Gunjan Doshi

Wall Street Journal had an interesting article on how US web properties are not prepared to monetize international traffic. Increasingly this traffic is from the BRIC countries (Brazil, Russia, India and China) as broadband adoption has significantly increased in these countries. This is an example of how international markets become relevant locally and none of the existing ad-serving products are designed with this in mind.

Here is the direct link to the article (subscription required). Following are some of the interesting numbers from the article.

1. “Many U.S. sites now draw more than half of their
audiences from international visitors but generate only about 5% of
their revenue from that traffic”.
2. “Facebook’s international audience accounts for 73% of its 124
million monthly visitors.”
3. “A recent visit to CNET.com from Australia, for example, showed an ad for Verizon Communications
Inc.’s FiOS TV service, which is available only in select U.S. cities.
U.S. marketers
4. “Half of Glam’s 77.4 million visitors
come from abroad, but only 5% of its revenue is from non-U.S.
advertisers.”
5. “In India, for example, online ad spending will only be
about $111 million this year. In Brazil, it will be $453 million,
ZenithOptimedia predicts. In comparison, U.S. online ad spending is
expected to reach $19.8 billion this year, up 23% from $16.1 billion in
2007.”
6. “MySpace is trying ramp up its sales teams outside the
U.S. and hopes to eventually generate 50% of its revenue from abroad.”

The article goes on an talks about the rise of local niche players like Komli Media that focuses only on India and serves Indian-based ads to 250 U.S. web sites. However, internet marketing industry is still in the early adoption phase of the life-cycle in these countries. I think one of the reasons that major giants like Double-Click and aQuantive are not focusing on international markets is because the CPM are still low and local advertisers are still not keen to go on the net.

Take-away: Market opportunity for serving ads to international audience is huge and much needed but still in the early years as advertisers are not ready. It will take at least a year to two years for a major player to emerge and hopefully it will not be the local players as it will lead to a very fragmented industry. Hopefully, it will be a more experienced, mature and trusted company like Google with its Doubleclick power or Microsoft with its aQuantive brand who can gain trust of local advertisers and motivate them to ramp up their internet spend. Also, these giants have the experience and deep pockets to scale fast.

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