Portalizing Asia

Posted on November 12, 1999 
Filed Under CNET, Julian

By Julian Matthews

A quiet revolution is brewing on the Internet portal-playing landscape in Asia.

Even as Yahoo!, Microsoft’s MSN and Lycos move in to colonize the masses, Asian players are taking counter-offensive measures.

The payoffs are obvious. Portals are proven big traffic generators, and Asia is the one of the fastest-growing Internet markets. Couple this with the potential to direct that traffic onto gold-lined e-commerce pathways and the war has just begun.

The battle cry seems to be: “Whatever Yahoo! can do, we can do better.” In Malaysia, a new player has entered the fray while others have revamped and expanded their portal offerings.

For Catcha.com, getting on the global highway via the local trunk road seemed the logical thing to do. “We were frequent Net surfers and real frustrated we couldn’t find any local content. A lot of these American portals were also not providing the depth we sought,” said Patrick Grove, the 24-year-old CEO of Catcha.com.

In Nike-borrowed bravado (”Just do it”), the former investment banker with Arthur Andersen banded with three other friends, cobbled a business plan together and parlayed Catcha.com to investors.

That landed them US$3.2 million worth of venture capital funds coming from venture capitalists and private investors in Hong Kong, Australia, Singapore and Malaysia. The company is now capitalized at RM76.5 million (US$20.1 million) and expects to close a third round of financing soon to enable it to strengthen its position as Southeast Asia’s largest portal.

“The difference between us and American brands like Yahoo! is we are a local portal. Southeast Asia is not a secondary market for us, it’s our primary market. And we’re the target audience. Our management team is the perfect demographic group. We know what users want as we’re all from the region,” said Australian-Singaporean Grove.

Catcha.com’s chief operating officer Nic Lim and chief technology officer John Wong are Malaysian, while chief marketing officer Ken Tsurumaru is Japanese.

Catcha.com’s management team exemplify the young, restless entrepreneurs of the New Economy. They are each no older than 25, sustain Silicon Valley-type work rates of 15-hour days and very often crash out in the office.

The six-month-old portal has three country-specific sites in Malaysia, Singapore and Indonesia, and plans to expand to Thailand and the Philippines early next year, with Australia in the pipeline by mid next year.

The young and the restless

Grove agreed the barriers to entry on the Net these days are so low that anyone can purchase a script off the shelf and launch their own search engine. “But it isn’t easy being competitive. There are over 600 search engines but there’s probably only 10 you’ve heard of. The most important thing is for people to get to know us. We are very focused on marketing and branding.”

Grove said he takes comfort in the fact that in every key market outside of the U.S., the No 1 portal is always the local portal.

Although a RM1 million advertising campaign is on the cards, the management team needs little by way of promoting Catcha.com. Their age, looks and savvy fielding of press questions make for good copy. A no-frills launch of the Malaysia search engine recently saw placement in every newspaper plus a magazine spread.

Grove said he isn’t worried that banner ads market seems still limp in Malaysia. “The tide is going to change and we will be banking on it as we are among the first movers in the region.”

He said a research study recently by Goldman Sachs projects Internet advertising will increase dramatically in Asia, from the current US$237 million to US$1.45 billion in 2001.

“In America, the top 10 Web sites in terms of traffic secured 61 percent of the total online advertising, and in Australia the top 10 secured 77 percent of online ads. We expect Asia to achieve similar concentration,” added Grove.

COO Lim also cited other revenue sources for the company besides banners, such as sponsorship for promotions and selling space on email newsletters and on secondary search boxes.

Catcha.com boasts a database of 30,000 listings, and averages 10 million hits monthly. It features the usual free Web-based email, chat, news, events calendar, e-cards, forums and real-time stock market information. Popular sections include a comprehensive food review section and the “Catch A Date” service that admittedly the portal founders say has improved their social lives.

The company has signed on about 30 content partners in each country and is quickly adding new ones.

Lim said he doesn’t discount e-commerce tie-ups in future. “The Malaysian market is still slow as people aren’t ready to put their credit cards online. Our role is just to keep creating awareness, increase usage and build trust with our users. Once we have that, e-commerce will follow.”

Catcha.com has also acquired two other vehicles–ibeau.com, an Asian celebrity search engine, and 1mp3.com, one of the top 25 MP3 music search engines in the world–which the company plans to build into parallel sister ventures.

“Music is very niche on the Net and we hope to spin-off 1mp3.com to have its own team, and close its first round of venture capital soon,” said Lim.

Grove said that Catcha.com also plans to list on Nasdaq or a regional bourse such as Kuala Lumpur Stock Exchange, or both, within a year.

Other portals in the trenches

While Catcha.com works feverishly for the battle ahead, others have been digging in the trenches for some time.

Computer engineering graduate Liew Chew Keat chucked a US$42,000 a year position in San Francisco to come home and found the MyCARI.com (”cari” means search in Malay) portal in June 1996.

Three years on, Liew still employs only four staff in Penang and one freelancer in Kuala Lumpur while banner ad revenues fluctuate from month to month. “Our advertising revenue is very unstable. Some times it reaches over RM20,000, sometimes nothing!” Liew said the site derives more modest and stable income from hosting.

Slow progress, however, has not prevented the portal from having a small but loyal fan base with 2.5 million page views a month. “We have about 14,500 listings now and 95 percent are Malaysia-related. We add around 150 new links per week,” he said.

Apart from its search engine, MyCARI.com and its local mirror Cari.com.my count the free classifieds and matchmaking sections as the more popular.

Liew seems unworried by the entry of new, more aggressive players and foreign brand names. “I like to think of myself as a warrior, and for any good warrior–no war, no fun!”

He does not believe Yahoo and Lycos will carve up the traffic and advertising pie, leaving local players with the crumbs. “They may have advantages, but I would like to think we are creating our own new pie and we will all have a share of it. The Internet is growing at a very fast pace, faster than any company can manage to take over the whole pie that continues growing,” he said.

Liew added that his company is also actively seeking partnerships with other players to grow market share.

In July, MyCARI.com struck a deal with Skali.com, another portal player to market their brands together at a newly created page called Cari@Skali and share the banner revenue generated from there.

Skali.com, operated by Alam Teknokrat Sdn Bhd, was also an early player in the portal field in Malaysia, having acquired the rights to host the AltaVista search engine in Asia two years ago.

Aimi Aizal, Alam Teknokrat’s director of sales and marketing, agreed it is tough for an Asian Web site to build a brand name in a largely English-based medium, but “it is not impossible. The game plan is to employ the right operational and business model. Do creative marketing and promotions for the brand and build up a community of loyal users”.

A wake-up call

Skali.com accelerated its tie-ups this year and counts 70 global content providers in its stable. The site records more than six million page views every month and publishes more than 1,000 new content items daily.

Aimi does not believe the banner ad market is “slow” anymore. “When we first started two years back, we were the only one singing the portal mantra. Now more players are in the market singing the same tune.

“We also see the creation of new Asian-based advertising networks e-Asia and Space Asia and international ad networks coming to Asia such as Real Media, 24/7, and lately, DoubleClick. Their entries suggest rising growth in the region,” he said.

Aimi said there are also various new means to raise revenue including collaborative partnerships and affiliate programs.

Skali.com’s strategy is to tie up with as many brand names and “share” content or technology. “The common model currently is co-oppetition–where you cooperate and at the same time compete. And the money is for everyone,” he said.

Alam Teknokrat recently partnered with Camtech Asia to offer secure real-time payment processing services for merchants located on its e-commerce site Skali Multimedia Applications Centre (SMAC).

Aimi said that technology puts most players in level playing fields and “understanding of user profiles, culture and local preferences does give us the advantage to provide a better service for the Asian user”.

He conceded, however, that having deep pockets for branding and marketing exercises helps.

Richard Jacobson, senior Internet analyst for International Data Corp’s Asia-Pacific unit, said competition is heating up in the portal market space especially from foreign players in the region. He suggested that language could be an advantage to consider as a new leveraging opportunity.

A recent IDC poll suggested that Asian Internet users shopped at foreign Web sites because they preferred viewing the Web in their native languages rather than English. Foreign companies are already offering such multilingual services and content.

The poll is a wake-up call for Asian Web sites to be more aggressive or lose a huge potential market to foreign companies.

Both Catcha.com and MyCARI.com suggest they will add on Malay and Chinese versions of their portals soon.

“Portals reliant on banners can still be profitable with the right positioning and differentiation. Ease of use and building customer relationships are essential. There is also room for various types of innovative e-commerce tie-ups,” said Jacobson.

He added that he is bullish on e-commerce growth in the region to build new revenue streams for Asian Web sites. Jacobson qualified, however, that in Malaysia the numbers of users online is still relatively small. IDC estimates 580,000 users in 1998, growing to 770,000 in 1999.

Jacobson expects the figure to jump to 2.7 million users by 2003, by which time the portal war will be in full swing.

Published in CNET Asia, Nov 12, 1999: Pg 1 | Pg 2 | Pg 3 | Pg 4

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