating extra revenue for Yandex as one of the leaders of the market in Russia.

Of course only time will tell if optimistic forecasts for contextual advertising growth in Russia actually turn into reality next year or if we will see something very different and much less positive instead. Similar statistics from Google could be even more interesting to see if advertisers actually pay less to buy similar exposure now but while such measures are absent I will stick to the idea that contextual advertising will help internet giants survive the recession.

Svetlana Gladkova

Posted on Thursday, December 04 @ 16:58:43 MST

Associated Topics

Russia

last added article 2008-12-04 17:28:47

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