I just went digging for this as well. See the TechCrunch article first.
fredwilson
· 1 year ago
I'll check out the links
Thanks for posting them for me and everyone else to see Nik
Daniel Splittgerber
· 1 year ago
I think it probably correlates with GDP or PPP or some measure like that. Simply said: As long as Asian/Latin American citizens do not have the same amount of $$ as an American citizen and do not spend as much on tech, it will be difficult to get to the same level with revenue/user. There may be some niches which can already be successful by leveraging the differences in the market or address the rich elite class, but I suspect it may take a little longer for the investment capital to be distributed more equally along the continents.
fredwilson
· 1 year ago
It might be interesting to chart GDP and PPP divided by internet users for each region and see what that says
Are there any econ students out there looking for a summer project?
kyle_s
· 1 year ago
Not an econ student (any more), but took a quick look at this. I combined the TechCrunch data on internet users and ad spend per country, then combined that with per capita GDP. There was not a lot of correlation. For instance, Brazil's 2007 per capita GDP is lower than Mexico's, yet ad spend per internet user was twice as high in Brazil than in Mexico. Now, per capita GDP has total population in the denominator, not internet population, so that could be skewing results, but I wouldn't bet there are significant differences in internet penetration between France and England -- certainly not as significant as the difference in interactive ad spend per user.
When I have a little more time this afternoon, I'll throw my data up on a Google spreadsheet for everyone to look at & critique.
Robert Seidman
· 1 year ago
Wouldn't online advertising spend by country serve as a fairly decent proxy?
fredwilson
· 1 year ago
Not really because there are some very large commerce businesses in a number of countries that don't have large media businesses
Chang
· 1 year ago
FYI Korea's Naver (top search portal) did about US$ 128mm operating profit in Q2 2008, while Google did presumably about $ 800mm in the US (given their 2Q 2008 profit in total was $1.58bn and their US business took up about 48%, or about half, of their total business.) So the ratio was about 6.25 there. Meanwhile, the US-S Korea ratio in terms of population is about 5.8, and the GDP ratio is about 14.5. So this might suggest that in countries where the internet infrastructure is advanced, like in Korea, the internet revenue per user can be as high as that of the US or Europe. Today China is a different story, as the Chinese don't spend as much online now - but according to some of the Chinese bloggers that's changing fast now. Now some even say China is about to observe the hockeystick curve in the e-commerce arena.
fredwilson
· 1 year ago
Korea is on par with the US for sure
As is Japan
Or close to it
But the rest of asia is not
I really would love to see the data
togilvie
· 1 year ago
I'd think the average effective CPM in search advertising would be the best proxy for revenue per user.
Ed
· 1 year ago
Agree. Average cost per click on AdWords is probably the simplest proxy. By that metric I believe many parts of the EU (especially the UK) are ahead of the US.
PhilipJames
· 1 year ago
Ed - certainly in some markets. We know wine, and due to a whole slew of complex interstate laws Europe is way ahead with online wine sales. The US began deregulating interstate shipping in 2005, so its interesting to see how fast it catches back up.
Glad to see people looking at data deeper than top level subscriber details.
howardlindzon
· 1 year ago
very helpful numbers - thanks.
makes me a little more confident in canada
Leonard Boord
· 1 year ago
I have used Google Adwords Spend to extrapolate market size. Adwords has three drivers, the numbers of companies that advertise, the average CPC and the total revenue line. We own several websites in LATAM and use these as guide lines. We have obtained them from different conferences we have attended.
shel Israel
· 1 year ago
Dollars can throw off your calculations. In China $50 K seems like a very significant Series A investment. In Silicon Valley, it's lunch money. I would also wager there are US-based companies with over half its users out of the country. Your own Twitter, I'll wager, has close to the same number of users in Asia that it has in the US.
fredwilson
· 1 year ago
yup
Michael F. Martin
· 1 year ago
I'd like to see the numbers for Asia broken out by country. A while back, I remember reading that South Korea is the most connected nation on the planet. I would expect more Internet innovation to be coming out of there as a result.
Steven Kane
· 1 year ago
Hi Fred. Hope you are enjoying travel.
Your points/issues raised are not really affected, but here's some world internet/broadband usage data that is amalgamated from multiple sources, so is a little different from comscore
Yahoo says that it gets most of its revenue from outside the US.
fredwilson
· 1 year ago
Do they give a percent breakdown?
Erik Sherman
· 1 year ago
I posted something on the BNET technology blog that you mgiht find interesting - some points I got from recently talking to IDC about their regular Internet demographic studies.
Couple of things to look at other then revenue/user:
*disposable income --- this provides a glimpse of where their will be meaningful ad growth which is the core revenue driver of the Internet. As long as people have money to burn advertisers will want to get in front of them. *two markets within one: within some of these markets there are really two markets -- take Israel or India where there is an upper middle class forming whose Internet habits are very similiar to those we see in the LA, London, or Seoul, but in an nearby city or even adjacent neighborhood the market is more similiar to a 3rd world country.
LivePaola
· 1 year ago
For Europe, IAB Europe has some (admittedly rough) figures about online advertising revenue per capita, from €133.2 in Norway to €36.9 in Italy (2007) (some of the data here:http://bit.ly/37UKSS). That is not the total revenue pool, but a pretty good proxy - more developed commerce, gaming, subscriptions etc. markets tend to be more developed advertising markets as well.
fred, agree that revenue/user is a more important metric to look at when evaluating global internet opportunities, a lot of money has been and will be lost in India and China as people try to invest in geography arbitrage (read Indian and Chinese companies copying US businesses) because the revenue is not there to support those businesses scaling, there are few strong global consumer Internet plays in India, on the other hand there are quite a few US companies that can expand overseas but in those cases they need to conquer the US before moving to other areas because the US is the lower hanging fruit for those companies
All Comments
I thought PwC and TC did some work around this. Is this approx what you were looking for?
http://www.techcrunch.com/2008/06/23/modeling-t...
http://www.pwc.com/images/outlook/TablesandChar...
More thoughts on the same vein here:
http://andrewchen.typepad.com/andrew_chens_blog...
http://andrewchen.typepad.com/andrew_chens_blog...
Thanks for posting them for me and everyone else to see Nik
Are there any econ students out there looking for a summer project?
When I have a little more time this afternoon, I'll throw my data up on a Google spreadsheet for everyone to look at & critique.
of countries that don't have large media businesses
As is Japan
Or close to it
But the rest of asia is not
I really would love to see the data
Glad to see people looking at data deeper than top level subscriber details.
makes me a little more confident in canada
Your points/issues raised are not really affected, but here's some world internet/broadband usage data that is amalgamated from multiple sources, so is a little different from comscore
http://www.internetworldstats.com/stats.htm
http://industry.bnet.com/technology/2008/07/17/...
*disposable income --- this provides a glimpse of where their will be meaningful ad growth which is the core revenue driver of the Internet. As long as people have money to burn advertisers will want to get in front of them.
*two markets within one: within some of these markets there are really two markets -- take Israel or India where there is an upper middle class forming whose Internet habits are very similiar to those we see in the LA, London, or Seoul, but in an nearby city or even adjacent neighborhood the market is more similiar to a 3rd world country.
Thanks