Have you ever given a second thought to how a company like Google can have a market capitalisation greater than Ford?
Google is worth approximately $35 billion. Even in current market conditions, this is considered an under-valuation.
Has everyone lost it again? Why is no one screaming "dot-bomb"? Well, it`s pretty simple: the Internet has grown up!
The Web has become immense. In fact, Google now has over 4.2 billion pages in its search engine index. A quick check tells me that only 2 800 000 pages are indexed from South African domains.
With an index this big, more and more users are flocking to Google and Yahoo to search for information in the vast expanse of cyberspace. With all this information out there, users have no choice but to rely on search engines to navigate their way through the wealth of available information.
Google and Yahoo essentially "own" the customers and when these customers search for goods and services, that`s when the search engines make money. Google has over 200 000 advertisers who pay anything from 5c to $100 per visitor, and Yahoo, its largest competitor, has over 100 000 advertisers paying billions of dollars per year.
There are over 700 million Internet users worldwide. Google and Yahoo reach over 75% of them. This is probably the single largest marketing channel available on the Internet - so why has SA been slow to catch on?
South African companies tend to think within their own borders - three million Web users is usually the market size that gets thrown around. We need to start thinking outside the borders and understand that, generally speaking, there are no borders in cyberspace.
Many local companies have quietly caught onto the buzz surrounding search engine marketing - a $5 billion industry globally - and are building successful businesses on the backs of Google and Yahoo. There is nothing stopping South African companies from targeting the 700 million-plus global users with their goods and services. The Internet is no longer a "branding" channel; it`s now a sales channel.
Fact: More and more people are purchasing online. eBay generated over $25 billion in sales this year.
Reality: Just because it didn`t work for you in the past (or a company you used made promises it did not keep), does not mean the time has not come where the Internet can become one of your most profitable marketing channels.
This is probably the single largest marketing channel available on the Internet - so why has SA been slow to catch on?
Vinny Lingham, co-founder and chief strategy officer, incuBeta.
The difference between online and offline advertising is that online advertising has a directly measurable return - the dream of the dot-com era has finally come true. If you pay $100 for 200 visitors, you can immediately measure your return on investment (ROI) and track the source of customer referrals, which means no more wasted marketing spend online.
Imagine a potential customer in the US types "hotel in Cape Town" into Google and your advert gets displayed among the various listings. If 10 users click on your advert, Google would bill you around $1 for each referral. If one in 10 customers completes a transaction on your Web site and books a hotel for say $50 with your company, you can accurately determine what your ROI is - in this case, a massive 500%.
South African companies can tap into the power of the search engines by running search engine campaigns on Yahoo, Google and other second tier search engines. This means they can target the very people who are searching for their product, service or information.
It also means they can geographically target people in any country and ensure that only qualified visitors are paid for and that these marketing costs result in sales, leads or any other metric determined by management.
Consider that over $5 billion has been spent on search engine marketing this year in the US alone and an estimated growth rate of 20% per year is indicated in this sector. It`s not too late to get on board and start including online marketing as an integral part of your company`s marketing mix.
SA is one of the hottest tourist and business destinations in the world, and as our economy grows, there is more and more interest in doing business with us, be it business-to-business or consumer-to-consumer. With 700 million users out there, it`s no wonder that Google and Yahoo are so valuable: they are the gateway between 700 million opportunities for you and your business, not only the 3.5 million in SA.
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