The Russian search engine has begun overseas expansion

Yandex is developing its first foreign market. The company launched the search engine yandex.com.tr in Turkey and opened an office in Istanbul, headed by former RuTube and Rambler manager Alisher Khasanov. Yandex will have to win back a share from its main and only competitor in Russia - Google, which controls almost 99% of Internet searches in Turkey.

Yandex launched search for the first time in a country (yandex.com.tr) where “they don’t speak Russian at all,” company CEO Arkady Volozh said yesterday. The Internet is well developed here (about 35 million users), there is a lot of content in the local language, and the number of users is growing by about 50%.

The Yandex office in Istanbul will employ several dozen people - analysts, managers, translators. Alisher Khasanov, who in 2008 served as the manager of communication projects of the RuTube video hosting, and in 2009-2010 was the head of the analysis department, became the product director of the Turkish office and product design at Rambler.

Yandex's revenue for the six months of 2011 amounted to 8.43 billion rubles, net profit - 1.12 billion rubles. The founders of Yandex - Arkady Volozh and Ilya Segalovich - own 19.77% and 4.15% of voting shares, the Baring Vostok Capital Partners fund - 25.97%. At the end of May, Yandex held an IPO on NASDAQ, the entire company was valued at $8 billion and raised $1.3 billion. Capitalization yesterday at 21:00 Moscow time was $9.27 billion.

General Director of Yandex Arkady Volozh
Photo: Alexey Kudenko, Kommersant

Yandex's only competitor in Turkey is Google, whose share in the local market is estimated by marketing company MVG Global at 98.84% (another 0.94% is accounted for by the Bing search engine, owned by Microsoft). According to comScore, in July Google searches in Turkey accounted for 3.761 billion search queries, Microsoft - 21 million. The top five also includes Ask.com - 9 million, Yahoo - 6 million, MyNet.com - 2 million.

Yandex notes that this is the company’s first experience in foreign markets, excluding the CIS (Ukraine, Belarus, Kazakhstan). So far, Yandex has no plans to become an advertising platform in this country. “In order to sell contextual advertising, you need to have a market share of at least 10%, and we are still far from reaching this figure,” notes Mr. Volozh.

A source close to Yandex says that the next country where Yandex will come will be Poland. “There are already people there who are researching the local market, as well as the markets of Bulgaria and Romania. The decision to launch in Poland will largely depend on the success of the Turkish project,” says Kommersant’s interlocutor. Arkady Volozh does not comment on this.

According to Igor Ashmanov, general director of Ashmanov and Partners, Yandex could invest $0.8-1 million in the development and launch of the Turkish version of the search engine. To take a significant share in the Turkish market, Yandex will most likely have to spend about another $2-3 million over the next two years. The prospects for its monetization depend on how quickly the search engine can increase its share, adds Troika Dialog analyst Anna Lepetukhina. A good result for Yandex would be a 20-25% share in the Turkish search market, she believes. With such a share, the search engine can count on 10-15% of the Turkish online advertising market, the volume of which, according to ZenithOptimedia, was about $160 million last year. However, Yandex does not need entry into the Turkish market in order to get quick financial return, Igor Ashmanov is sure. “Entering foreign markets is a strategic step. Yandex cannot remain only a Russian search engine, otherwise Google will crush it sooner or later,” he believes.

Despite the fact that Google is the undisputed leader in search in Turkey, its existence in this country is not cloudless. In 2007, local authorities blocked access to the Google-owned YouTube video hosting service due to the fact that users of the service repeatedly posted videos, as Turkey considered, that insulted the memory of national leader Kemal Ataturk (the ban was lifted only in 2010).

Alexander Malakhov, Pavel Belavin

Yandex was found in Turkey