The Globalization of New Media in International Business

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Tyler James Emery, Founder & CEO

Abstract

In the United States of America, the way businesses promote and brand their companies has changed drastically over the past few decades. Old media such as radio, TV, Newspapers, and the Yellow Pages are far less powerful today as marketing channels. The emergence of new media (internet media) has changed the world of marketing forever. This paper first rigorously analyzes the history of old and new media and how marketing has changed in the United States of America. Then, this paper delves deep into key trends, statistics, economic conditions, and sociocultural factors in Brazil, Russia, India, and China. In doing so, the reader will clearly understand that the use of new media for marketing purposes is indeed a global phenomenon. Forecasting this trend forward, marketers and entrepreneurs alike can capitalize on these trends and leverage new media in these developing countries.

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International business and the phenomenon of globalization have complimented each other profoundly. The inherent political, socioeconomic, cultural, and legal factors in international business have shaped the ability to effectively market domestic products on an international scale. Furthermore, the emergence of new media has revolutionized the business world in a multitude of fundamental ways. The United States has seen a paradigm shift in recent years from advertising in traditional ways to the internet and related marketing platforms. The focus of this paper is primarily on marketing with the use of Google Adwords, Facebook, and YouTube; which are commonly referred to as “new media”. The purpose for this is to effectively illustrate an in depth historical analysis of where marketing is heading in developing countries such as the U.S. and where marketing is heading in developing countries, particularly in Brazil, Russia, India, and China. There are powerful implications for businesses with the proper knowledge of how to utilize new media marketing to maximize profits, while building brand equity. Overall developing markets in Brazil, Russia, India, and China have drawn an immense interest for marketers; and it is clear that new media will be prevalent in the near future.

It is essential to address the general trends of what occurs as countries begin to develop; and the implications for marketers. International business extends beyond simple domestic marketing because of the inherent differences that need to be addressed. Markets develop in correlation with economic development, and there are more marketing functions demanded when dealing with a developed economy. Country development also influences the emergence of distribution and channel systems; and become more effective and less costly over time. Particularly, the channel gets shorter because less middlemen are needed to facilitate a deal. As the BRIC (Brazil, Russia, India, China) countries develop the marketing mix and supporting industries will develop accordingly. This has a huge impact on business because these developing countries have been developing at such an extreme rate. Borrowed technology has been instrumental the development of the BRIC countries. As these developing countries begin to become developed international product life cycle theory comes into effect as the location of production, and consequently sales and marketing change. Online marketing is increasingly becoming prevalent not only in the domestic U.S. market, but even on a global scale through time.

Google Adwords, Facebook, and YouTube have been instrumental for business people to effectively allocate their marketing funds to pay-per-click advertising. Before this paper delves into the domestic and international markets for online advertising, it is vital to understand these platforms. The Internet has revolutionized the marketing and advertising space for businesses and professionals in the United States and it’s now making its way to developing countries who are becoming more connected to the Internet.

The modern Internet, as most know it, started about twenty years ago and used an electronic form of indexing (reading) web content through an elaborate algorithm. This was commonly known as search-engine-optimization (SEO) where someone could “optimize” their website to tell the various search engines what it was about. As people in various industries figured out this algorithm they were diverting non-relevant search traffic to their own website in hopes of monetizing this web traffic.

From this movement of non-relevant web traffic to someone’s website, a new form of advertising was born simply known as pay-per-click (PPC) advertising. This enabled a business or professional to display their website at the top of the search engines and only pay when someone clicked on their ad. The first successful pay-per-click company was called GoTo.com which eventually changed its name to Overture and then was bought out by Yahoo and then called Yahoo Search Marketing. In 2002, an upstart company named Google started to make waves and actually started to advertise on Yahoo’s search engine thereby diverting Yahoo’s search traffic back to Google.

Today, Google takes up sixty-five percent of all online search queries with Yahoo receiving fifteen percent and Bing, a Microsoft owned product, receives fifteen percent. The remaining five percent is from many very small search engines combined.

Google’s pay-per-click platform is known as AdWords and along with multiple acquisitions, including the acquisition of video giant YouTube, Google has dominated the search query space on personal computers, tablets, and mobile device. Google also has a program called AdSense where website owners can display Google driven ads and receive a commission for each click on the ad.

This online form of advertising became known as “new media” and old forms of media such as the Yellow Pages, television, and radio soon became known as “old media”. With this new media revolution, businesses that were able to leverage both pay-per-click advertising and search-engine-optimization to receive highly targeted traffic dominated their industry.

With the advent of social media such as FaceBook, Linkedin, Twitter, Pinterest and even Google’s social presence known as Google Plus businesses could further expand their online presence.

Today, businesses and professionals who have a high level of expertise in these areas, or at least hire the right search-engine-marketing (SEM) firm, can easily yield a one-hundred to three-hundred percent return on their advertising dollars spent.

A Southern California based used car buying service called Cash4UsedCars.com, implemented PPC, SEO, social media, video syndication, mobile click-to-call ads and blog content to dominate their local market. The return on investment (ROI) was in fact between one-hundred and three-hundred percent depending on the current used car auction market.

With a complete Internet based marketing system in place, any business or professional can yield a high ROI as well as position themselves with great reviews from customers or clients. This is a proven system and can be replicated in any country if properly managed.

The United States market is considered one of the hardest markets for foreigners to understand and penetrate effectively. Companies such as Digital Marketer holds expert guru seminars that thousands of successful business people go to many times per year. These seminars address the absolute significance of online marketing and how to get the most money out of investing in online advertising. They have invested over fifteen-million dollars on marketing testing on the internet and share their knowledge for a large price. Seminars like the aforementioned highlight how huge online marketing is currently in the U.S. The implications alone for exporters go beyond that of traditional advertising. Understanding the immensity of online pay-per-click marketing is valuable when considering international markets.

Brazil has been of extreme interest in recent years as their economy has surpassed Italy and the UK in recent history. Their staggering population of 192 million has been working efficiently and a significant amount of people have made their switch to the internet. During the year 2011 the internet population in Brazil grew by an incredible sixteen percent.  Experts suggest that it is important to set up a website in English and Portuguese.  The amount of money spent on online ads increased 40% in 2011, reaching a record amount of seventy-nine million dollars (141 million reals). Furthermore by the year 2015 over seventy percent of homes in Brazil  are estimated to have internet capabilities. The cost and accessibility of internet has recently been reduced, allowing for a broader socioeconomic class to have access to it. This combined with the T-Index’ 2015 estimate that by 2015 Brazil will be the World’s fourth largest online market speaks for itself. Lastly Brazilians are using more mobile devices, an estimated 29 million. There are LAN Houses that allow Brazilians to get internet access, it is their number one form of accessing it. The Google Adwords market is opening up in Brazil; some even say it is growing exponentially. There are even businesses that are experts in Google Adwords in the Brazilian market; they manage the business owner’s campaign. Now is the time to invest on online marketing in Brazil.

Another facet of online marketing to consider is investing in Facebook or other forms of social media in Brazil. The Wall Street Journal even named Brazil the “Social Media Capital of the World.” Their culture is socially connected and are subject to adapting to brands found through social media. Also according to comScore’s 2012 Brazil Digital Future in Focus out of the forty-six million Brazilians ninety-seven percent use social media. Facebook specifically has been huge as their user numbers are upwards of sixty-five million users. There is a huge opportunity to advertise with YouTube because they are the number two market outside of the U.S. for Google’s YouTube. Orkut also is a dominant social media site and should also be considered. To strengthen the argument to invest in social media an incredible eighty-one percent of social networkers used social media to look into new products and ideas. New media and online marketing is huge in Brazil and the aforementioned analysis reveals a potential goldmine for international business people.

Online marketing efforts are without a doubt proven to be effective in Russia.,and it has significantly changed the marketing mix. As the purchasing power of the consumers continues to increase, they are shifting to more modern technological sophistication. In Russia there are an outstanding eighty-six million internet users, with over twelve billion in purchasing during 2012. This does not exactly translate well to using Google Adwords and Facebook, however. The internet is in Russian, and their main search engine is Yandex (60% of searches) and VKontakte is their main social media outlet. Russians also use Google.ru. (about 25% of searches) as a search engine. Facebook is considered their fourth largest social media site as well. Mail.ru (Google) is the largest portal and email service; it is possible to penetrate potential consumers by emailing them with offers and trip wires.  The Russian internet is very different from the internet experience people in the U.S. have.  A cultural difference to account for is that Russians tend to prefer paying in cash. An international business person should consider payment plans accordingly; using direct transfer of cash.  Russian internet companies are doing well abroad, even with social media. It is important to penetrate the market and see which search engines or social media outlets will have relatively low costs and high returns. Russia is unique in terms of their internet marketing because adaptation needs to be a part of the marketing mix.

India is a great example to illustrate the production and consumption patterns of a developing country. Typically, three markets coexist; the high-income sector, the agricultural sector, and the transitional sector composed of low-income individuals. India is considered one of the largest industrial economies in the world. Their population is around one billion, with twenty to twenty-five percent considered middle class (high-income sector). The remaining seventy to seventy-five of the population are in the rural, agricultural sector. Clearly the middle class in India has the ability to purchase products and services that are prevalent in industrialized countries such as the U.S. This however triggers an issue because seventy to seventy-five percent of India’s population only need products that are essential to their everyday life. The current issue that marketers face in India is targeting the seventy to seventy-five percent of people that do not necessarily have the means to buy sophisticated products and services. Another issue that emerges for marketers is the fact that as they target geographical areas where there are both middle class and low-income individuals. It is not very profitable because they are not targeting their consumers specifically enough, the low-income individuals cannot purchase what they are marketing.

India to this day utilizes the caste system as their main hierarchical tool.  The term caste originates from 1200 BCE and the Indian caste system has been used for many years. A caste system means that an individual is born into their respective hierarchical class in society; they cannot influence it with luck or their abilities. These individuals are born, married into, and die carrying the same class in which they were inherently given.  Brahmans are typically priests and scholars, Kshatriyas are political rulers and soldiers, Vaishyas are merchants, and Shudras are laborers, peasants, and servants. The untouchables are at the bottom of the caste rank and they do all of the work that no one else would want to do. This system has played a huge role in modern India, and the implications for marketing and business are huge.

India in recent years has seen a significant increase in the importance of social media as well as video advertising online. Investment in social media as well as video advertising has shown a seventy-one percent growth year over year. Investment in Search Ads have growth from INR 493 to INR 850 from the years 2010-2013. Search advertising alone accounts for forty percent of the online advertising market. Also, the online display form of advertising (e.g. images) is becoming more  sophisticated to suit consumer needs. Richmedia with and without video accounts for 60%  of all display ad spends in India. Lastly, mobile advertising (mobile web, SMS, MMS, app designing) have also increased significantly in recent years. Forty percent is allocated to mobile web advertising, another forty percent is allocated to in-app advertising, and twenty percent is allocated to mobile video and TV, SMS, and MMS. The year 2012 marked the time that India finally delved into the world of social media advertising. The aforementioned statistics highlights the general trends associated with India’s move towards online advertising. This jump to social media and online advertising in India shows something spectacular. The developing countries are already showing a shift to online marketing. Facebook and YouTube advertisements are also becoming more dominant in online marketing. There is a narrow window of opportunity for business men and women to infiltrate the market while the cost per click is low. India is a viable country to begin the online marketing attack to maximize R.O.I. and advertise at a low cost-per-click.

In terms of product-demand countries such as the U.S. have high expectations for their product performance and longevity. Surveys have affirmed that in the U.S. and other western countries consumers expect a product life span of six to seven years. This is clearly because of the innovative free market environment, the next logical question is what about countries such as China? China expects a product lifespan of only eighteen to twenty-four months! This knowledge can be used by producers to emphasize in quality as it is clearly a huge differentiating factor. This then presents the issue of targeting specific customers that are willing and able to purchase superior products that last longer.

India is a great example to illustrate the production and consumption patterns of a developing country. Typically, three markets coexist; the high-income sector, the agricultural sector, and the transitional sector composed of low-income individuals. India is considered one of the largest industrial economies in the world. Their population is around one billion, with twenty to twenty-five percent considered middle class (high-income sector). The remaining seventy to seventy-five of the population are in the rural, agricultural sector. Clearly the middle class in India has the ability to purchase products and services that are prevalent in industrialized countries such as the U.S. This however triggers an issue because seventy to seventy-five percent of India’s population only need products that are essential to their everyday life. The current issue that marketers face in India is targeting the seventy to seventy-five percent of people that do not necessarily have the means to buy sophisticated products and services. Another issue that emerges for marketers is the fact that as they target geographical areas where there are both middle class and low-income individuals. It is not very profitable because they are not targeting their consumers specifically enough, the low-income individuals cannot purchase what they are marketing.

India to this day utilizes the caste system as their main hierarchical tool.  The term caste originates from 1200 BCE and the Indian caste system has been used for many years. A caste system means that an individual is born into their respective hierarchical class in society; they cannot influence it with luck or their abilities. These individuals are born, married into, and die carrying the same class in which they were inherently given.  Brahmans are typically priests and scholars, Kshatriyas are political rulers and soldiers, Vaishyas are merchants, and Shudras are laborers, peasants, and servants. The untouchables are at the bottom of the caste rank and they do all of the work that no one else would want to do. This system has played a huge role in modern India, and the implications for marketing and business are huge.

In terms of product-demand countries such as the U.S. have high expectations for their product performance and longevity. Surveys have affirmed that in the U.S. and other western countries consumers expect a product life span of six to seven years. This is clearly because of the innovative free market environment, the next logical question is what about countries such as China? China expects a product lifespan of only eighteen to twenty-four months! This knowledge can be used by producers to emphasize in quality as it is clearly a huge differentiating factor. This then presents the issue of targeting specific customers that are willing and able to purchase superior products that last longer.

A solution to targeting high conversion customers is online marketing, but in China Google isn’t as big as most people would think. Google alone commands 67% of the global internet market share, but in China Baidu and 360 (So.com) has the majority of the market share in China. CNZZ estimated that Baidu’s market share was around sixty-three percent by the end of 2013. This is considered by many business people to be the best search engine marketing campaign in China. 360’s So.com is ranked second in search engine marketing campaigns in China. They naturally gained market shares because it was the automatic search engine on all 360 internet browsers. This site is associated with lower costs per click than its main competitor Baidu. Consequently there are considerably less results driven by this search  engine.  360 can be best used by business people by using it in addition to Baidu as well as determining if the cost per click is conducive to a high return on investment. Google Adwords is still a viable option in China despite the insignificant market share of less than two percent. This is because people in China tend to use Google to search for foreign inquiries, which increases the probability that they will be looking for a foreign product. Market analysis shows that for certain products Google even brings in thirty to thirty-five percent of the traffic that Baidu provides them.  The statistics of Google’s market share in China may be skewed because it does not account for the usage of proxy servers or “VPNs”; which are fairly common in China. For international business in China marketing efforts should clearly be directed accordingly to Baidu, 360, and Google Adwords. Analysis of the potential returns on income should be used to determine how much should be invested into the aforementioned online marketing platforms.

In the developed countries such as the United States the use of new media is becoming a dominant paradigm in international business. The use of Google Adwords, Facebook, and YouTube, or the equivalent, should be utilized to maximize profits and convertibility of sales.  The historical chronological assessment of the evolution of new media shows a continuous potential for success and excellence. In very recent years the change from old media to new media was seen as a complete paradigm shift in marketing. It affects the marketing mix, allocation of marketing funds, and businesses need to adapt in this new world. The BRIC countries are a testament to the revolutionary potential for the impact of new media on business operations. Being able to understand, analyze, and interpret financial cues and data in the pursuit of online marketing is critical. New media is now a global phenomenon and will continue to spread the earth to embrace international business and marketing.

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