Market overviewNews-centric web-portal launch analysis in South-Eastern Asia (SEA)

Feb’16

Methodology and contentsTo put things simple, we will consider the country worth of launching a new web-media portal if we can easily and cheaply acquire online users, retain them (securing our supply side) and if we can easily and expensively monetize them (demand side). The questions are simple, but to find true answers each side requires gathering an array of various stats and indicators, weighted and relatively indexed based on our expert opinion. Therefore, for better displaying I’ve drafted up a small decision-making model with relative country analysis in South-Eastern Asia (SEA).

The full list of indicators, detailed methodology and the model itself can be found here.

The main ones, which make an impact on launch decision:

1. Demand and user acquisition strategy impact: size and behavior of internet audience, use of social media, growth perspectives.

2. Supply and traffic monetization/revenue impact: existing competition, how rich is the population, how well developed is the advertising market (including digital).

3. Content-related: how strict are copyright rules and whether population can stream video.

Numbers are in the .xls file and the presentation is focused on summarizing and general observations.

Remark: the analysis and conclusions are drafted mainly with a goal to show my mindset. However, the numbers itself and the modelling system might be useful on initial decision-making stage.

Overall regional peculiarities• The SEA region while being economically and politically integrated is truly multi-cultural and multi-legal with huge

disparities (so better to stick to local brand strategy);

• Higher mobile penetration and younger internet and social-media audience relative to developed world;

• Big recent investments in e-commerce start-ups (high-potential buyers): Lazada (raised US$710M), Zalora (US$238M), Redmart (US$100M+), MatahariMall (US$500M+), Tokopedia (US$100M+) in Indonesia, Malaysia, Philippines and Thailand currently secure 80-90% customer reach through Facebook.

• Internet content restrictions are selectively applied in Indonesia, Vietnam, Thailand with hundreds of web-sites being banned (see internet freedom rankings in .xls);

• Some countries are multi-lingual and/or heavily dependent upon expats (Indonesia, Malaysia, Singapore), what shall affect content strategy;

• Big buying agencies with MNCs' ad budgets are concentrated in Singapore, Indonesia, Thailand and Malaysia;

• Major sources of traffic are FB and messengers (Line/WeChat) along with traditional Google/Bing/Yahoo search engines

• Another major digital media buying industry is gaming (Indonesia, Vietnam, Thailand, Malaysia)

• With a lot of tech-start-ups in Singapore, Indonesia, Malaysia, Thailand it will be easy to have additional monetization options through partnerships (travel, deals, vacations, jobs etc.)

• More than half of internet audience makes e-commerce purchases with the biggest share of such transactions been made low-cost air flight tickets purchase

Analysis results

COUNTRIES TOTAL INDEX POINTS

Malaysia 17,6Thailand 16,1

Indonesia 13,7Philippines 13,6Myanmar 13,1Singapore 11,8Vietnam 8,8

Cambodia 5,4

Eight SEA countries have been reviewed with Laos, Brunei and Timor-Leste being set aside due to low population and absence of reliable data.The main assumption: following the example of naij.com story, I’ve been focused on finding the most under-appreciated market with least entry barriers, but with clear short-term perspectives and large internet audience.Conclusion: due to low existing competition with relatively large advertising markets and rapidly developing e-commerce and MNCs the most interesting markets are Malaysia, Thailand and Indonesia. However, if you re-weigh the factors in the model, outcome may vary. Further I’ll try to explain why the numeric result appear viable for me.

Market Insights: Malaysia• No local web news portals among 20 top web-sites, but with strong traditional media players• 44% of country’s ad budgets are spent on printed media, which makes it easier to sell ads for online news

portals• Users spent longest time in social media• Malaysians read printed media and watch TV with internet being used mostly for videos and SM• Highest GDP per capita in the region after Singapore with population over 30 mln people• Well-developed media-buying agency market with global network agencies focused on TV and printed media • FMCGs are the biggest media buyers Unilever, Nestle, Procter & Gamble, and Colgate Palmolive)• Malaysia is a Muslim country. Keeping Indonesia in mind it is a good place to start “exploring” SEA market• In 2016 big advertisers will be more cautious in ad spending which means better opportunities for direct

digital sales due to better efficiency for the media buyers• Active mobile social users shows ~20% growth y-o-y• 28% of population watching video with mobile phones and 27% using mobile banking (highest numbers after

Singapore)

Ad spending in Malaysia by Medium in 2008-2015

Market Insights: Malaysia

Market Insights: MalaysiaDigital ad spending is gaining fast

Case studies: MalaysiaMedia Prima:• leading media investment group:• Owns 100% equity interest in TV3, 8TV, ntv7 and TV9;• 90% equity in The New Straits Times Press; • three radio networks: Fly FM, Hot FM and One FM• As an expansion into digital media, Media Prima partnered with YTL communications for digital TV servicesAstro All Asia Network:• AAAN is Malaysia’s leading multimedia services provider• Started in 1996 with 22 channels• It is involved in origination, aggregation and distribution of TV programs in Malay, Chinese, English and Indian

languages• Owns AMP Radio: the first radio broadcaster in Malaysia to radio streaming iPhone applications• Collaborates with ESPN Start Sports (through its arm BPL broadcasts) to exclusively broadcast the BPL (Barclays

Premier League) in Malaysia, customers can watch matches being simulcast over the internet and mobile means

Market Insights: Thailand2 web-sites are in alexa’s top 20 country sites are news portals with none in top 10

Market Insights: Thailand• Internet ad spending takes only 1,34%

from total pie, but grew robust 50% (!) last year

• Most of the Thai audience can be found in FB and Line/WhatsApp messengers

• With internet penetration slightly over 50% there is still a lot of room for new audience in the country. With 3G and 4G networks covering 90% of Thailand it is a matter of several years

• Thailand is a Buddhist monarchy. So religion and the king along with strict internet controls are the topics to keep in mind when choosing content strategy.

• 27% of population are watching videos on mobile and 20% are using mobile banking

http://www.adassothai.com/index.php/main/ad_expenditure

Market Insights: Thailand

This is the explanation in digital ad spending growth. Thailand is the leader in internet growth dynamics among SEA countries.http://www.slideshare.net/wearesocialsg/digital-social-mobile-in-apac-in-2015/290

Case studies: ThailandPantip.com:• one of the largest Internet forums in Thailand with 14,5M unique monthly users

• contains political discussions and criticism of the government, so users are required to register their identities using their national identification number

Sanook.com: 11M unique users monthly

Kapook.com: 8M unique users monthly

Market Insights: Indonesia• 5 web-sites are in alexa’s top 20 country sites are news portals with 3 in top 10. The competition among

news-centric web-portals is quite fierce.

• You can notice non-organic growth of some of them due to money influx to companies’ working capital

Market Insights: Indonesia• Digital ad spending is the fasted growing in the region with 100% AGR since 2012 with no visible reasons to

slow down

• 33% of country’s ad budgets are spent on printed media, which makes it easier to sell ads for online news portals

• Leading e-commerce start-up MatahariMall (“Indonesia’s Alibaba”) has raised US$500M in the last several years

• Another e-commerce platform Tokopedia raised US$100M

• Blackberry’s BBM is top1 messenger in the country

• With only 34% of internet penetration a major challenge for the country is securing internet connection for tens of millions of its citizens scattered over hundred of islands

• Indonesian middle class is expected to grow to 150M+ until 2019 from current 70M

• 11% of population watching video with mobile phones and 11% using mobile banking

• Ad spending in Indonesia has still a lot of room to grow: it is below US$50 per capita (e.g. in Brazil US$100, in South Korea US$198) with projected growth of 9% annually

• Second-to-Singapore-only tech start-up landscape with many international venture capitalists starting to opt for Indonesia instead of Singapore due to lower burn rates and immense internal marker

Case studies: IndonesiaDetik.com:• Started in 1998 as a plain news site, in 2004 became an online media holding with 100+ journalists and

writers, in 2011 was bought for US$60M by Indonesian CT Corp, now has 26M monthly unique users (~6 pages depth)

• Employs 200 people now (here are all their names ;))• #5 site in Indonesia, #189 in the world (alexa.com)• In Indonesia locals use the search query “Detik” 3 times more often in Google rather than “Berita”

(“news” in local language) Kompas.com:• As a newspaper was launched in 1965, web-site from 1997, now has 15M unique visitors (4,6 pages

depth)• 10 000+ people work in the media holding KompasGramediaIn Feb 2016 tribunnews.com grew from #1018 to #214 in global alexa ranking and to #7 in Indonesia (14M unique monthly visitors now)

Market Insights: Philippines• 4 web-sites are in alexa’s top 20 country sites are news portals with 3 of them in top 10

Market Insights: Philippines• 79% of ad media budgets are spent on TV

• Women are more active in SM; world's leader in time spent on SM

• In 2015 number of active mobile social users grew +50% (#2 in SEA market) to 36M people

• Total internet penetration is also growing ~20% annually with current level of 44% (or 44.2M users)

• Locals are still not active in using mobile phones for videos and mobile banking: 19% and 14% of population respectively. The reason: 96% of mobile connections are still pre-paid, which makes every Mb expensive

• With landline internet there are still problems as well: 3,6MBPS puts the country on the last place in SEA

• Only 46% of current internet users use internet every day (77% in Malaysia, 86% in Thailand

• With the biggest share of English-speaking audience locals often use international news media portals to read news

Therefore, according to numbers Philippines’ digital growth still relies on internet access growth and affordability of 3G/4G services (the islands are very detached) even for existing internet users

Market Insights: Singapore• 2 web-sites are in alexa’s top 20 country sites are news portals with none of them in top 10

Market Insights: Singapore• Generally small audience with 4,7M internet users (though, rich) and low growth expectations

• TV ad spending totals only 27% from total media budgets, which is usually a healthy indicator for well-developed and diversified advertising market (on contrary, Vietnam and Philippines are close to 80% TV share)

• All Facebook services are far ahead of competitors in digital popularity among locals (WhatsApp, FB, FB Msgr, Instagram)

• SPH and Mediacorp are the biggest publishers in the country. They are focused on printed versions with digital ones bringing losses. They have tried advertising and subscription models, but with no much result.

• The economy is expected to flatten growth in 2016-17, so big advertisers might be more approachable to try digital ads

• Being the hub for all SEA regional corporations and tech start-up scene, there are a lot of tech companies for additional monetization options (possibly, unique on world scale) (while Hong Kong is generally recognized as the financial and business anchor for companies working in China, Japan, Taiwan)

• With 86% of existing internet penetration the country saw a sharp social media and mobile social user growth in 2014-15: 56% and 57% y-o-y respectively. But due to already high penetration the future growth will be slow.

• With 56% of post-paid mobile internet subscriptions many people are watching videos and use mobile banking (34% and 33%).

• One of the quickest landline internet in the world all kinds of media content are well consumed by Singaporeans

Market insights: Vietnam• 9 web-sites are in alexa’s top 20 country sites are news portals with 2 of them in top 10

Market insights: Vietnam76% of ad media budgets are spent on TV

What sets Vietnam apart from neighbors is relative low urbanization – 31%, which means that mobile internet growth will have more impact on internet behavior and digital ecosystem

Similar to Indonesia, Vietnam has a lot of active e-commerce shoppers: 7 in 10 internet users make online purchases

Market Insights: Cambodia• 7 web-sites are in alexa’s top 20 country sites are news portals with 4 in top 10.

Something to consider when becoming noticeable: media government controls

Final wordsTo put it simple, Malaysia and Thailand appeared on top of the list because it is easier and cheaper to acquire online users (due to low entry competition and relatively mature digitally-penetrated audience), retain them and relatively easy to monetize them (due to developed advertising market and major buyers on the market).

Indonesia, being a runner-up, is showing even better growth signs and possibly more monetizing options (even in spite of the fact that digital still remains under-developed). But the digital news media competition is quite fierce already with higher entry barriers, which increases the risks.

All three countries show healthy digital tech landscape with a lot of unique well-funded start-ups and e-commerce companies, which can significantly increase revenue streams.

Philippines and Vietnam with combined population of 193M people remain interesting markets to keep a close eye on in 2016-17.

Myanmar numbers are not currently attractive on relative basis in SEA region, but first democratic elections in 2015 as well as established piece in the country might make this market more attractive in 2018-19.

Best regards,

Vlad Grankin

Key sources used• http://wearesocial.sg/• http://www.alexa.com• https://freedomhouse.org/• https://www.techinasia.com/• https://www.cia.gov/library/publications/the-world-factbook/• http://www.mparesearchconsulting.com/• http://www.statista.com/• http://hypestat.com