Google is making progress in improving search quality in Russia but still lags Yandex in some key areas. The document outlines plans to achieve 40% search share by 2014 through initiatives to fix search and geo issues, become number one in mobile, and make purchasing online as easy as searching. It also details revenue goals to reach $500 million by focusing on customer acquisition and retention.

1. 1
RU localization update for L-Staff
Aug xx 2011

2. We are monetising well
What is going well – internet growth & monetization
2
We are leading in mobile
Internet Penetration: Russia following US trajectory
0%
10%
20%
30%
40%
50%
60%
70%
80%
US Penetration 1991-2007
Russia Penetration 2001-2010
InternetPenetration
2011
Users Online
Russia = 52M
France = 45M
UK = 51M
Germany = 65M
1991
2001
2001
2011
Google Russia achieved record high results in
both number of advertisers and RPM
Key Metrics
Google
Russia
Yandex
Mobile Search users 5.1m 8.5m (tbc)
Mobile
Maps users
3.3m 2.5m
Mobile Apps 18 TBC
Mobile Access Points TBC TBC
# of Killer Products 3 2
2010
In M
(Pen.)
% CAGR
‘06-’10
Social
network
43 (83%) 55%
Search
Engine
41 (79%) 21%
Online
Videos
40 (77%) 64%
Online News 32 (62%) 20%
Download
music
21 (40%) 35%
Online video
games
16 (31%) 58%
Mobile
Internet
15 (29%) 50%
Shopping
online
15 (29%) 43%
Bank online 6 (12%) 45%
Number of internet user by online activity & Time spent:
Legend: Leading
Minor Gap/
Improving
Major Gap/
Lagging
Russian internet population is growing fast and still
expected to grow
Search shows great potential in
access points with internet pen.
still low
Very fast growth in Mobile
Internet and users are among
the most active
Watching videos and
downloading music show great
prospect with already strong
adoption
Ecommerce starting to be
significant but still untapped
potential
Social Network deem to show
great prospects but users
choosing mostly a local player
$-
$1
$2
$3
$4
$5
$6
$0k
$10k
$20k
$30k
$40k
$50k
$60k
Advertisers
RPM
NumberofMonthlyusers
inkusers
RPM
in$
Google Russia: number of users & RPM – Q1’08 to Q2’11

3. Access points
What worries us – most roads lead to Yandex
3
Launch times
Search / Geo qualitySearch evolution
6% 12%
18%
32% 29% 26%
60%
53% 53% 50% 58% 64%
29% 27%
10%
6%
2%
2005 2006 2007 2008 2009 2010
Search share – Google vs Yandex
After strong evolution, we start losing since 2008 particularly
in: Search/Geo localization, Launch times and Access Points
1996
1998
2000
2002
2004
2006
2008
2010
2012
Yandex & Google Russia Launch Times
Russian users find new Google products at Yandex 18
months earlier than they appear on Google.ru
Number of downloads via access points (in M downloads) 2010
Google Yandex
13.7 m 31.9 m
Yandex major partners:
Yandex has put itself at the user fingertips with DHP, default
search and Toolbar deals
Local Search
9 /10 times
Yandex offers better
search results for locally
intended queries
Users find Yandex products better tailored to local specific,
be it traffic in large cities or regional search
Launch Year
Table in Annex
Maps
38 vs 3 cities w Traffic
50 vs 0 cities w Streetview
75 vs 42 cities w Base Maps
Yandex Launch
Google.ru Launch
Top 5 largest gap
Product
Yandex
Google
Rambler
Mail.ru
To be confirmed

4. Our plan: 40% search share and achieve
$500m by 2014
4
User plan: Grow from 26% to 40% share
1
2
3
4
Fix the plumbing
Search: Improve web search precision, especially
for queries with strong regional intent
Geo: Significantly improve Base maps, cover at
least 20 cities with Streetview
No 1 in Mobile
Lead in localized mobile innovation, Build the
ecosystem with operators and retailers &
Consider one umbrella app
Purchasing as easy as surfing
Help Russian users search for and purchase
products online
Current
Search
Share:
26%
Fix the
plumbing + 4%
Access
Points:
+ 1 - 4%
1
2
3
4
Win in
Mobile : + 3%
Purchasing as
Easy as
Search : + 3%
Search
Share in
2014:
40%
Estimated Impact of user strategy in 2014:
Revenue plan: Grow to $.5 B by 2014 Government plan: Become a trusted advisor
5 6
Scale revenue generation across all segments
to next level by focusing on quality of
acquisitions and step-changing retention
Support Skolkovo’s innovation and start-up
environment through cloud computing
1
2
3
4
Impact by
2014
+4% Search
Share
+3% Search
Share
+3% Search
Share
Win access points
Turn around the access points situation by
capturing distribution share and driving Chrome
adoption. Consider one single access point to all
Google products
+1-4% Search
Share
+3-6% plus
Firefox
(not covered
today)
(not covered
today)
(not covered today)

5. Current status
Geo:
• Need to improve Geo-IP tracking
Maps:
• Establish or acquire mapping entity in Russia with
cartography license.
• Kick-start Streetview by sourcing new suppliers
and/or deploying our own resources to cover 20
cities
• Improve Local Geo Search precision
• Prioritize Russia in launch of new local/geo
products (Base Maps, Traffic, …)
User strategy – Fix the Plumbing
5
• Significantly improve precision of implicitly
regional queries
• Make major improvements to our Geo
offering in coverage, quality and content
Our plan
What we need
1
Search
25MYearlyusers
Maps
12MYearlyusers
Number of
monthly users
Yandex Google
6.0m
2.3m
Geo Coverage Google vs Yandex
Yande
x
Google
Google
by Q4’11
Base
Maps
75 42 45
Street-
view
50 0 3
Traffic 38 3 6
Product Priority Google
Russia
Yandex
Web Search precision High Medium High
Universals precision Medium Medium High
Regional search precision High Low High
Samara
Core Search Product Gap
Precision of Regional Implicit
Queries
(Source: Analyzethis.ru)
Distribution results of actual
users In Samara
PM reviewing Plan
xxx
Legend: Blue – In Plan
Lack of regional results for queries (outside of
Moscow) is a major disadvantage for Google

6. Current status
• Prioritize RU on mobile road map, incl.
Prime
• Working on a RPM guarantee of $1 (budget of
$3.3M (maximum) to offer deal terms on par with
Yandex
• Include significant marketing investment of
$10M on mobile to 2012 business plan
User strategy – No 1 in Mobile
6
• Continue to own mobile innovation
• Investigate Google Mobile 1 app to combine our
current 18 distinct mobile apps
• Build sustainable eco-system through:
• strong Co-marketing deals and support to retail
partners
• fostering the App developer community
• leveraging good distribution deals with key
operators
Our plan
What we need
2
% of smart phones to total
handsets
2009 2010 2011f 2012
6%
12%
18% 23%
Users are switching quickly to smartphones
We had great success in establishing our mobile
leadership but we need to make further effort to build the
ecosystem
Killer App launches &
Marketing campaigns
Current Mobile distribution terms:
Google Yandex
Business
model
Tiered revenue
share
Flat revenue
share or bounty
Payments 0-16% tiered
revenue share
50% rev share
or $1 RPM
guarantee
$1 bounty with
OEMs
Contract
type
24months -
non duplication
of services
Non-exclusive,
incl exit clause
Products
offered
Opera mini,
GMA, Android
search
Opera mini,
T2/3 app,
Android search,
Maps
Chart showing our
advantage:
Table comparison
Google vs Yandex
2010 2011e
Total
Smartphones
11.2m 14.5m
IPhones 1.5m 3.3m
Android 0.7m 4.0m
# of smartphones in Russia (in M)
Legend: Blue – In Plan

7. Current status
• Prioritize launch of Product Search
• Prioritize launch of Check-out and Wallet
• Prioritize launch of Music & Books and
recruit SPD resource to add local content
User strategy – Purchasing as easy as surfing
7
• Catch up with Yandex on:
• Helping users find products they need
• Enabling payments online and offline
• Leapfrog and overtake Yandex by:
• Offering Mobile Payments
• Providing access to digital content
Our plan
What we need
3
Evolution of Forms of Payment as % of Clients
Products purchased by Russian online Buyers*
29%
24%
31%
19%
14% 15%
1997
2007
2011
0
200
400
600
US Timeline
Russia Timeline
2001
2011
Ecommerce per Capita: Russia following US
trajectory
Ecommerce
Spend = 13B
E-commerce is taking off to become one of the largest European market
• $24B Russian E-
commerce by 2014.
• Today almost as large
as Italy and by 2014, 4th
largest market in Europe
New FOP were well adopted and Checkout would show great prospects
• Today 1m Yandex
Money active users
• 60% of Adwords
customers use E-FOP &
20% of local bank
transfers deliver 80% rev.
Today purchase are mainly physical good but moving to digital
• 86% of users search
products online
• 10m users & 2K per-per-
click merchants on
Yandex Market
• 29m Digitsl Content
users by 2013Books CE Gadgets Apparel Media Cosm.
-
10,000
20,000
30,000
40,000
50,000
Y.M WM CC Wire terms Wire prepay
H2’08 H1’09 H2’09 H1’10 H210 H1’11
Legend: Blue – In Plan

8. Revenue & Government strategy
8
Revenue strategy
Government Strategy: Become a trusted advisor
Revenue strategy: Achieve 500M by 2014
5
6
Focus Areas Actions 2011 Uplift
Head
• Developed plan to get 15 $1m+ DSO accounts (vs $5m in 2010) in
key verticals: Local, Entertainment, Tech & Telco, Retail
• YouTube to deliver $5m in CPG and Tech & Telco verticals
$15m
Torso • ISO on the ground to deliver incremental $65m in next 3 years $ 2m
Long Tail
Acquisition
• Integrated campaign for Yandex clients (10k new monthly actives)
• GAGA target 500 agencies working w 6k SMBs
• Launch Internet Revolution in Q3
$13m
Long Tail
Retention
• Begun + 2 new reselling deals (+10k monthly active clients by EoY)
• Soft Landing to improve retention and upsell newbies
• ETO to deliver incremental revenue
$24m
Total
2010:
$117M
Total
2011:
$210M
Total 2012:
$330M
Total 2013:
$480M
Organic:
$39M
Upside:
$54M
Revenue Plan:
Google’s Skolkovo Mission: Support Skolkovo’s innovation and start-up environment through cloud
computing around 5 pillars
INNOVATION EDUCATION INFRASTRUCTURE INVOLVEMENT
DEVELOPER
OUTREACH
Invest to kick start
local tech start-up
Invest in grants to
professors and
students
Invest in
infrastructure and a
Research Centre
Engage on par with
partner on Board
Campus to
evangelize Google
technologies

9. Product Needs by Product Area
9
Product Area Background Product Need Related strategic priority
Search • Yandex delivers better regional
targeting across Russia
• Improve generic search precision
and regional search precision
Regional Search
Ads • Search share/quality is primary focus
at this time
• Payment options to all types of
publishers (Adsense, Android,
Youtube, Books)
• Implement Local Forms of
Payment
Local Forms of Payment
Local &
Commerce
• Google Maps cover 34M people, 3
cities, with 5 planned streetview cities
• Yandex maps cover 49M people, in
40 cities with streetview in 37 cities
• E-commerce is large, growing, and no
leading pureplay webstore exists
• Accelerate Basemaps, MapMaker
and StreetView launches
• Launch Product Search, Checkout
and Wallet
Improve current products
Invest in future growth
Mobile • User base is big and growing 4M
Android handsets by EOY. Strong
opportunity to grow.
Rolling thunder mobile launches:
Voice Actions, Speech-to-speech
translate
Invest in future growth
Social • Google+ launched in Russia and
allowed for Advertising
• Need to integrate with local social
networks (if possible at all)
Improve current products
Chrome • 7days active: 5.9M users • Invest in marketing and distribution
deals
Invest in future growth
YT & Video • YT is true market leader in Russia • Continue premium content
acquisition
• Fix Opera bug showing no Ads on
YT Front page
1
Color = progress on product need
Number = country priority level1
3
1
2
3

10. Current Backup
10

11. Current status
• Approve bounties of $2 per first search in Russia
for a budget of $10m in Year 1
• Maintain current Chrome marketing budget
commitments
• Legal to investigate how to stop Yandex’s Chrome
User strategy – Win access points
11
• Distribute additional 10m access points
(+1% additional search share) by signing
current Yandex partners or new local players
with aggressive terms.
(Note: 10m activations is approx. 5m First Searches)
• Stretch goal: Win back Firefox carve out for
RU (up to +2% additional search share in
2012)
• Boost Chrome adoption with
comprehensive Marketing campaigns (+6m
downloads
• Investigate portal approach
• Stop Yandex to promote its own chrome
default search (chrome.yandex.ru)
Our plan
What we need
4
… but we expect 22M (+48%) new online users in the next 4
years and current users will access in new ways
# of new Russian users in M
2011 2012 2013 2014
# of downloads expected by user type in M
2010 2011 2012 2013 2014
Current
users
New
users
Google Yandex
13,683 31,913
Yandex dominates access points today …
# of downloads (in K) 2010 Yandex major partners:
Google Yandex
Partners
Distribution mainly stems from
Russian traffic from foreign
global deals
• Deals w large number of local
partners
• Deals for Russia traffic w
major Google partners (ie:
Firefox, Opera)
Payment
s
4c first search
(Bounty guidelines)
$1.7 first search
(50% rev share on 2x Google
RPMs)
Contract
terms
2 year exclusive 1 year non-exclusive
Other Leaner policy & product offering
Current Desktop distribution terms:
Yet our current distribution terms are not as attractive as
Yandex

12. Overall Google search quality is higher than Yandex, varying
across different query types
12
Overall our search quality has improved since Nov ‘10 and is higher than Yandex
Overall Search Precision Yandex vs Google
Source: Internal
Our areas of strengths lie particularly in:
Major Search Quality Elements - Yandex vs Google
Source: Analyzethis.ru & Internal
%ofq Yandex Google
26% Long Tail queries -- -
5% Popular queries + +
4% Questions + ++
5% Spelling/Suggest ++ ++
22% Navigational queries + ++
10% Regional queries ++ -
6% Regional + city queries - +
10%? Digital Media - -
10% Porn -- -
- Precision + +
- Speed + ++
- Freshness/Updating - ++
In navigational Search we have a
clear lead
Head and Long tail we are on par or
better
Speed and Freshness we are way ahead
Loading Time
Yandex:
0.9s
Google:
0.3s
Indexation Time
0
10
20
30
40
50
60
70
80
90
Jan Mar May Jul
Long Tail (300 random queries)
Most Popular (Top
300 queries)
Source: Internal Source: Internal
91
92
93
94
Product queries will be assessed together with Commerce
Legend:
Gap Google to Yandex
Significant
gap
Small gap and
Improvement
area
Significantly
better

13. However Google precision is worse in implicit regional search
– representing 9% of overall queries and …
13
Av. Number of regional results of Yandex vs Google among
100 implicit regional queries (all cities outside Moscow)
Yandex
Google
Legend:
Source: Analyzethis.ru
We are behind versus Yandex because of problems in Geo IP tracking…
Distribution of result of users In Samara
Hired 2 HC in Feb. dedicated to
Regional improvements:
-> Implementing Metroboost
-> Improving GeoIP tracking
together with local/MV team
What is Regional Implicit search: A query implying a local related result without specifying
the city
Source: Internal
… but we have done progress and delivering on the plan
Geo-ip precision is not good enough

14. … In Geo, we need massive improvements
14
Yandex’s coverage is far more extensive than ours
Yandex offers more & fresher content:
Geo Coverage Google vs Yandex
Features of Yandex products:
Yandex is:
• able to create own GT-
alike maps
• significantly better speed
in their updates
• able to sign-up more
directories
•
Streetview
Yande
x Google Google
by Q4’11
Base
Maps
75 42 45
Street-
view
50 0 3
Traffic 38 3 6
5%
5%
33%
30%
27%
Distribution of new users in Russia – city
typology
Moscow
St Petersburg
Cities > 100K hab
Cities < 100K hab
Villages
Legend:
Traffic
• better quality in traffic
jams info
• highlights accidents
• integration with twitter
• live cameras
Number of monthly users
Yandex Google
6.0m
2.3m
Business
Directories
Is there an overall
metric on
quality?
# of Biz
directories
+ automatic
directory sign-up
with websiteRefresh
Yandex refreshes
more often than
Google