Mon, Aug 19, 2002 page11

• Yahoo's Tsuo upbeat on the firm's growth outlook

  Yahoo entered the Taiwan market in January 1999 and merged with the NO. 1 local Internet portal Kimo in November 2000. This year, for the first time, Yahoo-Kimo Taiwan, is set to start making money. Last week, Rose Tsou, general manager of Yahoo-Kimo Taiwan, sat down with Taipei Times' staff reporter Annabel Lue to discuss whether the company's forecasts indicate the industry is rebounding

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  Taipei Times: Yahoo-Kimo Taiwan (雅虎奇摩) reported 20 percent growth in ad sales for the first half of this year over the same period last year. Is this a sign that the Internet business is rebounding?

  Rose Tsou (鄒開蓮): When we talk about the advertising business in general, my guess is going to be yes. But whether that is a huge rebound, we don't necessarily know. As a matter of fact, last year we saw a little bit of a setback from the year 2000, in terms of overall ads sales as well as Internet ads. Last year the percentage of Internet ads in relation to total ads was less than 2 percent.

  Although this year everybody has much stronger growth, the percentage didn't rise. But in general, it's a good sign when we started seeing advertisers more and more willing to spend online.

  

  Rose Tsou, general manager of Yahoo-Kimo Taiwan, says that the coming year is going to be a ``fantastic'' one for the firm that will see strong growth.

  PHOTO: CHEN CHENG-CHANG, TAIPEI TIMES

  TT: What's Yahoo Taiwan's income forecast for this year?

  Tsou: Last year our market share of the Taiwan Internet advertisement sales pie was more than 40 percent and this year we expect to maintain a similar market share. Total Internet ad sales last year in Taiwan was about NT$800 million. We believe we will be able to expand the pie a little bit in 2002. As for the breakdown, we anticipate our revenue stream for 2002 will be over 20 percent coming from non-advertising revenue.

  TT: With ads sales closely tied to the economic climate, isn't it too risky to rely on ads that much?

  Tsou: Yes, if the business is solely dependent on ads sales I would definitely say yes. [And actually] that is exactly the direction Yahoo-Kimo has been headed. But we don't want ads to become our only media strength -- we want to be able to balance them with the other income sources.

  However, that does not mean Yahoo-Kimo doesn't believe that Internet ad sales will continue to be a major source of revenue. We are sure it's worth every effort to push the envelope.

  TT: What new ideas do you have to diversify your income sources?

  Tsou: We are doing two things simultaneously. One is we are continuing to build our advertisement platform, making sure Yahoo-Kimo is going to be the strongest and most effective marketing platform for any advertiser.

  On the other hand, we are also adding premium services which will bring additional revenue. Premium services are those we offer or cooperate on with external partners that users subscribe to. Those can be, for example, extra space for e-mail accounts, express search directories or fortuneteller services.

  The second sector is more e-commerce related like shopping, online trading or selling insurance online.

  TT: Where will non-advertising revenue come from?

  Tsou: That's very fragmentary. I would tend to believe the premium services will probably make up the higher share.

  In the long run, I believe overall the company will be able to see combined ad and non-ad revenue grow to the 50 percent range in the next two years. That is the Yahoo worldwide goal and Yahoo-Kimo absolutely wants to follow that as much as we can.

  Hopefully, after we carefully develop and maintain relationships with premium customers, we will be able to not rely so much on Internet ad sales.

  TT: Your competitor, PC Home.com (網路家庭), is reporting a certain percentage of revenue from e-commerce. What are Yahoo-Kimo's plans in this area?

  Tsou: E-commerce is set to be a big area of our [goal of achieving] 50 percent non-ads sales in addition to premium services such as search directories or add-on value content. We all understand selling computer electronics in Taiwan, the margin is very limited to less than 10 percent.

  However, we also see e-commerce as a very strong growth area. Last year we noticed leading companies in a few key segments such as online travel or books received a much higher return on investment.

  E-commerce is absolutely entering a stage where we can start seeing the light at the end of the tunnel. Yahoo shopping works as a shopping mall and we are a platform provider, not a merchant.

  Under this business model, the key success is to be able to recruit a variety of merchants, and we currently offer more than 120,000 items in the Yahoo-Kimo shopping channel. Our position is to offer a valuable market platform to promote clients' merchandises rather than going out to sell individual items.

  The other sector of e-commerce we will pursue is the C2C [customer to customer] auction model widely proven successful in worldwide markets across the US, Europe, Japan and even in Korea.

  Yahoo has already run its auction business well overseas and Yahoo Taiwan is very fortunate to have strong edge even though we started the auction business last October, much later than some competitors.

  Currently we are very happy to see we hold a significant lead -- we probably hold about 70 to 80 percent of the market share in Taiwan's auction area.

  There are not many online auction companies in Taiwan, and we are very confident the edge between us and eBay Taiwan is miles apart.

  We absolutely want to be in Yahoo Japan's position: successfully defeating eBay Japan and become the market winner.

  All we can say is that auctions are one area Yahoo-Kimo in Taiwan is going to focus on.

  TT: Yahoo-Kimo also has linked up with Chunghwa Telecom Co (中華電信) in offering ADSL services. What does this move represent? Any further cooperation plans with telecom players?

  Tsou: Just like Yahoo US, which has become much more involved in the [promotion of broadband Internet access services], we too launched a co-branded ADSL service with Chunghwa in the middle of April.

  We believe that because this service is going to maintain a customer relationship for years, it's not like a product you buy and then you change tomorrow. So that's the beauty of being able to have a strong partner together in offering broadband services.

  In addition, we believe the more broadband customers there are in Taiwan, no matter where they come from, we can offer more of a variety of Internet services in the future.

  We never exclude any possibility working with different players on wireless and currently we are in close talks with Chunghwa on the wireless area as well.

  TT: What's the business outlook for the rest of this year and next?

  Tsou: We believe both the Internet ad business and the e-commerce market are becoming much more of a reality now than before.

  So, for Yahoo-Kimo, this year will be an absolutely fantastic year, So far we are in the middle of the Q3 while the revenue we have now is already equal to what we had all together last year.

  Therefore, we are very confident to forecast this year we will report strong growth.

  We are going to make a profit this year -- Yahoo-Kimo is going be a profitable company.
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