Monday, January 12, 2009

Internet use booming in Latin America - Venezuela 1.58 million (38 percent growth)

Personal Internet use is growing by leaps and megabytes in Latin America, driven by the availability of more affordable computers, an expanding broadband network and the appeal of a range of new cyber features.
New users in the region are attracted by familiar applications like e-mail, instant messaging and quick access to news and information on the Web, but features such as social networking, online bill payment and digital entertainment also are proving popular.

A recent marketing study of 10 Latin American nations and Puerto Rico projected the regional residential base of Internet users would reach 160 million in five years, up from more than 100 million now. The survey, conducted by Pyramid Research for Google, also forecast large increases in Internet advertising and online shopping.

DRAMATIC GROWTH

The recent expansion of Internet users in Latin America has been dramatic. In 2007, for example, Colombia added 5.4 million Internet users, or about 12 percent of its population of 45 million, according to a Morgan Stanley report. This represented an 80 percent increase in the number of Colombia's Internet users that year. The same report said that Brazil added 7.4 million Internet users in 2007 (17 percent growth); Mexico more than 2.2 million (an 11 percent increase) and Venezuela 1.58 million (38 percent growth). In contrast, the United States added 9.8 million net Internet users that year, for an increase of 5 percent.

Companies that earn revenue from Internet advertising such as Google, Microsoft, Yahoo, AOL and others, are keen to capitalize on Latin America's growth potential, and expect continued expansion over the medium term despite the world economic slowdown. ''Latin America for us is the fastest-growing region from a revenue perspective,'' said Alexandre Hohagen, Google's managing director for Latin America ``We hope to double the size of the company in the region, even with the economic slowdown.''

When results are finalized for 2008, Google expects revenue growth from Latin America to reach around 120 percent down from 165 percent in 2007, Hohagen said. Even so, he added, revenue expansion in the fourth quarter of 2008 was still the highest in the world for Google divisions.

`PASSION POINTS'

Many Internet portal companies already have a presence in Latin America and are positioning themselves to capture a share of this rapidly expanding market by focusing on sites covering topics and features that appeal to local audiences, like soccer, music and social networking. They make money by placing display ads on these sites, using sponsored search links, specific local listings for products that are offered for sale and other options. ''We speak to the passion points of each audience in Latin America,'' said Miguel Ferrer, director of programming for AOL Latino, which operates portals in Argentina, Colombia, Chile, Mexico, Puerto Rico and Venezuela and is based in New York.

AOL's Latin American portals focus on the specific interests of each market, he added. ''While there are shared platforms and tools, they are not cookie-cutter versions of AOL'' in the United States. For example, in 2008 AOL launched Fanaticos.com, a Spanish-language blogging site that targets the large audience of Latin American sports fans. AOL also tailors news, celebrity and gossip features to each local market and appeals to women though lifestyle sites dedicated to health, beauty tips and cooking.

Yahoo, with portals offering local content in Argentina, Brazil, Colombia, Chile, Mexico, Peru and Venezuela, is projecting 30 percent growth in Latin American Internet users for 2009, compared with a 10 percent increase in the U.S. Hispanics market and 5 percent for the U.S. market as a whole, according to Armando Rodriguez, general manager of Coral Gables-based Yahoo! Hispanic Americas. ''We've gone out of our way to have a social element to capture users,'' Rodriguez said. Yahoo seeks to cater to all age groups, he added, and is offering options in areas such as social networking, video, music, sports and entertainment that are fueling Internet growth.

Yahoo created Flickr, a popular website for people who like to share photos and comments, as well as Respuestas (Answers), where people ask personal and technical questions and receive answers, advice and ideas from other Internet users. The company appeals to sports fans with sites where participants can exchange photos and comments on games and players and is targeting the expanding audience of Internet users on mobile devices through a search feature called oneSearch.

Google, which owns social networking sites Orkut and YouTube, as well as Blogger.com, is the biggest player in the Latin American Internet market. Google and its properties had the most unique visitors in Latin America last year, according to a 2008 report published by comScore, an Internet information provider. Ranking behind Google were Microsoft, Yahoo, MercadoLibre and Wikipedia sites.

GROWTH STRATEGY

Dominating the Latin American search market with an overall share of about 90 percent, Google is pursing a strategy that includes attracting new users, especially young people, to its popular social networking sites; convincing more small and medium businesses of the benefits of online advertising; and rolling out new, localized products in each country, like Google Maps. ''A lot of people in Latin America use the Internet just to be part of a social network,'' Google managing director Hohagen said. In Brazil, for example, about 80 percent of Internet users visit these sites to chat with friends, meet new people, exchange music and videos and post photos. ``Going to a party where there are 10 people is one thing. For young people, it's much more fun to go to a party where there are 1,000 people.''

The search function will continue to be the mainstay of Google's operations both in Latin America and worldwide, Hohagen added. ``Nine out of 10 people in the region use Google when they search, and there is an enormous opportunity for revenue from ads.''

NEW OPPORTUNITIES

Hohagen believes that the economic downturn provides new opportunities for Google to expand revenue in Latin America, especially among the large pool of small and mid-sized companies. These businesses, he said, can reach markets in each country through online advertising products that cost less than other media. ``We are very competitive in proving the return on investment to clients. We can show the number of hits on an ad and the conversion of hits into sales. No other media can do that.''

The explosive Latin American growth reminds Google executives of the spectacular expansion of U.S. Internet use in the 1990s, Hohagen said. ``We still have a lot of people who haven't used the Internet yet.''

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