Digital marketing set to explode with broadband and 3G | Bangkok Post: tech

The increasing number of broadband users and the coming 3G roll-out is helping make Thailand one of the more attractive global markets as Internet players expand their footprints as digital marketing spending takes off.

Sanook Online CEO Torboon Puangmaha.

Meanwhile, Sanook Online owner Tencent sees long-term potential in the Thai market after spending HK$81.7 million (327 million baht) to take 49.92 percent of sanook.com.

Poramate Minsiri, webmaster of entertainment site kapook.com and former founder of sanook.com, who sold Sanook to MIH Group, said the deal allowing Tencent to acquire 49 percent of Sanook required a change of shareholders from 100 percent of MIH to half Chinese and African capital.

The acquiring price cannot be the reference price because this deal was worked out from the same group of subsidiary companies, as MIH also has a 34.49 percent share in Tencent which cannot reflect real value market price.

"In the case of the Rakukten deal, which acquired tarad.com for US$3.35 million [104 million baht], the price should reflect the real market price of ecommerce potential in Thailand," said Poramate.

However, he admitted that there is trend for investor and mobile operators to consider investing in content providers to capitalise on growth opportunities in online business, especially when the 3G network is fully available, allowing new types of content, applications and innovations to take off.

Meanwhile, Torboon Puangmaha, CEO at Sanook Online, said the Tencent deal to acquire Sanook shares is the part of international business strategy to expansion outside China and make a long-term investment in Thailand.

Sanook licensed Tencent's QQ instant messaging seven years years ago and today the software has one million active users in Thailand.

Changing shareholders' structure, the company can leverage the Tencent experience, which has had success in China, to build and transfer Internet business here, although no changes will be made to the local management team.

Sanook recently upgraded QQ, allowing users to login via their email addresses instead of using numbers and better integrating the user base more with Sanook members, which currently account for 700,000 unique IP impressions and 14 million page views per day.

A source, who asked not to to be named, disclosed that Google is also preparing to set up an office in Thailand.

Google has given priority to Thailand since it is the first country in Southeast Asia to launch a local version of Google Maps.

Kamolpat Swaengkit, National Sales Manager, Microsoft Advertising Thailand, said digital and online business is growing in Thailand and around the world, but this is different from the dotcom explosion in the early 2000s because at that time, most websites did not know how to make money.

Now, most corporate and media agencies are embracing digital online media and allocating budget spending in this channel.

Witawat Jayapani, president of the Advertising Association of Thailand, said when 3G or 4G rolls out in Thailand and the price point of portable PC devices is driven down to less than 10,000 baht, and smart phones to 3,000 baht, the number of Internet users in Thailand should shoot up from 18 million users to 50 million.

"It should happen like the mobile phone phenomenon here in 2002," he said.

"The global and other players will eyes future opportunities and penetrate the market ahead of the boom."

Currently, the online advertising market reach accounts for 1-2 percent of total advertising spending, or 1.5 billion baht, but it has potential to grow in tune with the expanding digital market, with spending on activities to build brands through social networks such as Facebook or Twitter.

"This digital market spending could reach 5 billion baht by 2011," Witawat said.

M Interaction managing director Siwat Chawareewong added that Thailand is well known as an emerging country, but the market is still far behind the likes of the USA, Europe and some other countries in Asean, as indicated by the relatively low number of Internet users and PC penetration.

Currently, fierce competition from service providers is driving a surge in the number of broadband users, while overall the country has an internet user base of at least 18 million.

"Comparing today's Internet business its not hype like the dotcom boom in the past decade, when there was no broadband, said Siwat.

"The young generation, born in the past 10 to 15 years, was born to live with the Internet, and this generation continues to increase.

"Today, online advertising in Thailand is worth 1.5-2 billion baht, which is still small, but when the time comes it will growth at an exponential rate, especially in social networking sites, portal/content and ecommerce."