Keith Nilsson, Senior Vice President, Emerging Markets, Yahoo! talks about why Maktoob.com is the right fit for Yahoo! and where the company is headed.
Can you give me an overview of Yahoo!’s strategy in emerging markets?
The Maktoob acquisition reflects Yahoo!’s broader strategy to expand into the emerging markets. We currently have operations in Southeast Asia, Latin America and the Indian Subcontinent, and the Arab region is our newest emerging markets territory that we are expanding into with this acquisition.
Yahoo!’s strategy for expanding into emerging markets is to take the best of our global technology platforms and either build or partner or in this case buy strong expertise on the ground with relevant local content, good sales forces and teams that can help us deliver on this expansion strategy.
We see tremendous opportunity in the emerging markets, mostly because internet penetration is in its infancy, online ad penetration is extremely low and growing. We see this growth opportunity to continue for many years to come.
Why is Yahoo! buying Maktoob?
Yahoo! is acquiring Maktoob because it accelerates our market entry efforts into the Arab region. We looked at whether we should partner or build an effort here, or buy. Maktoob brings us a great team that has operated in many of the key countries in the region. This team understands how to do business in a fairly complex region with good editorial capabilities, strong products and a great sales team.
Maktoob also has a large audience, it is the leading brand in the region, and by taking Yahoo!’s global brand with a strong local brand, that presents a good opportunity for us to enter into this market.
What is Maktoob going to do for Yahoo! that it cannot already do or does not already have?
Maktoob brings a strong community of Arab users, and a portfolio of content verticals that Yahoo! does not have today. By marrying Yahoo! global technology with Maktoob’s content and community, we think we have a winning offering in a way that differentiates us from our key competitors. We don’t see any of the major technology players as focused on creating as deep a local content experience in this region. We think it is a better recipe to win in this region.
How does Yahoo! see the Middle East and how does it fit into Yahoo!’s overall strategy?
The criteria we look at to enter into a market is first look at the potential online population, the size of the offline ad market and the potential for that to come online in the future. We then look at our strengths and capabilities of how we can capture both those online audiences and advertising dollars going forward.
So if you look at the Arab region, with a population of 320 million people across the Arabic speaking world, and a multi-billion dollar offline ad market which is growing at 25 to 30 percent, this represents a significant opportunity going forward. That is why we believe now is the time to be investing in this region.
What is more important for Yahoo! going forward, profit or market share?
We are looking to grow our audience of nearly 600 million users as rapidly as possible. We see the emerging markets as one of the areas where we see an opportunity to expand our global audiences.
By aggregating the largest and highest quality user base in the region, there will be monetisation opportunities that emerge. This region offers a terrific advertising opportunity and that is one of the reasons we like the Matkoob team because they have built one of the best sales forces in the region and they are monetising well today.
What countries are you going to focus on in particular going forward?
With this acquisition we are really going after the entire Arab region, from North Africa to the GCC region. The five markets that we will be focused on initially will be Saudi Arabia, Egypt, the UAE, Jordan and Kuwait. Those are markets where Maktoob has operations. We will be looking to expand into other Arab countries in the future.
Will the acquisition make a combined Yahoo! Maktoob the market leader in the Middle East?
We are confident that we will be a leader in the Arab region with the combination of Maktoob and Yahoo!. We believe the alignment of Yahoo!’s global brand with that of Maktoob’s strong local brand, and the breadth of content and services that we will be offering, is a winning combination to lead in the region. We see great opportunity from that perspective.
Where do you see an overlap between Maktoob and Yahoo! in terms of products, resources and technology, and how will this be addressed going forward?
The businesses are actually quite complementary today. Yahoo!’s strength is really in its global technology platforms, specifically around messaging, email, instant messanger, search technologies - our front page - those are our core global technologies.
Maktoob has a broad range of community assets through its forums and vertical content channels that Yahoo! does not have in this region. If you marry the global platforms with the suite of local products and local verticals that Maktoob has, the result is a complementary business alignment.
Over time the platforms Yahoo! is investing will likely be the primary platforms we use going forward. That will take time and we will have to figure out the right staging of how we convert those products.
But there will be a host of products and services that will continue to be on Maktoob technology, that will be both developed for the regional market and maintained going forward. Where it makes sense to leverage global platforms or Yahoo!’s technology we will do that, and where it does not make sense we will continue to invest in local products and platforms.
What is the timeline for integration of Maktoob and Yahoo! and when will users start to see a difference in their experience on Matkoob?
The deal will close in early Q4. After the deal closes there will be only small changes. We will not be introducing Arabic versions of Yahoo! products into the region until next year. That is when you will start to see most of the material changes to the product.
Do you see censorship in the Middle East as an issue and how are you going to address that going forward?
We have a lot of experience operating across a diverse set of countries in the emerging markets, and we take an approach where we are sensitive to cultural norms and sensitivities.
We comply with local laws and take into account local customs and norms in our approach to content. We operate according to our own privacy policies and terms of service. This has been the approach Maktoob has taken in the region and we don’t plan to change that.
Local users are concerned Yahoo! may censor negative comments about the U.S. on Maktoob post acquisition. Are these fears unfounded?
That would be an unfounded fear. We don’t plan to change the approach to content of the Matkoob site. We think Maktoob has taken a healthy, balanced approach to the content and we don’t plan to change that.