Aug 20, 2008

SES San Jose - Day 1 - The Global Search Landscape

I noticed that the SES folks introduced a track called World View - on day 1 of this event. The first session focussed on Asia Pacific & Latin America - Part 2 centered on European Markets. I've summarized my learnings and takeaways below.

Latin American Market
The Hispanic Community is a rapidly growing, but largely underserved Market. There are over 44 Million Hispanics online, they’re young, highly engaged, spend plenty of time online. Spanish-dominant users are the fastest-growing online segment. The purchasing power of U.S. Hispanics is growing faster than many other segments; It is currently more than $750 billion and will likely exceed $1 trillion by 2010

While the U.S. Hispanic market is just 2 percent of the total search market worldwide, they are growing by 5% YoY. Hispanics are great Internet Explorers – and are known to use Google: 87%; Yahoo! Search 68%; MSN Search: 40%; Ask Jeeves: 32% and Altavista: 12%; amongst other Search Engines.
-> The average Latin American Internet user spends 29 hours online during the month –more than the global average of 25 hours
-> Video Search has a high penetration with the U.S. Hispanic market and Latin America
-> Search Engagement is especially high in 3 major Latin American countries - Colombia, Brazil, and Argentina

The key takeaway here is that the U.S. Hispanic and Latin American markets present huge opportunity for sustainable online advertising growth. Hispanics are very engaged and will likely be included to respond to targeted SEM Campaigns

Asia Pacific Region
The Internet is increasingly popular on a global scale: The most popular languages used on the Internet include English, Spanish, Japanese, French and Chinese. Internet penetration remains strongest in N/America and Europe, Latin America, Asia Pacific and the Middle East regions are growing very fast.

Japan is one of the most prominent Internet Markets – with over 89M people online and 85% broadband penetration. Online advertising spend topped $4.6B in ’07 and is projected to hit $7.6B by 2011. Japanese Internet Users are very engaged individuals, online video players, blogs, Mobile services and QnA features – remain very popular. The social networking phenomenon, epitomized by services such as Mixi, has really taken off in Japan - as is the case in China and South Korea. Google and Yahoo are both very strong local players – however Yahoo has an edge because it’s portal content and communication services are very popular with users.

Chinese users are relatively more turned on, tuned in versus their western counterparts. Given fewer media choices, much of China’s public Internet companies value are based on entertainment and communication.

The most popular online activities amongst the 250M Chinese Internet Users – are: (Online Music: 86%,Search: 72.%,News: 72%Instant Messenger: 81%, Online Games: 59%). This actually makes sense – given the peoples’ love of Music and thirst for information. The online advertising landscape is growing fast – approximately $961M was generated in ’07, this amounted to about 7% of total ad spend in China. Search alone, accounted for $309M / 32% of total online ad spend. Current forecasts indicate that China will generate over $1.38B from Search advertising – by the year 2010. That estimate is not very far fetched given the fact that less than 50% of the Chinese population is online.
The sheer number of web sites and web pages continues to grow at a very high rate.

Baidu remains the strongest Search Engine in China – with over 71% Query share and revenue of $234M in ’07. Google has approx 23% query share and Microsoft, Yahoo and a string of 2nd tier players – share the remaining 9% query share. In addition to its Search Engine, Baidu has its own monetization platform and a growing list of online services & features

As Yahoo struggles across Europe – Google has grown even stronger. A recent report by “relevant traffic” indicates that Google gets over 80% of the Search advertising spend across all key European markets – including UK: 80%, France:75%, Germany:95%, Italy:95% and Spain:95%.

In France, broadband penetration is very high (94%). Much of the online advertising spend is driven through Media Agencies – so Search Engines without their own monetization platforms (like Microsoft and Ask) are at a distinct disadvantage. Add to this, the fact that Yahoo is focusing more on display advertising and it’s not difficult to understand why Google has over 75% share of Search advertising spend, in France

One thing European Markets have in common with Asian ones is the growing popularity of Social Network Systems and Video players. In France, Skyrock, Facebook, Spaces and Flickr. In Germany – local social networking players, such as y!gg, Mister Wong and mienVZ are doing much better than facebook, myspace and delicious.

In Germany, enthusiastic Searchers generate over 100M searches daily – 3B/month. Google has over 90% Market share, Yahoo:3%, Live Search:2% and T-online:2%, jointly account for 7% query share. Ultimately – Google is the key driver of traffic to key general interest portals and websites across DE and other key markets across Europe.

Overall, the speakers were okay and the sessions were fairly informative. Many of the key insights are not new - Social Networking is very popular, Google dominates in query volume, share and online advertising revenue - in most markets. One key trend is the Yahoo's query share and Search Revenue continues to decline across Europe and Asia. It does appear that YSM! is de-prioritizing Search in favor of online display advertising and perhaps choosing to stand it's ground in specific markets - such as UK and JP.

Microsoft derives search revenue in UK, France and Canada, through it's own monetization platform - adCentre, but relies on YSM! to help drive revenue throughout the rest of Europe and much of Asia/Americas. Without a truly global monetization platform which can offer formidable competition to both adwords and adsense, neither Live Search nor Yahoo Search - will make any headway against Google......

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