Growth options for online media companies
Like any other business, we struggle to define our growth strategy. In the world of online media, the landscape is changing rapidly, but to our surprise the trend is in line with the overall advertising trends. At this time, our business can aptly be described as following the 80/20 rule. In other words, 80% our income comes from the United States, despite the fact that English is spoken by so many people all over the world and our overseas traffic is more than 20%.
Where should online media businesses grow?
According to ZenithOptimedia, US is the world’s 800-pound gorilla. Japan comes second, though some interesting trends are emerging. While US is still the largest contributor to global advertising growth, providing 33% of the ad dollars added between 2004 and 2008 while accounting for 41%-43% of global advertising, the ‘BRIIC’ economies of Brazil, Russia, India, Indonesia and China are only 6%-10% of the sector but are all among the top eight growers, and predicted to supply 26% of global ad growth 2004-2008. By contrast, the five large European markets (UK, Germany, France, Italy, and Spain) are making a predicted contribution of 11%, and their combined share of the global ad market consequently shrinks from 19% to 17% over the same period.
So, it does make some sense for us to grow in China, Brazil, Russia, and India (we already cover the Japanese market in a small way). Should we do it? Not really. We do not plan to allocate any significant resources since the overall pie is still tiny, though we are trying to create a footprint there so that we can still ride the wave. India will probably be the easiest country to penetrate since the vast majority of the surfers have some level of comfort with English. Other countries do not yet justify an investment.
In conclusion, United States is the place to be if you rely on advertising revenue alone.
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