• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

U.S. Internet Companies Make Changes To Attract Global Customers

Posted on: Monday, 28 July 2008, 14:42 CDT

In the face of a weakening U.S. economy and slowing growth of online advertising revenue, major U.S.-based Internet companies are working to expand their business in other parts of the world, hoping to lure new customers through market-specific services with customized content and features.

Such services are often tailored to reflect differences in connection speeds, cultural preferences and payment options outside the United States.  For example, Google Inc.’s traditionally frugal U.S. home page is full of vibrant, animated icons on its Korean site.  And AOL’s home page for India displays images of Bollywood celebrities.

With the two populous countries of India and China just now getting online, the stakes are high for U.S. Internet firms in attracting the next billion Internet users.  And research firm IDC projects Internet ad spending will reach nearly $107 billion in 2011, a significant increase from the $65 billion in spending this year. 

However, attracting non-U.S. customers will be a significant challenge, and American companies that simply translate their U.S.-centric content into other languages risk losing out to local firms that better reflect cultural nuances.

For instance, Google Inc. discovered that in China and South Korea, where the company initially tried its minimalist approach, local rivals thrived by catering to user preference for sites rich with visual complexity and entertainment.

"A lot of times, the U.S. companies, because they were successful in the U.S., they tend to repeat their current business models Tian X. Hou, a Pali Research analyst who follows China, told the Associated Press.

"Most of the time, that doesn't work."

Graduate student Cho Ko-un, 29, likes Google for English and academic research, but prefers local portals like Naver and Daum for Korean-language information.   Naver’s forums allow users to answer one another's questions, which proved valuable when Koreans couldn't find a site in their native language.

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

MySpace co-founder Tom Anderson said dominance in one market means nothing as the company expands to nearly 30 other countries and regions. He told the AP that local incumbents have a distinct advantage since "it's difficult to get people to change their behavior."

But nevertheless, MySpace is trying, offering an exclusive “minilog feature” for South Korean youths that allow them to keep journals on their daily thoughts.

In mobile phone-centric Japan, people can sign up for an account directly from their wireless phone, in contrast to elsewhere, where a computer is needed.  The News Corp.-owned company also altered its Chinese site to open new windows with each click, reflecting local user preferences.

And in India and Latin America where connection speeds are often slower, MySpace is considering low-bandwidth versions of its service, with less audio or fewer graphics.

For its part, AOL, a unit of Time Warner Inc., has launched over 20 international sites during the past 18 months as the company transforms itself into an advertising business. The company’s executives made a decision to pursue several emerging markets that they knew wouldn't be profitable for another few years.

"Our goal is to plant the flag, to be present,” the company’s India-based international chief, Maneesh Dhir, told the AP.

"Then you work to grow that business."

AOL partners with local content providers in each market.

For example, its Indian portal is heavy on Bollywood films, covering stars as fiercely as American sites follow Britney Spears.  And instead of baseball, AOL’s Indian portal covers cricket, providing team profiles, schedules and even an online fantasy game.

AOL also customized its popular AIM instant-messaging service for India and other markets that rely heavily on cell phone text messaging, with AIM messages now automatically converted into phone texts, and vice versa.

Another change is in AOL's channel for men, which is far edgier in Australia than in Asia or the United States. At one point it featured a photo gallery of a New Zealand rugby game with full frontal nudity.

Software giant Microsoft Corp. now has more than 80 people worldwide tasked with ensuring its products and services do not offend local sensibilities or prove irrelevant in various cultures.  For example, the company’s instant-messaging product varies icons and emoticons to reflect animals, flowers and characters popular in each local market.

But Google has faced different obstacles.  With the dearth of Arabic Web sites, the company had to find a way to first lure Arabic speakers onto the Web.  So it developed a system that automatically translated an Arabic user's search terms into English, and checked its English index for matches before translating relevant Web sites back into Arabic for Mideast markets.

In Korea and China, where it lags behind rivals, the normally spartan Google site for those countries now includes animated icons that jump as users move the mouse.  In China, Google also took the controversial step of filtering search results to eliminate search results blocked by the government.

But Baidu remains the Chinese leader in Internet search, thanks in large part to its music videos 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," Zhu Shuang, a 27-year-old employee at Shanghai wireless technology company mInfo Ltd., told the AP.

As with other U.S. companies, Google has discovered it can’t ignore emerging markets, and over half the company’s revenue will come from abroad this year.

Analyst Greg Sterling of Sterling Market Intelligence told the AP that many firms have stepped up their focus on international markets "to insulate themselves as much as possible" from the weakening U.S. economy.

Both Amazon.com Inc. and eBay Inc. were among the pioneers in global expansion, achieving their international dominance over the past decade by acquiring local companies that already understood the markets, according to Anette Schaefer, Europe-based director at the Yankee Group.

Pali's Hou said Microsoft has made inroads in China due to its highly local staff, in tune with the Chinese preference for entertainment news.

But global expansion has not been easy for U.S. Internet companies. EBay failed to gain traction in Japan, and withdrew from the market in 2002.  Among its mistakes were the company’s insistence on credit cards in Japan’s largely cash-based society. EBay is now re-entering the Japanese market through a partnership with auction leader Yahoo Japan Corp., a joint venture between Yahoo and Japan’s Softbank Corp.

Other companies merely translate their American sites, making it feel foreign to locals, according to Matthias Caesar, board member for the Globalization and Localization Association. 

However, U.S. companies do have many critical advantages, including technical expertise, deep pockets and global reach.  For instance, MySpace and Facebook allow users to communicate worldwide, even if different users log on from locally customized sites.  Oddly, a few U.S.-based companies, such as Google's Orkut in Brazil, AOL's Bebo in Britain and Friendster in the Philippines, have found their social networks more popular overseas.

But U.S. firms are often vulnerable to global codes of conduct.
In the case of nudity, many Mideast cultures are averse to displaying women's skin, whereas Europeans are far more receptive to public nudity than Americans.   A U.S. company trying to impose its standards for user-submitted content elsewhere risks complaints of allowing either too much or too little, despite the fact it holds consistent policies across the Internet.

"Creating a national company is like rocket science," John Strand of Strand Consulting in Denmark told the AP.

"But creating an international company is like proton physics."

Source: redOrbit STaff & Wire Reports

More News in this Category