CREATION: Portals search new ideas as advertising dollars dwindle

As the harsh reality of the Internet takes a toll on dotcoms around the world, portals anticipating a decline in online advertising dollars are looking for new ideas to check falling revenues, according to the IDC. Internet companies, such as Yahoo, that rely heavily on advertising are expected to suffer first, a report by the IDC said. "With fewer dotcoms flush with dollars, spending for online ads could diminish, casting doubts on the ability of stellar performers such as Yahoo to uphold their revenue," the report added, "On the other hand, Yahoo may be benefiting from reduced competition among providers of ad space. Its revenue for the September quarter grew to USdollars 295.5 million from USdollars 270.12 million in the June quarter." However, during November, shares of the Internet portal fell to their lowest level in two years on concerns over a weaker Internet advertising market. The difficulty of the online ad market, analysts have warned, also means Yahoo is likely to miss its revenue targets in coming quarters. In light of this, the portal is looking to generate revenue from other channels, such as from visitors to its site. "Watch for Yahoo to embrace the broadband world and ratchet up its activity as a component of corporate intranet portals. Yahoo is also actively expanding in Asia and growing its list of merchants on its shopping portal. "As caution creeps into the dotcom world, the hope is that the best and brightest will survive and thrive. Some will face challenges from the brick and mortar companies attempting to add another channel, while others will combine forces with appropriate brick and mortar counterparts," the report said. Other portals are also following the likes of Yahoo. Hotmail introduced traditional Chinese, simplified Chinese and Korean languages to its email service with the aim of attracting an additional 37 million regional users at the rate of 10 million each year. To draw more users to its localised service, Microsoft's MSN also launched a series of Hotmail marketing programmes in Hong Kong and Taiwan, and an upgrade to its service to version 3.5. Other overseas-based portals are also looking to expand their presence in Asia as the number of Internet users in regional countries soars. Lycos Asia is to set up a subsidiary in Thailand to further its Asian presence. The subsidiary is to operate a Thai-language site, which will be launched at the end of November. Chinese Web portal Sohu.com had also attributed weaker-than-expected quarterly revenues to a sluggish online advertising market. It said it was training its sales force "to be more effective". The company's CEO Charles Zhang had said he expected the online ad market to gain momentum as more Chinese companies warmed to the concept. In the meantime, Mr Zhang said Sohu.com would increase its slice of the pie by promoting itself as host to "more Web traffic than any other company in China" - a claim that has been given credence by its acquisition of portal ChinaRen in October. Of the three rivals Sina.com, Netease.com and Sohu.com, the latter has had the greatest success at raising ad revenues because, according to anlaysts, it had moved quicker than the others to adopt an aggressive ad sales strategy. Meanwhile, a Merrill Lynch analyst reportedly described the Internet advertising environment as "horrible", while Gartner has predicted 85 per cent of Asian dotcoms will go bankrupt or be swallowed by bigger Internet companies or more traditional and stable companies by 2004.

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