Hallo all,

Today i will attempt to do something that would certainly make me look foolish! 😀
Yet when someone posed to me a great question, i find it hard not to spend some time trying to answer it. My foolishness can certainly be shown by your negative comments and unlike others i welcome them so do share what you have in mind 🙂
I appreciate the data driven culture at Google so i will try to use as much data as i can. However, due to the lack of reliable numbers, many comments are based on personal observation.

The question is if i WERE a Googler, taking care of Vietnam market, who i should pay attention to?

Let’s answer this from a couple of different perspectives.

1. Google Revenue stream:

Before jumping straight into answering this question, let take a look at the big picture first.

Overall advertising spend in Vietnam is small, albeit growing fast

First of all, total advertising spend for Vietnam is quite small compared to other countries in the region. According to TNS Media Vietnam, the advertising spend in Vietnam for 2009 was around 736 million USD, the estimated number for 2010 is 840 million USD.
The corresponding figure for Malaysia is around 2 billion USD, for Thailand is around 3 billion USD. So the first conclusion is even a bigger percentage of ad spend in Vietnam is for digital marketing, the absolute value may still be smaller than the figures in Malaysia, or Thailand and of course Singapore.

Estimated Online marketing spend in Vietnam for 2010

VnExpress in Sept 2009 published a joint article by Yahoo Vietnam and TNS Vietnam about online marketing spend. In the article, they estimated that the marketing spend for online advertising in Vietnam will reach about 8 million in 2010. This makes the percentage of online ad spend come to about 1% of the overall advertising spend in Vietnam in 2010. However, in a Saigon Digital Marketing conference in early 2010 VnExpress themselves reported that their ad revenue reached about 7 million in 2009, Yahoo said they had about 2 million in revenue and Zing brought home about 1 million.
(If you happen to search for Saigon Digital Marketing or SDM in Vietnam, the company that held the event no longer existed. )

Obviously the various reported numbers do not match. Yet we can estimate that the online ad spend in Vietnam (excluding spend on digital content) should be lesser than say 20-25 million USD in 2010, or about 2% – 3% of the overall ad spend.

So now with a little bit of context for Vietnam marketing landscape, let’s see where Google gets her money from in Vietnam.

Worldwide, the majority of Google revenue (about 90%+) comes from the Advertising program i.e. Ads on Google sites. The platform that powers this are Google Adwords & Google Adsense.
Right now Advertisers in Vietnam can use a single platform to reach target audience while they are:

• Searching on Google.com or google.com.vn (for Vietnam)
• Watching videos on You Tube, writing emails using Gmail, blogging using blogger, reading news on CNN, Bloomberg etc… These sites are available in Google Display Network, formerly known as Google Content Network. Besides traditional banner, this network supports rich media, video ads and other formats.
• Searching on their mobile phone. According to some data i gather, the volume of daily search queries on mobile device for Vietnam has skyrocketed this year and the absolute volume is well above a couple of millions queries/day
• Using apps on their smart phones
• Searching on Google search partners
• And some other activities

Much like elsewhere, Google owns web search in Vietnam. According to comScore MediaMetrix  Aug – Dec ‘09, Yahoo Search reaches 27% of searchers in Vietnam. This data was released by Yahoo team in 2010. I would assume the high percentage is because Yahoo is still the default search engine for some browsers/toolbar. Especially people in Vietnam may use Yahoo toolbar hence when they search, it’s automatically on Yahoo. Also please note that the above figure measures “Reach”, not in terms of absolute search volume (i.e. the absolute number of search queries/month).

Coming back to Google’s competitors, in a recent interview with WSJ, Google Chairman and CEO Eric Schmidt said that Bing was Google’s primary competitor, not Apple or Facebook. If we follow that train of thought then in Vietnam, Yahoo should come at the top of the list because of their search deal with Bing.

Is Yahoo Vietnam the main competitor?

From my estimation, Yahoo revenue has been increasing since 2008, when they opened their office here in Vietnam. Yahoo team in Vietnam (small office with about 10 employees) focuses primarily on sales & client servicing.
Yahoo is super strong with their messenger program. Virtually every internet user in Vietnam has a Yahoo Messenger ID.
According to them they have 9 million unique users/month and about 124 million page views (data Jun 2010) for Y! Messenger Vietnamese version and 7.3 million unique Vietnamese users/month with 46.7 million page views for Y! Messenger English interface version – US version.

Yahoo messenger is clearly the top property for Yahoo. As for Yahoo Homepage even though Yahoo says that their homepage attracts 10 million unique users/month. I would suspect that because of the Yahoo toolbar integration with Yahoo messenger and other distribution deals (installing any updates for Java, they would prompt you to install Yahoo toolbar). Yahoo Homepage content is relatively poor as compared to other news portal in Vietnam and personally i don’t feel that it’s Yahoo ambition to be the place where Vietnamese would go to read news.

The change of leadership at Yahoo Vietnam recently brought in new direction. Yahoo local team is aggressively  looking for ways to monetize Yahoo properties, including non traditional banner position

The real issue, i feel, is the scalability issue. Yahoo obviously does not want to make it messenger interface too crowded with ads so she’s trying to develop other properties. Without Yahoo Messenger, Yahoo has very little to offer from my opinion. Agency can easily find other solutions to replace other Yahoo properties.

In conclusion, i personally don’t feel that Yahoo would pose a big threat to Google in Vietnam cause of Yahoo internal priority issue + innovation speed.

Google Pay per Click while being effective, is not SEXY

Yup you heard it right, i used the word Sexy. Online is new in Vietnam hence many of the online marketing campaign center on branding and raising awareness. With these limited objectives in mind, it’s not a big wonder to see VnExPress and other news portal claim the top spot in online ads revenue. Google pay per click advantage lies mainly with Direct response type of marketing, marketing type that needs to show Return on Investment quickly. However, Direct response marketing is still relatively nascent in Vietnam.

Vietnamese heard about Google Adwords about 5 years ago but until now, not that many people in the market place actually have lots of experience running Pay Per Click campaign. It’s always difficult to communicate to an audience who think that they know a lot but actually little rather than communicating to a brand new audience.
Common myths/mistakes, which are no longer an issue in mature market,  are profound in Vietnam.

Vietnam market is unique in such a way that it doesn’t go through the normal “evolution” process as mature markets did. Every year Vietnamese marketers are looking for the next big/sexy thing to embark on while lots of fundamental issues remain. From that perspective people think that Google pay per click is something of the past, it’s now Social media and mobile marketing etc…
Let’s look at one example from our client base, from Oct 2010 until now (23rd Dec 2010) we see a 54% growth in terms of media spend for Facebook Ads compared to Q4 2009. Clients can approve a plan to spend $5000 on Facebook for 2-3 weeks. However, it’s not that easy to convince the same client to spend that amount on Google Pay per Click. The reason i think is because the name Facebook has been mentioned time and again this year and that makes a strong impression on marketers’ mind.

VnExpress and Zing are worth noticing

VnExpress still leads the publisher market in terms of revenue. They drive the bulk of their revenue from Display banner/Rich Media. VnExpress is tackling the issue of scalability by developing different properties like http://ebank.vnexpress.net/GL/Ebank/ or the upcoming social media network. When planning their media plan, many agencies and big clients still allocate lots of budget for VnExpress, the remaining budget is for other channels.
The bigger the “moat” VnExpress has around the portion of Online Media spend, the harder it is for Google to grow its share. They are not direct competitors from a product stand point but from a revenue stand point, they are.
VnExpress started to offer contextual ads as well. However, the adoption rate is still quite low judging from what i see on the site.

Zing is a completely different story. Vinagame just rebranded itself as VNG, which focuses on Digital Content. Right now Zing is both a publisher and an agency. Zing has a very big sales team (around 30 in Ho Chi Minh alone), talking to both agencies and direct client. Zing has its own creative team, they can cater their platform/portals to suite different marketing campaigns.
Basically the way Zing approaches advertisers is this: tell us your marketing objectives and we will build a marketing plan for you using different Zing properties from online to offline like: Zing mp3, Zing games, ingame advertising, Zing Me, offline internet cafes, offline game rooms etc…
Right now Zing doesn’t pose such a big threat from the revenue stand point because the perception from the market place that Zing portal is primarily for younger audience i.e. limited marketing opportunities.
However, Zing has been trying to rebrand itself and appeal to much older audience.
The role Zing playing is quite controversial because soon it will compete directly with agencies. Lessons from New Media Edge some time back and Innity recently are worth observed.
It is known that Vinagame and Tencent have close business relationship (strategic partners so it’s not a big mystery to see Vinagame follow the same model as Tencent with some local favor. While Google business model and Vinagame have little in common, the truth is that until Vietnamese advertisers switch their mindset from online branding/raising awareness to direct marketing/direct response type, Vinagame continues to be Google’s competitors from revenue standpoint.

2. Google Product review Threats from Vietnamese competitors

Google Search (web search and image search)

No close competitor in sight. Yahoo mentioned in the middle of 2010 that it would take them at least 12-18 months to customize their algorithm to churn out better search results for Vietnamese. Right now the search results are no where near the level of Google.
Another 12-18 month is a long wait i suppose so well, as i said, no close competitors in sights.

You Tube

I would consider Zing mp 3 and nhaccuatui as too serious competitors for Vietnam market. While the leading position of You Tube for video sharing is ubiquitous even in Vietnam, there is no clear leader for mp3 song sharing and the like.

According to Google Ad Planner, Zing MP3 has around 8.1 million unique users, while nhaccuatui has about 6.2 million unique users.

Users who visit nhaccuatui.com also visit mp3.baamboo.com, which is also another potential competitor for You Tube.
Zing mp3 and nhaccuatui are being used by not only by teens but also young white collar workers as well.
Video sharing section of Zing i.e. video.zing.vn attracts about 1.9 million users in October 2010 according to DoubleClick Ad Planner. This number is obviously much smaller than Zing mp3 or You Tube number. Local experience suggests that users of Zing Video are more keen on searching for Vietnamese made videos rather than international ones.
The number of viewer for top videos on Zing Video is lesser compared to You Tube figure as well.

Other portals like clip.vn (3.2 million users in Oct 2010) video.baamboo.com (2.1 million users) are worth considering but they lack the appeal to older audience/office worker i guess.

You Tube is facing some serious copy right charges from content owners and it’s trying to very hard to overcome these. Local players in Vietnam do not seem to face this issue though because many of them follow the Baidu model. They would argue that they are basically search engines, they do not own/store/publish the copyrighted materials. The law enforcement agency should go after the real publishing/storing sources.

Gmail

The battle has not yet finished. Y! Mail is still quite popular in Vietnam.While Yahoo doesn’t disclose their email users in Vietnam publicly, every Yahoo Messenger user automatically has a Yahoo mail address so you can roughly estimate the large volume of Yahoo mail users. How many of them are active users is another separated question even though the number of active Yahoo Messenger users in Vietnam exceeds 15 millions/month.

Vietnamese usage of Yahoo Mail is primarily because Yahoo came to the market first and people get used to using Yahoo Mail. In rural areas, i suppose Yahoo mail is much more popular than gmail because of Yahoo messenger usage.

There are no other local free email service provider that is worth noticing. While Zing is following the Tencent Model but i doubt that they will be able to integrate their portal with email service and convince users to use it.

Google Maps faces strong competition from local players

While Google Map is the number one mapping service in the US. It’s not the same in Vietnam.
In the south of Vietnam, diadiem.com is the local favorite while vietbando is the choice in Ha Noi.
The level of traffic for diadiem.com is quite good actually

Blogger remains steady

Blogger is still one of the popular blogging platforms in Vietnam. The level of traffic for Blogger is about 10% the level of traffic for wordpress (blogger has about 0.2M users/month while WordPress commands 2.2M users/month in Vietnam). This is a bit surprising because wordpress is perceived to be used by more sophisticated crowd as compared to Blogger.

Yahoo 360 plus while not being in the lime light any more still manage to get over 3 million visitors /month.

Zing used to offer its own blogging platform. However, it’s no longer going down that road i believe.

Google Docs faces a strong Microsoft Office

Google Docs has been around for quite some time and i use it a lot, especially Spreadsheet.
However, from my humble opinion i would say Google Docs is still mainly used by savvy internet users in Vietnam. The advantage of Google Docs to users in Vietnam would be the powerful sharing & history function. It’s so easy and secure to share either word document or an excel file online with friends and all users can edit the document at the same time.
One big advantage Microsoft Office has over Google Docs is that Microsoft Office has become the official/must learn tools for business. In high school and university, teachers/lecturers teach about how to use Microsoft Office more efficiently. They even teach Microsoft Office via distant learning (i.e. on TV).

Another advantage Microsoft Office has is that it’s available in Vietnamese while Google Docs is not.
While i guess it’s relatively easy to translate the interface of Google Docs to Vietnamese, i think the longer Google waits, the more Microsoft Office will become more like a habit for Vietnamese users. When it becomes something like Yahoo Messenger, it’s hard to replace.
Many Vietnamese still have problems with English so by simply translating the interface of Google Docs to Vietnamese, it would go a long way in winning the Vietnamese market.

I personally do not think there is any local/vietnamese products that would be a threat to Google Docs. The threat itself comes more from the functionalities i.e. whether the average Vietnamese users find Google Docs useful.

Google Checkout is going to face very strong competition from Vietnamese Players.

Yup local payment gateway is gaining ground. Google checkout is hardly used in Vietnam. Instead we have nganluong.vn or OnePay.vn.
These local payment gateways have the advantage both from the policy point of view and their ability to cater to local needs quicker i.e. using ATM card to pay instead of just using credit card or bank transfer etc…
Escrow service is available for many local payment gateways as well. To succeed in building up a local payment gateway i would say the ties with local banks and different local authorities would play a critical role.

Hence, I guess Google checkout would lose out to vietnamese players completely. Even the ability to integrate with Google Adwords Ads for Google Checkout won’t help it much in gaining audience in Vietnam.

3. Threats from policy makers

3.1 Tax complication between Google and Vietnamese government

This would be the biggest issue between Google and the local government.
Google derives most of their revenue/profit from Google Adwords platform, which is purely online.
In a way, Google faces similar situation as Yahoo Vietnam so i wouldn’t say Google would be the first case locally.
However, the challenge is it’s unlikely for Google to set up a permanent office in Vietnam with a full business license, NOT a representative office license. I am not a legal expert but i would guess that a representative business license would be quite restrictive in terms of what you can/can not do.

Right now Google HQ for the region is in Singapore. The way Google works at the moment is either you can pay the media spend by credit card/bank transfer. Either way the destination of those transfers is NOT a registered office in Vietnam. By this arrangement Vietnamese Government has no way of imposing tax on Google profit from Vietnam market and this is going to be an issue.
We know that Google is making lots of money by its annual/quarterly earnings reports. And Yes Google is employing various tactics including the famous Finance Office in Ireland to get around the tax issue and retain its profit. It’s within Google right & responsibilities to minimize the amount of tax it has to pay, however, the issue here is Tax authorities have no way of determining exactly how much Google should pay without an office here.

For responsible agencies in Vietnam, if they want to go long term they have to pay the Withholding tax on Google behalf. The rate is about 10% of the media spend for Vietnam, from what i heard it’s 20% for Indonesia.
Well no one is going to blow the whistle if agencies don’t pay the Withholding tax to Vietnamese Government on Google behalf. However, doing so will probably do more harm than good to the agency tax record in the long run.
As for Google, I am not sure exactly how the situation in other countries is like, but it’s unlikely that Google would be willing to pay 10% tax on its media spend if the money is coming out of Google pocket directly i.e. Instead of collecting the full $100, Google only gets $90. The burden would then fall on to those who want to advertise using Google platform.
If you are familiar with the way Search Engine Marketing (PPC) agencies operate, you would know that the tax rate of 10% of the media spend is a big percentage.

3.2 Censorship issue for Google Natural Search Results

While Vietnam does not currently impose such a strong censorship over the internet, the country tends to control the flow of information somewhat. Right now Google doesn’t censor its natural results in Vietnam and the government doesn’t require it to do so.

The situation is 100% different in China. The recent information made public by Wikileaks (which was posted by AP, BBC, The New York Times and other organization) indicated that a standing member of the politburo member typed his name into Google and found critical results of him. This led to the hacking efforts on Google system, leaked U.S government memos showed. How the situation played out subsequently was portrayed candidly over the news some time ago. We observe the same situation in natural search results if you search for names of famous persons in Vietnam. I didn’t realize how “open/free” search results from Google in Vietnam for political content was until i did research for this post.
I guess that this is not a surprise to many of you. However, this does show one thing the freedom of speech is relatively exercised here.

Could the situation in Vietnam change i.e. the Government requires Google to censor its results? Obviously, I am in no position to answer this question. Besides, one of the difference between China and Vietnam is that we don’t have a “Baidu” equivalent for Vietnamese. Searching for information remains the top 2 activities Vietnamese do online according to Cimigo report on Vietnam Netcitizens.

3.3 Censorship for blogging service

It was observed that because of the popularity of Yahoo 360 and Yahoo 360 plus blogging service, it became a topic of discussion for the law enforcement agencies because right now we have very limited rules to govern the internet.

From what i heard, Yahoo blogging service has to guarantee with the government that it will do its best to maintain/censor the content. Recently more and more bloggers are being sued for various charges. I am in no position to comment whether these charges are valid or not. One thing i can estimate is that if more vietnamese use Blogger and Google has no intention of implementing some kind of censorship over its blogging service, there is a possibility (no matter how remote) that blogger will be unofficially blocked in Vietnam.

That’s all i have for now folks. I am more than welcome any comments you may have so feel free to share.

Thanks,
Chandler