Rambler posted a net loss of 68 million rubles ($2.16 million) in the first half of 2009, down from a loss of 11 million rubles in the same period the year before.
Sales fell 18 percent year on year to 1 billion rubles, and earnings before interest, taxes, depreciation and amortization were 85 million rubles, down 60 percent year on year.
“During the first half of 2009, the operating environment was particularly challenging because of low business confidence, decreasing GDP in Russia and a prevailing lack of visibility, which limited advertising spend across all sectors,” chief executive Olga Turischeva said in a statement. She added that she expected 2009 revenue to be down 15 percent in ruble terms.
The group attributed the poor performance to increased competition, the emergence of social networks and growing Internet penetration.
“Rambler has been losing its market share lately as part of its audience shifted to competitors’ search engines Google and Mail.ru, while Yandex search has maintained its leading positions in 2009,” said Konstantin Roshchupkin, an Internet marketing analyst at Ashmanov and Partners.
“The financial losses have come from the decline in context advertising — meaning that Begun and Rambler have seen their context advertising subsidiary share decline,” he said.
Rambler intended to sell a 50.1 percent stake in its Begun advertising unit to Google, but the Federal Anti-Monopoly Service blocked the deal. The company no longer plans to sell the asset, Turischeva said, adding that it was one of its most valuable units and accounted for about 30 percent of the company’s contextual advertising revenue in the first half.
Rambler’s loss comes as the online advertising market is making giant strides.
The contextual advertising market will maintain its 25 percent to 30 percent growth in 2009, and by year-end its total turnover might reach $420 million, compared with $350 million in 2008, Roshchupkin said.
Another factor contributing to Rambler’s loss-making performance may be a lack of focus, analysts said.
“Rambler Group’s strategy was to grow from an Internet portal into a media holding, which included Internet services, a TV channel and content providers,” said Maxim Kazak, head of CNews Analytics.
“To reach its desired business diversity, Rambler piled up its assets, reporting losses year after year. But then it decided to go back to its core business, and by this time its search engine competitors were already ahead,” he said.
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