YAHOO! Inc may have diversified into fee-generating services so as to reduce its reliance on advertising sales, but that does not mean the world's largest Internet portal is slowing down efforts to attract advertisers. In Malaysia, at least, it is clearly becoming more aggressive.
A few weeks ago, Yahoo! South-East Asia engaged e-marketing specialist Yellow Brick Road Sdn Bhd to be its exclusive advertising sales representative in Malaysia. While the latter is a new outfit set up only in October last year, its founders – Rene E. Menezes and Peter Yoong – are no newcomers to e-marketing.
Menezes was formerly Grey Direct InterActive interactive communications director while Yoong was chief marketing officer of e-business and customer relationship management consultancy SeBAS Sdn Bhd. Between them, they have over 20 years of experience in interactive media and online advertising.
Yahoo! South-East Asia general manager Niren Hiro says it is becoming more important for Yahoo! to work more closely with Malaysian clients, who were previously serviced from the regional office in Singapore.
“Malaysia has some very formidable marketers and some very exciting brands, both multinational as well as local, and it has become very important for us to have a presence here, to be within reach of these clients and walk them through some of the possibilities in terms of our solutions,” he tells BizWeek.
Yahoo! did have a partner in Malaysia two years ago, but it was before Hiro’s time (Hiro joined Yahoo! a year ago) and he does not know what happened to the old partner. “The partnership with Yellow Brick Road is the first of our renewed, or increased, effort at getting more traction in Malaysia,” Hiro says.
Yahoo! and Yellow Brick Road, he says, joined hands for two reasons. “One is that we (Yahoo!) already have commanding numbers in the Malaysian market in terms of audience usage. Also, we have already had some success in attracting marketers here like Club Nokia, Philips and HSBC. And because our sites are consumed and our brand is appreciated, we feel it is high time we have on-ground presence in Kuala Lumpur through a couple of people who really understand the local market and who are veterans in this industry.”
In Malaysia, Yahoo! attracts 450,000 unique visitors a day, 1.3 million a week and 1.8 million a month. (“Unique” means that even if a person visits more than once, he still counts as a single visitor.)
Across the globe, Yahoo! gets about 215 million unique visitors per month. “The 1.8 million for Malaysia is a pretty commendable number given that only 20 percent, or 4 million people, use the Internet here,” Hiro says.
The biggest growth, he notes, has come from the PMEB (professionals, managers, executives and businessmen) sector. “This is primarily because the daytime usage of the Internet at the workplace has climbed pretty dramatically across most metropolitan areas in the world, including in Kuala Lumpur,” he says.
When it comes to the Malaysian advertising market, Hiro harbours high hopes. “We have about a dozen brands using us in Malaysia, which came onboard prior to our partnership with Yellow Brick Road. If that figure doesn’t increase by at least 500% in 2003, I think we would be pretty disappointed,” he says.
He continues: “My hope is we can get the likes of Maybank and Proton onboard. There are very, very strong Malaysia-originated multinational corporations that have marketing needs that go beyond the borders of Malaysia.”
Today, according to him, such Malaysian multinationals usually reach overseas consumers by either adopting domestic media options or buying airtime/space in regional media such as cable TV and magazines like Time or Newsweek.
“But no matter how you cut cable TV and regional English-language magazine numbers, Yahoo! is far ahead,” says Hiro, formerly president of Sports.com Asia (a member of the CBS Sportsline network).
“In fact, for most of the markets they would want to reach, we can deliver many times the reach that any of these other options can. So, in order for us to be successful this coming year, we need to explain this to clients and we need to have them try us.”
While 20 percent of Malaysian consumers are online, less than 1 percent of marketing budgets go online.
Hiro laments what he sees as a big gap between the power of the medium and how much marketers are investing in it.
“I think marketers, with the help of Pete (Yoong) and Rene (Menezes) explaining this, would realise that the Internet has to be a necessary part of the marketing mix rather than an afterthought.”
Hiro is aware that some marketers feel the Internet is too complicated. With TV, they usually measure the reach and efficiency through gross rating points and cost per thousand (how much the ad costs to reach 1,000 people), but when it comes to the Web, the possibilities can be mind-boggling.
“Because the Internet is interactive and fundamentally built on data, you can pull out any number you want and measure anything you want to death. So what happens is that the whole industry is overwhelmed by all the information available,” Hiro says.
He adds: “What we are doing at Yahoo! very, very aggressively and in a focused fashion is to simplify it. Marketers do not need to come up with unbelievable mathematical formulas as to what they want to achieve. The Internet can be measured against other media options very easily.”
A major strategy for Yahoo! seems to be spurring marketers to draw a parallel between its business and the traditional media business.
“Now what’s happening is the brand-building and the audience reach that Yahoo! can offer has become so big that we’re compared ‘apple to apple’ with newspapers, magazines, cable TV and other media options,” Hiro opines.
Besides re-educating marketers that the Net is a powerful advertising medium and convincing them that it is no rocket science to measure returns on online investment, Yahoo! and its local partner Yellow Brick Road must also persuade marketers to loosen their purse strings for the creative aspect of online advertising.
“Just like in any medium, lousy creative gets lousy results,” Hiro says, pointing out that advertisers do invest substantially in making TV commercials and print ads.
With some of the technologies now available, marketers can do dazzling online ads. Driving home this point, Hiro shows a video of some “rich media” ads (ads that come with video and animation) which Yahoo! has helped create – ads that he categorises as “sexier-than-TV, high impact advertising.”
“A lot of people associated Internet advertising with banner ads. Our position,” he says, “is that banners are very 1999, so Mr Client, please be clear that things have moved on since then.”
Hiro declines to reveal either advertising revenue or percentage growth figures for South-East Asia or Malaysia. However, he does say he expects a double-digit growth in Yahoo! South-East Asia’s total 2003 revenue, which also comprises income for its non-advertising businesses such as premium services (including shopping and mobile services such as downloading of ring tones and logos), enterprise solutions, and solutions targeted at small and medium-sized enterprises.
“Generally, Yahoo! Inc as a whole experiences double-digit growth and operations in the international markets are probably growing at a faster clip. They certainly did for the last couple of quarters. Part of it was driven by us getting our act together better and part of it was driven by market dynamics,” Hiro says.
He says: “Malaysia is still only at 20 percent Internet penetration, so there’s a long way to go. And secondly, daytime usage is still growing. So as these situations improve, and bandwidth rates and PC prices fall, there’ll be more and more growth for us. It has been six years since the launch of Yahoo! South-East Asia, but we still feel like we’re at the beginning of the curve. So there’s a lot of growth.”