Battle of the Russian Search Engines: Yandex vs. Google

"The original pac-man"

In Russia, Google is a ghost, not Pac-man

If you’re new to Russian e-commerce and are looking at Pay-Per-Click (PPC) advertising options, you’ll inevitably run up against Yandex, the market leader in Russian-language search. This post is a primer on Yandex, and its similarities and differences to Google.

Yandex has been around since 1997, slightly before Google was founded, and achieved market dominance in Russian-language web search well before Google opened its Russian office in 2005. In the last 6 years, Google has played fast catch-up in the Russian market but still lags badly. Their market share in search is currently around 22% compared to Yandex’s 64%. Moreover, Yandex’s market share has been growing over this time, although both Google and Yandex are gaining by picking up market share from weaker players in the consolidating Russian search space. Yandex’s 2011 agreement with 3rd-place Rambler to power its search results gave Yandex a further boost.

Yandex introduced maps, news search and webmail well before Google, and continues to innovate. Most car drivers in Moscow depend on Yandex’s real-time traffic maps to deal with Moscow’s horrendous traffic. In the early days of Google’s arrival on the Russian scene, the quality of their search results also lagged behind Yandex’s. However, with a commitment to the Russian market this gap no longer exists, and Google’s results from “global” searches (vs. specifically Russian ones) are considered more dependable by the majority of Russian users. In the long run, it’s hard to see Yandex maintaining a technical edge in terms of search quality, so the competition will focus on introducing new and valuable services to users.

One area where Google has a comparative advantage against Yandex is in social media (although neither company has nailed this sector yet). Google’s recent launch of Google+ has the potential to displace users from other popular sites like vKontakte and Facebook but it’s still early days.

In terms of revenue model, Yandex earns about 88% of its revenues from online advertising whereas Google is increasingly diverse. Both companies offer similar PPC advertising programmes although Google’s typical user is considered somewhat more attractive than Yandex’s from a demographic perspective. In the realm of analytics for their PPC advertising customers, both companies offer similar services. Analytics is unlikely to be a sustainable point of differentiation, as the features are easy to replicate. At the moment, Yandex offers demographic statistics of site visitors whereas Google does not. However, the accuracy of such statistics is debatable. Yandex also offers more visual displays of visitor statistics, such as a graphical display of typical user paths through the site (towards the conversion goal), and a heat map of clicks.

The PPC advertising systems of both companies work on a similar, auction-based model. Costs per click are also similar, although there is an ebb and flow as most advertisers active in Russia have accounts on both platforms and alter their bids depending on competition.

For most advertisers, reaching only 22% of Russian users is inadequate, so the decision to advertise on Yandex is quite easy. Yandex is a bit trickier to get started with, as they must comply with Russian regulations. Advertisers must disclose certain legal information (e.g. entity name, registration number) directly on their websites. Another difficulty in working with Yandex is in payments, as they are not set up to automatically charge credit cards like Google. If you don’t have a local legal entity, your payment options are more restricted.

On the plus side, Yandex’s customer service is superior in the sense that they assign an English-speaking account manager to work with foreign companies, helping them design their PPC campaigns and performing ongoing campaign performance reviews. However, these people are only experts in Yandex’s online advertising system, and not in e-marketing. If you need more comprehensive marketing assistance, you should turn to an independent Russian e-commerce marketing consultant. Yandex offers a partner program for qualified online advertising firms, so they can manage your online advertising program directly.

Adapting English-language PPC campaigns to Russian is not a straightforward task. I’ll address this topic in a subsequent post.

Finally, an important wildcard to keep in mind is the political situation. Google’s foibles with respect to China’s privacy and censorship laws are well documented. The Russian environment has the potential to become a similar sticking point, as highlighted in Yandex’s IPO prospectus, and Google’s relative toehold in Russia compared to its dominance elsewhere in the world could make its Russian presence a sacrifical lamb in the longer term.

About Leighton Peter Prabhu

I am a partner in Interstice Consulting LLP and head of the Russian office. My practice focuses on e-commerce business and marketing consulting, especially for foreign e-commerce brands entering the Russian market. I also serve as a consultant to some of the largest international portfolio investors in Russian equities (both public and private). You can find out more about my background and business interests on LinkedIn. You can also connect with me on Twitter and on Google+.


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