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. Last Updated: 07/27/2016

Google Searches for Its Place in Russia

MTVladimir Dolgov aims to raise Google's share of Russian Internet traffic.
In the English-speaking world, the Google search engine is one of those rare brand names -- like Hoover and Xerox -- that has become part of the language. To find the answer to pretty much any question, you just go online and "google it." This powerful name recognition has helped make Google a driving force in the booming dot-com industry.

In Russia, however, Google lags far behind established local rivals such as Yandex and Rambler. Vladimir Dolgov, the head of Google's fledgling operation in Russia, intends to change that.

Dolgov's goal, he said in an interview last week, is to make Google "as popular in Russia as it is everywhere else."

"We are in the midst of building a company in Russia," he said. "This is just the beginning."

Dolgov, 47, is a veteran of the Russian Internet scene, serving most recently as CEO of the country's leading online retailers, Ozon.ru. He opened Google's Moscow office -- which includes one of only four research and development centers outside the United States -- in April this year.

The abundance of well-educated and tech-savvy consumers makes Russia a "priority market" for Google, said Dennis Woodside, the company's emerging markets director for Europe, the Middle East and Africa.

Dolgov has his work cut out for him. At present, Google accounts for just 7.6 percent of Russia's Internet traffic, compared to 60.3 percent for market leader Yandex and 21 percent for Rambler, according to the Live Internet online traffic counter.

Some industry analysts doubt that Google will be able to mount a serious challenge in the near term to Yandex, which posted $35.6 million in revenue last year. But in the longer term, Google's growing array of products could turn the tide.

"National competitors are likely to have strong brand loyalty among national citizens, but the global players will be able to leverage the resources of maps, satellite photographs and a host of tools that will be tough for a smaller business to match," Danny Meadows-Klue, CEO of London-based Digital Strategy Consulting, said by e-mail.

Dolgov said Google would eventually adapt all of its products, including Google Maps, for the local market. The Moscow office is also working to improve the site's Russian-language search capacity.

"It's always a matter of infrastructure that is available in the country," Dolgov said, explaining that Google relies on third-party providers of maps and other content to launch new search-based products. "I wouldn't be all that surprised if it turns out that there is no [comprehensive, digital] map of roads in [Russia]," he said.

Google also aims to become a heavier hitter on Russia's $60 million Internet ads market, which expanded by 71 percent from 2004 to 2005, according to the Association of Communications Agencies of Russia.

Google makes the bulk of its money from Internet advertising sales, with worldwide revenue surpassing $6 billion last year. The share of that revenue generated in Russia is unclear because the company does not release country-specific earnings figures.

Google's ads are linked to the content a user is browsing, and they are clearly marked as advertising.

Although Google has gradually improved its Russian-language search engine, the company is not aggressive enough to surpass its chief rivals any time soon, said Arsen Revazov, president of the IMHO VI Internet advertising agency.

Yandex, which along with BBC's news site helped gather more than 150,000 questions for President Vladimir Putin's Internet conference earlier this month, enjoys the greatest name recognition among Russian Web surfers.

Rambler, Russia's No. 2 search portal, also sees brand recognition as a key advantage. "Rambler will turn 10 this fall and according to R-TGI [research company] over 65 percent of Russia's Internet audience uses at least one of Rambler's services," said the company's general director Denis Kalinin.

Yandex was positive about Google's arrival in Russia, saying it could "lend greater legitimacy" to targeted Internet ads, benefiting all players by giving the market an additional boost.

"We, of course, compete in terms of search," Yandex's chief editor Yelena Kolmanovskaya said, "but we all work together because there is still a lot of room for growth."