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Wednesday, Jul 30, 2008
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Global instincts, local flavours on the Web

As U.S. Internet companies expand worldwide, being un-American can be key to success

Market-specific services, customised features
Getting it right is tough, but avenues are large

NEW YORK/BEIJING: Images of Bollywood celebrities are now seen splashed on AOL’s new home page for India. MySpace accepts sign-ups from mobile phones in Japan. Google departs from its customarily spartan home page and peppers its Korean site with colourful, animated icons.

As major U.S. Internet companies stake their ground abroad in anticipation of the next billion people coming online — and the advertising revenue they might generate — the flags they are planting are not the Stars and Stripes.

Companies are trying to expand globally without seeming to, designing market-specific services with customised features that reflect differences in connection speeds, payment options and attitudes toward sex or violence.

High stakes

The stakes are high as the U.S. faces a weakening economy and a slowing of online advertisement growth.

And the opportunities are large. People in two populous countries, India and China, are just getting online. The research firm IDC projects worldwide Internet ad spending at nearly $107 billion in 2011, compared with $65 billion this year.

But getting it right will be tough. American companies that merely translate their U.S.-focussed sites into other languages risk losing to home-grown businesses that can better respond to cultural nuances.

Google discovered that in South Korea and China, where it initially held its minimalist approach, only to see local rivals thrive by acknowledging their users’ preference for sites rich with entertainment and visual complexity.

“A lot of times, the U.S. companies, because they were successful in the U.S., they tend to repeat their current business models,” said Tian X. Hou, a Pali Research analyst who follows China. “Most of the time, that doesn’t work.”

Cho Ko-un, 29, a graduate student sitting in a cybercafe in Seoul, South Korea, finds Google good for English and academic research, but local portals like Naver and Daum better for Korean-language information. Naver, for instance, has forums for users to answer one another’s questions, which proved helpful when Koreans could not find a site in their native tongue.

“I feel amazed and surprised when the exact question I am trying to ask... the proper answer on that is already uploaded,” said Kim Seung-ho, a 32-year-old government employee.

Tom Anderson, co-founder of MySpace, said dominance in one market means nothing as the company expands to nearly 30 other countries and regions. He said local incumbents have an advantage because “it’s difficult to get people to change their behaviour.”

MySpace is nonetheless trying. In South Korea, it offers an exclusive “minilog” feature for youths to jot down everyday thoughts and feelings. In mobile-heavy Japan, people can sign up for an account directly from a phone; elsewhere, you need a desktop computer. MySpace tweaked its Chinese site to generate new windows with every click, in deference to local user preferences.

Exploring options

The company is exploring low-bandwidth versions — perhaps with fewer graphics or less audio — for India and Latin America, where connection speeds tend to be slower.

AOL has launched about two dozen international sites over the past 18 months. As the one-time Internet access powerhouse transforms itself into an advertising business, executives decided to push into several emerging markets that they knew would not pay off for another few years.

“Our goal is to plant the flag, to be present, said Maneesh Dhir, AOL’s India-based international chief. “Then you work to grow that business.”

In each market, AOL partners with local content providers. The Indian portal, for instance, is heavy on Bollywood films, covering their stars as fiercely as American sites follow Lindsay Lohan. Instead of baseball, the Indian portal covers cricket, with schedules, team profiles and an online fantasy game.

AOL customised its popular AIM instant-messaging service for India and other markets with heavy usage of text messaging on cell phones. Messages sent over AIM are automatically converted into phone texts, and vice versa.

And AOL’s channel for men is far edgier in Australia than in Asia or the U.S., at one point featuring a photo gallery of a New Zealand rugby game with full frontal nudity.

Microsoft has more than 80 people worldwide that are tasked with making sure its products and services do not stereotype, offend local sensibilities or prove irrelevant in a particular culture. Microsoft’s instant-messaging product, for example, varies icons and emoticons to reflect flowers, animals and characters popular in each market.

Challenge for Google

Google has had a different challenge. With a dearth of Arabic Websites, it had to find a way to persuade Arabic speakers that the Web is worth exploring. So it developed a system for automatically translating an Arabic user’s search terms into English, checking its English index for matches and translating relevant Websites back into Arabic for West Asian markets.

Filtering results

To take on China and Korea, where it trails rivals, the normally sparse Google site for those countries now displays icons that jump as users move the mouse. In China, Google took the much-criticised step of filtering its results to avoid revealing search results blocked by the government.

But Baidu is still the Chinese search leader, thanks to its willingness to add music video and other entertainment features.

“I do think local companies have an edge over international companies because local companies start with Chinese services, whereas international companies have to follow their overarching goal and can’t easily adapt to Chinese needs,” said Zhu Shuang, 27, who works at Shanghai wireless technology company mInfo.

Like other U.S. companies, Google is finding it cannot afford to ignore emerging markets. This year it started getting more than half its revenue abroad.

Analyst Greg Sterling of Sterling Market Intelligence said many companies have stepped up international ambitions “to insulate themselves as much as possible” from the weakening U.S. economy.

E-retailer Amazon.com and auctioneer eBay were among the pioneers in expanding abroad, gaining dominance elsewhere over the past decade by buying local companies that knew the markets already, said Anette Schaefer, a Europe-based director at the Yankee Group.

But expansion has not always been smooth. Though strong elsewhere, eBay failed to gain traction in Japan and pulled out in 2002. Among its missteps: it insisted on credit cards in a largely cash-based society. eBay is re-entering Japan by teaming up with auction leader Yahoo Japan, which itself is Yahoo’s joint venture with a leading Japanese company Softbank.

U.S. companies do have key advantages. They have technical know-how, financial muscle and global reach. MySpace and Facebook, for example, let friends communicate worldwide, even if each logs on from a locally customised home page.

But U.S. companies are often hampered by global codes of conduct. Take nudity. Many West Asian cultures are averse to displaying women’s skin, while Europeans are far more tolerant of public nudity than Americans. A U.S. company trying to impose its standards for user-submitted content elsewhere risks complaints of banning too much or too little, yet it wants uniform policies because the Internet crosses borders. — AP

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