Yahoo! Buys to gain market share in Latin America

Apr 18, 2005 - 6:18 am 2 by

By Nacho Hernandez | April 18, 2005

In recent news titled "Yahoo! Buys Brazilian PPC Search Network" from an article published by Kevin Newcomb from the ClickZ it says "Yahoo! is expanding its presence in Latin America with the purchase of Brazilian performance-based advertising network TeRespondo". This is one of the most important events happening for the Latin American search engine marketing industry. TeRespondo is the leading provider of performance-based online marketing solutions for Latin America, primarily Brazil, Mexico and Argentina.

To better understand the deal, I put together a summary from aggregated numbers published by another ClickZ Article called "Population Explosion!" combined with a statistical analysis from the Internet World Stats:

World Population and Internet Statistical Data

This exhibit shows in more detail a comparison for each country in North, Central, South America and the Caribbean.

According to JupiterMedia with a projection of 77 million Internet users for 2005, Latin America ranks fourth among total Worldwide Internet users and is the fastest growing region in the world. In general, this market has been growing at compounded average growth rate of 33% - almost doubling the total worldwide average. Brazil alone is an extremely attractive market when compared to other global markets.

TeRespondo knew that most users were found in Argentina, Brazil and Mexico. Their market share for each region is unknown, but these three make up approximately 65% of the region's Internet population with Brazil alone accounting for 40%. The same also goes for most of Latin America's e-commerce transactions. Chile and Peru have large user populations and Colombia and Venezuela will most likely be part of this second group of important Latin American countries with Internet penetration.

How this deal came to be is fascinating to the Latin American search marketing industry. I have an understanding that for some time now Yahoo! had been trying to take market share away by going to TeRespondo's distribution partners and offering very appealing deals. However, these partners were very pleased working with TeRespondo and would just not want to let go. Could this be loyalty, a primary ingredient in Latin American business relationships? Then Yahoo! waited to see if MSN would renew their contract with TeRespondo as a first source of PPC ads for and other local MSN properties. Luckily for TeRespondo it was renewed and in very good terms. Therefore, there was really no other choice than to just buy them out and move on to gain long term market share over Google and MSN.

What a roller coaster ride that must have been for the two Colombian entrepreneurs that founded TeRespondo, Daniel (Danny) Echavarria and Juan Diego Calle. Bravo to these outstanding leaders of our search marketing industry. I also extend my congratulations to Brian Steel, President of Overture International, and Peter Celeste, General Manager for Latin America, with this outstanding strategic move for Yahoo!.

So what will Google do to compete with this move? I heard an interesting rumor that Google just hired a new general manager for it?s Brazilian operations. Well that's not all. Over at the Google Job Opportunities board it seems they have a lot more going on for Brazil, Mexico and who knows how many more new positions to be based in Mountain View, California will be focused on the Latin America operations. I believe that even though Yahoo! is well positioned in these countries thanks to the free email accounts which are widely used, Google can easily gain market share by hitting the young population with COOL ideas which are common to this company's marketing strategies.

I strongly believe MSN Search doesn't have much going on for these markets now. They are probably focused more in making their new search engine work at a level that can compete with Google and Yahoo!. They are probably happy with their PPC partnership with Yahoo! and gaining territory will be tomorrow's problem, not today's.

I wish most marketers in our industry can realize that this deal is just as important as when changed it's name to Overture back 4 years ago and then got bought by Yahoo!. Well, it's true that almost anything that happens in Latin America is usually delayed and mirrored to what's happened to the U.S. and European markets. Another latino entrepreneur from Argentina Lucas Morea, CEO of LatinEdge and founder of says, "Getting into this market now is like going back in time (like the 'Back to the Future' movie), where you can predict what will happen next because these markets follow the U.S. very closely. It just takes time." That's right and patience is sometimes a very good virtue to have for its Latin American dot-com players. Just like it happened for Danny and Juan of TeRespondo.

Now I hear Juan is off to Harvard for some business course retreat he does once a year (uff -- bad timing) and Danny is closing all transactions in their Miami headquarters. I wonder what these two latino entrepreneur superstars will do next after all of this is over?

I have a feeling it will take a good 2 or 3 months for the switch and hand off to Overture to happen. I imagine there are a lot of integration issues and notifications for their partners and advertisers to be made before they start seeing the name Overture or Yahoo! Search Marketing. Makes me wonder if they will even use the name Overture any more since it will be going away very soon now that Yahoo! Search Marketing was launched last week.

The other thing that I'm waiting to hear is what will happen to TeRespondo's employees which have an amazing know-how about the cultural aspects of these markets and the know-who to contact since most businesses are referral based. It would be a shame and a total wrong move if they let them go.

For TeRespondo's partners and advertisers this will be a positive transition. They will gain more efficiency with better platforms and technology. True that TeRespondo did an outstanding job with their PPC products and service, but Overture is a search marketing gladiator that will be able to deliver at a level that can compete with Google and MSN (in the future).

As a search engine marketer I know this will make my life a lot easier by managing my client's accounts under only two platforms rather than three. I also know that Yahoo! and Google will probably start tripping each other to gain market share. In reality, for the advertiser it's not about them dividing the Latin America search marketing pie, but rather growing it which will reflect in better products, service, technology and attention to these regions.

I'm sure there will be a lot more news to come about this deal. I will do my best to keep you posted. For the time being, you may join the thread "Yahoo! Gains Market Share in Latin America with TeRespondo" in SearchEngineWatch Forums and discuss the potential outcome for the Latin America search marketing industry.


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