Beckoning Asia's digital community

Yahoo’s recent decision to open a permanent office in Vietnam - its first in Southeast Asia outside Singapore - confirmed the market’s status as Asia’s hottest new internet market. With the digital sector following a similar path to China’s, there appear to be opportunities there for both media owners and marketers. So how seriously should they be taking them?

For a country with a low GDP per head, online penetration is relatively high at 25.6 per cent. Internet cafes have for years been the main source of users, but last year the balance tipped and home internet users now make up a slim majority.

As in China, gaming is by far the biggest part of the online ecosystem, and local operator VNG (formerly VinaGame) is the leading player in this area. Gaming was worth around US$80 million in revenues last year, compared with just $14 million from advertising, according to William Bao Bean, partner at Softbank China & India Holdings, which has invested in a variety of online businesses in the market.

Given Vietnam’s remarkably young demographics (the median age is 27), the enthusiasm for entertainment is not surprising. “All entertainment in Vietnam is driven off online and mobile,” says Bean. “Before these there was no entertainment in Vietnam except motorbike racing.”

Blogs have also been big news. Yahoo 360 was the platform of choice until it closed its Vietnamese service last year. Though it tried to migrate users to replacement Yahoo 360 Plus, Bean says that many actually shifted to Facebook, which can also act as a gaming platform, instead.

So what Vietnam offers is a large, young, urban online population, turning to the internet for entertainment and communication. Theoretically, that should be a good environment for marketers and media owners to experiment in. Cartoon Network is one Western company that has done just that. In 2009 it localised its games for the Vietnamese market and, according to Benjamin Grubbs, regional director for interactive media at Turner Entertainment Networks Asia, the reaction has been “greater than we expected”. He explains: “In 2010 we plan to invest more time in our digital business, allowing us to engage with kids however and whenever they want.”

Marketers have generally been a little slower off the mark. Online advertising is growing, but currently makes up just two per cent of total budgets. It remains, as GroupM Vietnam interaction director Aryeh Sternberg points out, still “the first to get cut”. Mobile, meanwhile, barely exists as a marketing medium, despite expectations that the mobile web will outstrip its PC-based counterpart.

Simple banners, usually bought on an online tenancy basis due to a lack of ad-serving technology, have formed the bulk of online advertising. But rich media is now widely available, and rising use of social media should open up opportunities in areas such as word-of-mouth. Users seem to welcome ads. Research by Yahoo and TNS found that 30 per cent of users had clicked on an ad on the portal in the previous month.

What’s more, online remains cheap. “From display to search to mobile, almost across the board costs for spots and production are lower than in other developing countries,” says Sternberg. “The trade-off is a less developed environment with lots of clutter on even the most popular sites - up to 45 banners per page - and less sophisticated executions.”