US-based Google, which operates world’s biggest Internet search engine, opened its own office with a local team in Romania in November 2010, two or three years later than it had initially planned, because of the global economic crisis, which slowed down the company’s expansion on new markets, Mohammad Gawdat told ZF in an interview. This is the official’s biggest regret, after all, that is having delayed entrance on the market, he admitted.
The online giant recruited a consultant for the Romanian market, Radu Tudorache, a former regulation manager of the telecom market watchdog, but a year later, when he moved to Romtelecom, it did not hire a replacement. Two years later, in January 2010, Google incorporated a local company and at the end of the year hired one of the best-known managers on the IT market, Dan Bulucea, to run its operations.
Looking back at the two years during which Google kept its expansion plans on hold, Gawdat says he regrets it because he believes the US company could have contributed to the development of the Romanian online industry ecosystem.
How does Google see the market in Romania at the moment? There is tremendous growth potential, partly because of the country’s lagging behind in certain departments (rural Internet, electronic commerce, number of companies using the online environment), as well as because of the enthusiasm of local users when it comes to new technologies, which is comparable to the level in the U.S. or Western Europe.
International statistics put Romania among to top five in the world in terms of Internet speeds, but these speeds were only measured in cities. Recent data published by the communications regulator reveal there are only 10,000 landline Internet subscriptions taken by companies in rural areas, compared with 290,000 in cities. The gap is somewhat narrower on the individual user segment, but is still there: 580,000-590,000 against 2.25 million in cities.
What are Google’s priorities in Romania, then? The goals of the local team are not necessarily tied to the first two or three years of operations in terms of revenue, but to the development of the online ecosystem, of the relation with the major partners and the “consultancy” provided to Google, so that the range of products and services available locally could be the most suitable to lead to market growth.
The biggest challenge for an Internet search company is educating the market towards the use of Internet, because when 80% companies do not publish anything about them online, and for half of the households in Romania located in rural communities the Internet is the exception rather than the rule, then users will not use Google to search information and the company cannot generate revenue.
What Google wants now, Gawdat says, is to have as much information available online as possible that the company could “organize” and make available globally. Until such thing happens, revenue is less important.
What is the revenue of Google in Romania? How many unique customers does it have? Is Google the biggest player on the online market in Romania – in terms of unique customer numbers and advertising revenue? The Google official would not provide a direct answer.
The only clue as to the trend of Google revenue in Romania comes from Dan Bulucea, head of the local office of the search engine company, which was also in the room during Gawat’s interview: Google’s Romanian business rose by more than 33%, the global revenue growth percentage of the company throughout the world.
Google’s revenue in Romania is put at several million euros a year, while the online advertising market was estimated at EUR20-EUR24 million in 2010. According to the data previously provided by the U.S. company, there are about 20,000 sites in Romania displaying ads served by Google and getting paid for it. On the other hand, there are also companies in Romania that spend over one million dollars on advertising through Google’s network and several thousand more that spend lower amounts on promotion.
Asked about how he saw the online market in Romania develop, Google’s official said that he definitely anticipates a positive trend.
(English version by Loredana-Fratila-Cristescu)