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The new economy goes global
Sitting in her office at Yahoo!'s Santa Clara, Calif., headquarters, Jasmine Kim sounds very relaxed. That's unexpected, considering her stressful job: director of international marketing for one of the world's most respected Internet companies. After all, competitors in the U.S. and abroad nip at Yahoo!'s heels every day. But Kim feels just fine.
"Wedo
n't view Santa Clara as the corporate central office that the world revolves around," she explained. "We happen to have resources in Santa Clara, but we made a conscious decision at the begin
ning that Yahoo! was going to be a worldwide operation that didn't revolve around the U.S."
So Kim can relax because local managers are responsible for execution of marketing strategies and content in their countries. Her international marketing team (she calls it the Germination Team) is based in Santa Clara and diffuses best practices to the managers of Yahoo!'s 23 country Web sites-but she relies on local management to teach her team about their particular market.
This core strategy, to leverage U.S.-based marketing strategies and content internationally but localize execution, is shared by America Online and Amazon.com, two other U.S. Internet companies that have successfully built international operations and brands. Is this the secret to their success? Possibly.
"Whenever you internationalize a business, it has to be a combination of what works in the home market with the right amount of local flavor," said Steve Frazier, managing director of Amazon.co.uk. "You try hard not to re-invent the wheel, but make sure you adapt it locally."
At the outset, all three companies made conscious decisions to expand first into Europe. To avoid the Boo.com-like mistake of launching simultaneously in 20 countries, they focused on the U.K., Germany and France, one by one. But their methods of setting up shop differ.
Yahoo!, a first-mover in the U.K. with its launch in 1997, decided to go it alone. It hasn't entered into joint ventures or partnerships in any international markets, choosing instead to independently run all of its 23 sites with locally-hired staff.
"We wanted full ownership and full responsibility for Yahoo! so we'd have complete control and accountability," said Andrea Cutright, Yahoo's international marketing manager responsible for Europe.
AOL, in contrast, has been a strong proponent of joint ventures. In early 1995, the company got an initial foothold in Europe through a partnership with German publisher Bertlesmann. In Latin America, AOL entered into a JV with Venezuelan media group The Cisneros Group of Companies in December 1998. And AOL Japan is a joint venture between AOL, Mitsui &
Co. and publisher Nihon Keizai Shimbun.
"We believe strongly in the JV model because it gives us infrastructure and content," said Michael Lynton, New York-based president of AOL International. "It also gives us local expertise and helps us understand the nuances of the market."
Amazon.com, on the other hand, launched sites in the U.K. and Germany in 1998 after buying local online booksellers Bookpages.co.uk and Telebook in Germany. These acquisitions, which catapulted Amazon into the top spots in each country, were Amazon's only option because it needed access to local book databases, said Olivier Beauvillain, analyst at Jupiter Communications, London. In fact, Amazon took longer than expected to enter France-the site just launched Aug. 31-because competitors like Fnac.com snatched up local bookseller Alapage.com first, forcing Amazon to partly build its own database, he added.
Despite having different entry strategies, Yahoo!, AOL and Amazon agree hiring locally is essential. Yahoo! Europe is run by Spaniard Fabiola Arredondo;
AOL Latin America is headed by Charles Herington, a native of Kingston, Jamaica who was raised in Mexico City;
and Diego Piacentini, senior VP, general manager, international at Amazon.com, hails from Milan.
But Americans still make up a good portion of international management. Frazier, AOL's Lynton, and Yahoo!'s Kim and Cutright are all American. In fact, all but Frazier are based in the U.S.
Nevertheless, in-country teams are often made up of local talent. But that's really no different than what other multinational companiesdo
. Perhaps the three companies' decisions to use a different ad agency in each country, which they say leads to more localized, targeted advertising, has some merit.
"We find the agency with the most strength in each market," said Lynton. For example, AOL uses DM9 DDB in Brazil, Teran TBWA in Mexico and Gotham NY in the U.S., leading to country-specific campaigns.
Yahoo! follows a similar strategy, with a twist: it adapts a good amount of creative from its U.S. agency, San Francisco-based Black Rocket, localizing ads through its roster of in-country agencies, Kim said.
Most of the TV ads are humorous and rely heavily on visual images, so executions can be easily moved around the world. Local agencies might make the ads locally relevant by changing the URL at the end of the spot from Yahoo.com to Yahoo.de, for example, or by completely changing the message but keeping the overall feel.
"In Europe, we're moving towards being known as a place to buy, but every country takes their own local approach to that," said Cutright. "In Spain, we know most people haven't used the Internet, so our ads will explain online shopping, talk about security and safety, and take a more educational tact. But in Sweden, most people have been on the Net and participated in online commerce, so we might use only online media to send the message that Yahoo! is the place to buy things."
For print campaigns, Yahoo! has templates that provide general images, fonts, colors and copylines local managers must use in each ad, but specific executions are left up to local managers and agencies. The English tagline, "Do you Yahoo!?" remains consistent around the world-research revealed the tagdo
es better left in English rather than translated.
The strategy has been particularly successful in Europe. Yahoo! is one of the top portals in all eight countries in which it operates (Denmark, France, Germany, Italy, Norway, Spain, Sweden and the U.K.), topping local competition like France Telecom's Wanadoo and Deutsche Telecom's T-Online, as well as U.S. players like MSN and Lycos.
Kim is also a big proponent of "buzz marketing," or grassroots efforts, such as covering cranes with Yahoo! posters in Cologne, Germany.
"We wrapped taxis in San Francisco with Yahoo! posters and asked our marketing people to think about the mode of transportation that is really ubiquitous in their country. So we wrapped rickshaws and motorcycles. We didn't get fixated on the cab, but we try to distill the essence of a program," Kim said.
Buzz marketing is Yahoo's main strategy now to differentiate itself in Asia. True, Yahoo! Japan, launched in 1995, is the country's top portal and Yahoo! Korea also is ranked highly. But there's strong competition from local start-ups like Chinese portal sina.com.
Recently, Yahoo! offered backrubs to Taiwanese university students adjacent to computers on which they could surf the Net. Students graduating from Beijing universities were greeted by Yahoo! staffers encouraging them to stay in touch through Yahoo! e-mail and chat services.
"It's really competitive in Asia, and so much of the new user base is students," said Gen Shibayama, Yahoo!'s international marketing manager for the Asia-Pacific region. "Grassroots marketing and word of mouth are very important for us now to create mass-level awareness."
Word-of-mouth marketing, coupled with an obsession with customer experience, is gospel at Amazon.com, which reported 23% of second-quarter sales from outside the U.S.
"We've focused much more on customer experience rather that just advertising," Piacentini said. "I'm not saying advertising isn't important. I'm saying Amazon has always chosen to spend onedo
llar on the customer versus marketing. That's why the brand is so popular-it's about making the customer happy."
Amazon's modus operandi is making sure customers have a good shopping experience-it lets them know immediately if an item is out of stock, for example-and receive packages on time. "The most powerful marketing and advertising [in the U.K.] is word of mouth, like in the U.S., so we have to have a site that works, that has good fulfillment and good customer service," said Frazier.
That being said, Amazon's U.S. site hasdo
ne marketing deals with Web portals like Yahoo! and engaged in TV and print advertising, strategies now being mirrored by its U.K., German and French sites.
"We're watching Seattle and trying to adapt to the European market. The [U.K. and German] sites are like twin brothers and Amazon.com is the mother," Frazier joked.
Now Amazon.co.uk has a presence on the Virgin and Yahoo! U.K. Web sites, and its current U.K. campaign, from HHCL &
Partners, emphasizes that it's easy to order and receive products from Amazon.co.uk-an idea formulated after the delivery fiascos Amazon experienced in the U.S. last Christmas. But Amazon.com ads, handled by FCB Worldwide, San Francisco, have never been used overseas because its three international markets are at different maturity levels, Frazier said.
AOL, with more than 4.6 million international subscribers,do
esn't use U.S. ads else
where either-but its marketing mix remains consistent around the world. "Internationally, wedo
brand marketing with TV and print, direct marketing and retail distribution, which is exactly what is effective in the U.S.," Lynton said. AOL operates in eight languages in 16 countries, including Germany, Sweden, Japan, Australia and Brazil.
AOL's strategy has really been tested in Europe, where it has tough local competition from free ISPs and national telecoms that have a stranglehold on the market. T-Online, Deutsche Telecom's ISP, leads the German market with about 4.5 million subscribers, dwarfing the 1.5 million subs AOL claims, and France Telecom's Wanadoo reports around 1.4 million paying customers to AOL France's 600,000.
When AOL entered Germany in 1995, T-Online had 80% of the market. So AOL and agency Grey Advertising opted for a humorous campaign, coupled with promotions and a price-aggressive campaign. "T-Online was so popular that we needed to make AOL the talk of the town," said Bernd Michael, chairman-CEO of Grey Advertising's Europe, Middle East and Africa region, who oversees AOL Germany's advertising. "The majority of Germans are afraid of using computers, so we positioned AOL as the only online service that is so easy, anyone can use it."
Boris Becker, the world-renowned tennis player, became AOL's German spokesman. In the first spot, he confesses he was afraid to use the Internet. After mistakenly pushing a button that gets him into AOL, he says, "I'm in the system now," which has sexual connotations in German, instantly making the campaign a success and boosting AOL's market share.
In France, by contrast, new agency DDB Paris is promoting AOL's latest pricing offer whereby customers pay a monthly fee for unlimited Net access. AOL must focus on cost now because a price war has broken out in France between AOL, Wanadoo and supermarket chain Carrefour, said Jupiter's Mr. Beauvillain. Wanadoo just cut its fees in half, and Carrefour is providing 120 hours of free Net access over a one-year period.
However, AOL faces its toughest battle in Latin America, where it's going up against firmly entrenched competitors who have been heavily branding themselves for years. Adding to the challenge is that AOL hit the Brazilian market in June 1999, at a time when free ISPs were taking off, and was late to enter Mexico and Argentina, said Lucas Graves, another Jupiter analyst.
So distribution partnerships have been AOL Latin America president Herington's strategy of choice. AOL Brazil is working with Banco Itau to distribute a custom version of AOL to the bank's 7 million customers;
AOL Mexico CDs will be distributed free by Blockbuster, Tower Records and Wal-Mart Mexico;
and several retailers in Argentina have agreed to distribute the CDs.
"We aredo
ing these deals to aggressively generate trials of the software," Mr. Herington said. "We focus on people coming onto the Internet, what we call the 'intenders'."
Analysts agree this is a smart strategy. "It makes a lot of sense for AOL to look for other customer acquisition channels by striking relationships with entities that are players in these markets to make up some of the gap," Mr. Graves said. "They have an immense amount of work todo
to catch up."
AOL Brazil has only 250,000 subscribers compared to the 760,000 that top ISP like Universo Online claims.
In what would be AOL's biggest distribution partnership yet, the company is rumored to be developing content for NTTdo
CoMo's wildly popular i-mode wireless phone service. I-mode has nearly 10 million subscribers, and AOL Japan has 440,000, making it Japan's 10th-largest ISP.
At the end of the day, the biggest advantage Yahoo!, AOL and Amazon.com may have, though, is the power to leverage content and technology from U.S. headquarters.
"The number one thing Amazon.co.uk hasdo
ne from a business point of view is transplant a business model-the user interface, customer service ethic and fulfillment system-that was proven to work in the U.S.," said Frazier. Using this basic shell, his team overlay a British tone, style and content for the local audience.
Similarly, Yahoo! exports a universal platform that includes e-mail and chat, but entertainment resources, news and sports are specific to each country site, Kim said.
AOL says it creates the most local content-according to Her-ington, the Latin American sites were 100% developed by local producers and designers, who created each service after being trained in AOL's Virginia headquarters.
Despite these apparent successes, Yahoo! Europe only just turned a profit in the first quarter with about $22 million in revenue, and AOL International is now making a small profit too.
And although any move Amazon makes causes marketers the world over to quake in their boots, the company stilldo
esn't make money, and is under considerable pressure to turn a profit. In fact, Merrill Lynch estimates Amazon's French operations will lose about $25 million in 2001.
They may be high-profile companies, but they're a long way off from being genuinely global brands like Coca-Cola Co. and McDonald's Corp. Even these old-economy stalwarts still have to worry about issues like customer satisfaction and competition. Many new-economy brands would love these to be the worst of their problems.
见好立刻给分
The new economy goes global
Sitting in her office at Yahoo!'s Santa Clara, Calif., headquarters, Jasmine Kim sounds very relaxed. That's unexpected, considering her stressful job: director of international marketing for one of the world's most respected Internet companies. After all, competitors in the U.S. and abroad nip at Yahoo!'s heels every day. But Kim feels just fine.
"Wedo
n't view Santa Clara as the corporate central office that the world revolves around," she explained. "We happen to have resources in Santa Clara, but we made a conscious decision at the begin
ning that Yahoo! was going to be a worldwide operation that didn't revolve around the U.S."
So Kim can relax because local managers are responsible for execution of marketing strategies and content in their countries. Her international marketing team (she calls it the Germination Team) is based in Santa Clara and diffuses best practices to the managers of Yahoo!'s 23 country Web sites-but she relies on local management to teach her team about their particular market.
This core strategy, to leverage U.S.-based marketing strategies and content internationally but localize execution, is shared by America Online and Amazon.com, two other U.S. Internet companies that have successfully built international operations and brands. Is this the secret to their success? Possibly.
"Whenever you internationalize a business, it has to be a combination of what works in the home market with the right amount of local flavor," said Steve Frazier, managing director of Amazon.co.uk. "You try hard not to re-invent the wheel, but make sure you adapt it locally."
At the outset, all three companies made conscious decisions to expand first into Europe. To avoid the Boo.com-like mistake of launching simultaneously in 20 countries, they focused on the U.K., Germany and France, one by one. But their methods of setting up shop differ.
Yahoo!, a first-mover in the U.K. with its launch in 1997, decided to go it alone. It hasn't entered into joint ventures or partnerships in any international markets, choosing instead to independently run all of its 23 sites with locally-hired staff.
"We wanted full ownership and full responsibility for Yahoo! so we'd have complete control and accountability," said Andrea Cutright, Yahoo's international marketing manager responsible for Europe.
AOL, in contrast, has been a strong proponent of joint ventures. In early 1995, the company got an initial foothold in Europe through a partnership with German publisher Bertlesmann. In Latin America, AOL entered into a JV with Venezuelan media group The Cisneros Group of Companies in December 1998. And AOL Japan is a joint venture between AOL, Mitsui &
Co. and publisher Nihon Keizai Shimbun.
"We believe strongly in the JV model because it gives us infrastructure and content," said Michael Lynton, New York-based president of AOL International. "It also gives us local expertise and helps us understand the nuances of the market."
Amazon.com, on the other hand, launched sites in the U.K. and Germany in 1998 after buying local online booksellers Bookpages.co.uk and Telebook in Germany. These acquisitions, which catapulted Amazon into the top spots in each country, were Amazon's only option because it needed access to local book databases, said Olivier Beauvillain, analyst at Jupiter Communications, London. In fact, Amazon took longer than expected to enter France-the site just launched Aug. 31-because competitors like Fnac.com snatched up local bookseller Alapage.com first, forcing Amazon to partly build its own database, he added.
Despite having different entry strategies, Yahoo!, AOL and Amazon agree hiring locally is essential. Yahoo! Europe is run by Spaniard Fabiola Arredondo;
AOL Latin America is headed by Charles Herington, a native of Kingston, Jamaica who was raised in Mexico City;
and Diego Piacentini, senior VP, general manager, international at Amazon.com, hails from Milan.
But Americans still make up a good portion of international management. Frazier, AOL's Lynton, and Yahoo!'s Kim and Cutright are all American. In fact, all but Frazier are based in the U.S.
Nevertheless, in-country teams are often made up of local talent. But that's really no different than what other multinational companiesdo
. Perhaps the three companies' decisions to use a different ad agency in each country, which they say leads to more localized, targeted advertising, has some merit.
"We find the agency with the most strength in each market," said Lynton. For example, AOL uses DM9 DDB in Brazil, Teran TBWA in Mexico and Gotham NY in the U.S., leading to country-specific campaigns.
Yahoo! follows a similar strategy, with a twist: it adapts a good amount of creative from its U.S. agency, San Francisco-based Black Rocket, localizing ads through its roster of in-country agencies, Kim said.
Most of the TV ads are humorous and rely heavily on visual images, so executions can be easily moved around the world. Local agencies might make the ads locally relevant by changing the URL at the end of the spot from Yahoo.com to Yahoo.de, for example, or by completely changing the message but keeping the overall feel.
"In Europe, we're moving towards being known as a place to buy, but every country takes their own local approach to that," said Cutright. "In Spain, we know most people haven't used the Internet, so our ads will explain online shopping, talk about security and safety, and take a more educational tact. But in Sweden, most people have been on the Net and participated in online commerce, so we might use only online media to send the message that Yahoo! is the place to buy things."
For print campaigns, Yahoo! has templates that provide general images, fonts, colors and copylines local managers must use in each ad, but specific executions are left up to local managers and agencies. The English tagline, "Do you Yahoo!?" remains consistent around the world-research revealed the tagdo
es better left in English rather than translated.
The strategy has been particularly successful in Europe. Yahoo! is one of the top portals in all eight countries in which it operates (Denmark, France, Germany, Italy, Norway, Spain, Sweden and the U.K.), topping local competition like France Telecom's Wanadoo and Deutsche Telecom's T-Online, as well as U.S. players like MSN and Lycos.
Kim is also a big proponent of "buzz marketing," or grassroots efforts, such as covering cranes with Yahoo! posters in Cologne, Germany.
"We wrapped taxis in San Francisco with Yahoo! posters and asked our marketing people to think about the mode of transportation that is really ubiquitous in their country. So we wrapped rickshaws and motorcycles. We didn't get fixated on the cab, but we try to distill the essence of a program," Kim said.
Buzz marketing is Yahoo's main strategy now to differentiate itself in Asia. True, Yahoo! Japan, launched in 1995, is the country's top portal and Yahoo! Korea also is ranked highly. But there's strong competition from local start-ups like Chinese portal sina.com.
Recently, Yahoo! offered backrubs to Taiwanese university students adjacent to computers on which they could surf the Net. Students graduating from Beijing universities were greeted by Yahoo! staffers encouraging them to stay in touch through Yahoo! e-mail and chat services.
"It's really competitive in Asia, and so much of the new user base is students," said Gen Shibayama, Yahoo!'s international marketing manager for the Asia-Pacific region. "Grassroots marketing and word of mouth are very important for us now to create mass-level awareness."
Word-of-mouth marketing, coupled with an obsession with customer experience, is gospel at Amazon.com, which reported 23% of second-quarter sales from outside the U.S.
"We've focused much more on customer experience rather that just advertising," Piacentini said. "I'm not saying advertising isn't important. I'm saying Amazon has always chosen to spend onedo
llar on the customer versus marketing. That's why the brand is so popular-it's about making the customer happy."
Amazon's modus operandi is making sure customers have a good shopping experience-it lets them know immediately if an item is out of stock, for example-and receive packages on time. "The most powerful marketing and advertising [in the U.K.] is word of mouth, like in the U.S., so we have to have a site that works, that has good fulfillment and good customer service," said Frazier.
That being said, Amazon's U.S. site hasdo
ne marketing deals with Web portals like Yahoo! and engaged in TV and print advertising, strategies now being mirrored by its U.K., German and French sites.
"We're watching Seattle and trying to adapt to the European market. The [U.K. and German] sites are like twin brothers and Amazon.com is the mother," Frazier joked.
Now Amazon.co.uk has a presence on the Virgin and Yahoo! U.K. Web sites, and its current U.K. campaign, from HHCL &
Partners, emphasizes that it's easy to order and receive products from Amazon.co.uk-an idea formulated after the delivery fiascos Amazon experienced in the U.S. last Christmas. But Amazon.com ads, handled by FCB Worldwide, San Francisco, have never been used overseas because its three international markets are at different maturity levels, Frazier said.
AOL, with more than 4.6 million international subscribers,do
esn't use U.S. ads else
where either-but its marketing mix remains consistent around the world. "Internationally, wedo
brand marketing with TV and print, direct marketing and retail distribution, which is exactly what is effective in the U.S.," Lynton said. AOL operates in eight languages in 16 countries, including Germany, Sweden, Japan, Australia and Brazil.
AOL's strategy has really been tested in Europe, where it has tough local competition from free ISPs and national telecoms that have a stranglehold on the market. T-Online, Deutsche Telecom's ISP, leads the German market with about 4.5 million subscribers, dwarfing the 1.5 million subs AOL claims, and France Telecom's Wanadoo reports around 1.4 million paying customers to AOL France's 600,000.
When AOL entered Germany in 1995, T-Online had 80% of the market. So AOL and agency Grey Advertising opted for a humorous campaign, coupled with promotions and a price-aggressive campaign. "T-Online was so popular that we needed to make AOL the talk of the town," said Bernd Michael, chairman-CEO of Grey Advertising's Europe, Middle East and Africa region, who oversees AOL Germany's advertising. "The majority of Germans are afraid of using computers, so we positioned AOL as the only online service that is so easy, anyone can use it."
Boris Becker, the world-renowned tennis player, became AOL's German spokesman. In the first spot, he confesses he was afraid to use the Internet. After mistakenly pushing a button that gets him into AOL, he says, "I'm in the system now," which has sexual connotations in German, instantly making the campaign a success and boosting AOL's market share.
In France, by contrast, new agency DDB Paris is promoting AOL's latest pricing offer whereby customers pay a monthly fee for unlimited Net access. AOL must focus on cost now because a price war has broken out in France between AOL, Wanadoo and supermarket chain Carrefour, said Jupiter's Mr. Beauvillain. Wanadoo just cut its fees in half, and Carrefour is providing 120 hours of free Net access over a one-year period.
However, AOL faces its toughest battle in Latin America, where it's going up against firmly entrenched competitors who have been heavily branding themselves for years. Adding to the challenge is that AOL hit the Brazilian market in June 1999, at a time when free ISPs were taking off, and was late to enter Mexico and Argentina, said Lucas Graves, another Jupiter analyst.
So distribution partnerships have been AOL Latin America president Herington's strategy of choice. AOL Brazil is working with Banco Itau to distribute a custom version of AOL to the bank's 7 million customers;
AOL Mexico CDs will be distributed free by Blockbuster, Tower Records and Wal-Mart Mexico;
and several retailers in Argentina have agreed to distribute the CDs.
"We aredo
ing these deals to aggressively generate trials of the software," Mr. Herington said. "We focus on people coming onto the Internet, what we call the 'intenders'."
Analysts agree this is a smart strategy. "It makes a lot of sense for AOL to look for other customer acquisition channels by striking relationships with entities that are players in these markets to make up some of the gap," Mr. Graves said. "They have an immense amount of work todo
to catch up."
AOL Brazil has only 250,000 subscribers compared to the 760,000 that top ISP like Universo Online claims.
In what would be AOL's biggest distribution partnership yet, the company is rumored to be developing content for NTTdo
CoMo's wildly popular i-mode wireless phone service. I-mode has nearly 10 million subscribers, and AOL Japan has 440,000, making it Japan's 10th-largest ISP.
At the end of the day, the biggest advantage Yahoo!, AOL and Amazon.com may have, though, is the power to leverage content and technology from U.S. headquarters.
"The number one thing Amazon.co.uk hasdo
ne from a business point of view is transplant a business model-the user interface, customer service ethic and fulfillment system-that was proven to work in the U.S.," said Frazier. Using this basic shell, his team overlay a British tone, style and content for the local audience.
Similarly, Yahoo! exports a universal platform that includes e-mail and chat, but entertainment resources, news and sports are specific to each country site, Kim said.
AOL says it creates the most local content-according to Her-ington, the Latin American sites were 100% developed by local producers and designers, who created each service after being trained in AOL's Virginia headquarters.
Despite these apparent successes, Yahoo! Europe only just turned a profit in the first quarter with about $22 million in revenue, and AOL International is now making a small profit too.
And although any move Amazon makes causes marketers the world over to quake in their boots, the company stilldo
esn't make money, and is under considerable pressure to turn a profit. In fact, Merrill Lynch estimates Amazon's French operations will lose about $25 million in 2001.
They may be high-profile companies, but they're a long way off from being genuinely global brands like Coca-Cola Co. and McDonald's Corp. Even these old-economy stalwarts still have to worry about issues like customer satisfaction and competition. Many new-economy brands would love these to be the worst of their problems.