2011 latin america internet market research and outlook
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Latam 2010-2011
2011 Latin AmericaInternet Market Research & Outlook
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2011 Latin America Internet Market Research & Outlook
• Latin America: Rising Star of the Global Economy
• Growing Internet Audience
• Online Advertising: Booming Potential
• E-commerce is Taking off
• More Mobile Phones Than People
• Latam’s Largest Market: Brazil
• The Opportunity with U.S. Hispanics
• Latam’s Online User’s Profile
• Top Players in the Region
3
Latin America will continue growing at higherrates than developed economies
Source: International Monetary Fund, Scotiabank Group
2005 2006 2007 2008 2009 2010* 2011* 2012*
-10%
-5%
0%
5%
10%
15%
20%Real GDP (annual % change)
Major advanced economies (G7) European Union China
Argentina Brazil Chile
Latam’s GDP growth for 2011-2012*:
• Argentina: 5%• Brazil: 4,3%• Chile: 5,8%• Colombia: 4,3%• Mexico: 4,1%• G7 countries: 2,04%• European Union: 1,7%
4
Latam Rank
City (Country) Current Population
2010 GDP World Rank
2025 GDP World Rank
GDP per Capita (by
city)
1 Sao Paulo (Brazil) 20.800.000 8 6 $18.654
2 Mexico City (Mexico) 22.800.000 9 7 $17.105
3 Buenos Aires (Argentina)
14.800.000 12 10 $24.459
4 Rio de Janeiro (Brazil) 12.500.000 30 24 $16.080
5 Santiago (Chile) 6.050.000 51 50 $19.835
6 Brasilia (Brazil) 3.925.000 55 51 $28.025
7 Lima (Peru) 9.200.000 56 52 $11.848
8 Belo Horizonte (Brazil) 5.700.000 61 89 $10.702
9 Monterrey (Mexico) 4.350.000 63 58 $23.448
10 Bogota (Colombia) 8.850.000 64 61 $11.299
11 Porto Alegre (Brazil) 4.100.000 66 85 $16.098
12 Guadalajara (Mexico) 4.700.000 81 74 $17.234
13 Medellin (Colombia) 3.625.000 104 103 $13.793
14 Curitiba (Brazil) 3.300.000 113 112 $13.333
Top 14 Cities of Latam: All of them will climb in World GDP rankings
Source: PriceWaterhouseCoopers
Paris (6th) and Osaka (7th) will be overtaken in 2025 GDP by
Mexico City and Sao Paulo.
Buenos Aires will overtake Boston (12th) and Washington
DC (11th) by 2025 GDP.
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Latam doubles the Worldwide growthrate of Online Population
32%
15%
8%8%
6%
3%
Online Population Growth 2009-2010 (%)
Source: comScore
According to eMarketer, the number of internet users in Latin America has been increasing at about double the rate of population growth.
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And Latam’s Online Population is far from saturation
Internet penetration in South America is still relatively small
Online Populations of Latam will boom with increasing internet penetration
Japan United States
Russia South America
Brazil China India
78.20% 77.30%
42.80%
36.50% 36.20%31.60%
6.90%
Internet Penetration (%)
Source: Internet World Stats
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Most major markets in Latam have grown significantly
Brazil Mexico Argentina Colombia Chile Venezuela Puerto Rico
33.3
14.812.5
9.86.7
2.2 1.1
40
17.8
12.8 12.3
7.3
2.91.2
Audience growth in Latam2009-2010
2009
2010
+20%
+21% +3% +26
% +9% +27% +9%
Source: comScore
Eric Schmidt(Google’s former CEO):
“..internet usage has increased dramatically [in Latin America]. In the last
years, Brazil and Argentina are having the fastest growth
in the world. We are looking forward to make strong
investments in both countries”
(April 2011 Interview – Diario Perfil)
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Latam’s Online Ads: in infant stages but with booming potential
Fastest-growing region in the world in online ad spending with a growth rate of 13.3% over the next five years. (Magna Global)
Online ad spending will more than double over the next four years, growing from $2 billion in 2010 to $4.2 billion in 2014. (eMarketer)
Latin America Online Advertising Spending Metrics,
2009-2014
(billions, % of total and % change)
2009 2010 2011 2012 2013 2014
Worldwide $ 55,2 $ 61,8 $ 68,7 $ 79,0 $ 87,4 $ 96,8
Latin America $ 1,7 $ 2,0 $ 2,5 $ 3,1 $ 3,6 $ 4,2
% of worldwide 3,0% 3,3% 3,6% 3,9% 4,1% 4,3%
% change 13,3% 23,1% 21,2% 24,6% 16,2% 16,2%
Source: eMarketer
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Latam’s e-commerce is taking off...
Source: :AmericaEconomia Intelligence
2003 2004 2005 2006 2007 2008 2009 2010* 2011*0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.9 34.9
7.5
10.6
15.6
21.8
27.6
34.5E-commerce in LatAm
Sales E-commerce as a % of GDP
US$
Billions
E-c
om
merc
e
as a
% o
f G
DP
Growing 51% per year during the period 2003-2009
E-commerce has also grown in importance: it has increased as a percentage of GDP at an average rate of 34% per year.
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And it will continue growing
By 2014, global e-commerce spending is projected to increase more than 90 percent. In Latin America, the amount spent online is projected to
more than double.
Source: Euromonitor International
11
E-commerce by country
60.8%
12.1%
4.7%
4.2%
4.0%
4.0%
2.9%
2.7% 2.0% 1.3% 1.3%
BrasilMexicoChileVenezuelaArgentinaCaribe sin PRCentro Am.Puerto RicoColombiaPeruOther
Source: :AmericaEconomia Intelligence
It’s not a matter of size…It’s about development
• Infrastructure
• Technology adoption
• Supply of goods and services
• Buying patterns and cultures
• Banking and credit card
penetration
12
E-commerce categories in Latin America
Travel; 45%
Retail; 34%
Interna-tional Retail;
13%
C2C; 6%
Taxes; 2%
Travel
Retail
International Re-tail
C2C
Taxes
Source: :AmericaEconomia Intelligence
The travel category is still the most important in Latin America
The retail category is growing the most
Paying taxes online has a high potential
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Credit Card Penetration
Source: Fuente: Estudio Regional de Comercio Electrónico América Economía 2010
Colombia, Mexico and Other
Argentina, Chile, Puerto Rico, Uruguay
Brazil Spain USA
2 or less
4-5
7.00
10.00
19.00
Number of credit cards per 10 individuals
Latam's Leader
Non-Latam countries
Brazil is the clear leader, but it’s still far behind penetration in developed countries
14
Latam: more mobile phones than people
According to Informa Telecoms & Media, Latin America will reach more mobiles than people by the end of 1Q11
Prepaid represents over 80%
2009 2010 2011 2012 2013 2014 2015
331.5 354.6 375.5 396.2 415.6 432.7 450.7
57.3% 60.6% 63.4% 66.2% 68.6% 70.7% 72.9%
Mobile Phone Users in Latin America 2009-2015
Mobile Phone Users
Source: eMarketerSource: eMarketer
2009 2010 2011 2012 2013 2014 201540%
50%
60%
70%
80%
90%
Mobile Phone User Penetra-tion by Country, 2009-2015
Argentina BrazilMexico Latin America
15
Latam’s largest market: Brazil
Dec-0
9
Jan-
10
Feb-
10
Mar
-10
Apr-1
0
May
-10
Jun-
10
Jul-1
0
Aug-
10
Sep-
10
Oct-1
0
Nov-1
0
Dec-1
0
33.3 33.8 34.2 34.8 35.3 35.9 36.4 37.0 37.5 38.1 38.7 39.3 40.0
1,966 1,978
1,848
2,155 2,113 2,153 2,1322,210 2,176 2,199
2,253 2,2522,163
Brazil: Internet Users and Total Visits
Unique visitors (MM) Visits (MM)
Un
iqu
e V
isit
ors
(M
M)
Vis
its (
MM
)
Source: comScore
Brazil has nearly40% of Latam’s internet users
It is the 8th largest internet audience in the world (15+, H&W). Mexico is 16th
and Argentina is 19th
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Brazil’s e-commerce
Source: Camara Brasileira de Comercio Eletronico
Brazil Worldwide
63.8% 61.8%
69.6%
63.9%
Retail Sites Growth
2009 Reach 2010 Reach
+9%+3%
Source: comScore
2006 2007 2008 2009 2010 2011*
79.5
13.2
17.6
23
27+
2.8
4
5.2
6.7
9.4
11.3
E-consumer evolution in Brazil
E-consumers Sales
Mill
ions
of e
-con
sum
ers
Billi
ons o
f US$
Brazil’s e-commerce is expected to grow at a compound annual growth rate (CAGR) of 18% over the next five years.
According to Forrester Research, Braziliane-commerce is set to jump to 178% by 2016.
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Social Networking in Brazil
The reach of the Social Networking category continues to be very high throughout Latin America
In Brazil, even with such a high reach, the category is amazingly still growing:In October 2010, Brazil was Twitter’s #1 market
Brazil Worldwide
77.9%
67.6%
85.3%
70.5%
Social Networking Sites Growth
2009 Reach 2010 Reach
+10%
+4%
Brazil
Netherlands
Venezuela
Japan
Indonesia
Canada
Philippines
Argentina
Singapore
United Kingdom
Turkey
United States
Chile
Mexico
Colombia
22%
22%
21%
20%
19%
15%
14%
13%
13%
13%
13%
13%
12%
11%
10%
Twitter.com Top 15 Markets by % Reach
Source: comScoreSource: comScore
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Hispanics in the U.S.
Hispanics are the 1st minority of the U.S. with an approx. population of 50 million
That makes U.S. Hispanics the 2nd largest concentration of Hispanics in the world: only behind Mexico
65%16%
13%
4% 2%
U.S. Population(by race, % of total)
White non-hispanicHispanicBlackAsianMulti-racial
White non-hispanic
Hispanic
Black
Asian
Multi-racial
200.9
49.7
39.9
14.4
5.4
2010 Population(Millions)
Source: U.S. Census Bureau Source: U.S. Census Bureau
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Hispanics are a rapidly growing population…
According to U.S. Census Bureau projections, Hispanics will grow 167% (White Non-Hispanics will only grow 1%) from 2010 -2050, across all ages.
It is also projected that by 2050, Hispanics will account for 30% of the U.S. population. That’s almost double from their current percentage
2010 2015 2020 2025 2030 2035 2040 2045 2050
49.757.7
66.475.8
85.9
96.8
108.2
120.2
132.8
16% 18% 19% 21% 23% 25% 27% 28% 30%
Projections of the Hispanic Population(Millions)
Numer of hispanics in millions % of total population
167% growth during 2010-2050 period (White non-Hispanics, 1%)
Source: U.S. Census Bureau
20
With More Buying Power
1990 2000 2009 2014
212
489
978
1,330
5.0%6.8%
9.1% 10.2%
Hispanic Buying Power(in billions)
Buying power in billions % of total buying power
2x the growth of n
on-Hispanics
+36%
Source: Selig Center for Economic Growth, University of Georgia, International Monetary Fund
+130%
+100%
Hispanics’ percentage of buying power is expected to double in the period of 1990-2014
That’s twice to growth in percentage of non-Hispanics
In comparison, Brazilian’s buying power for 2009-2014 will grow over 30%
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Compared to non-Hispanics, Hispanic adult Internet users…
...are younger:• On average, 8 years younger• Twice as likely to be 18-24• 50% more likely to be 25-35
…live in larger households:• On average, 1 person more per household
(4 vs. 2.9)• 3x as likely to live in 5+ households
...are twice as likely to live in households with 3 or more children, and
...are 77% more likely to live in households with 3 or more employed adults
Larger households with more kids and
employed adults
AttractiveAudience
Source: Simmons NCS. Leading sources used: Interactive Advertising Bureau
22
Latam’s Online User’s Profile
Brazil has the largest online population in Latin America – 45.1 million is currently
the comScore estimate of 6+, home & work
– Extended universe
estimate is 77.3 million, larger than the total populations of France and the UK (66 and 62 million, respectively)
Average usage in Brazil, Mexico, Argentina, Chile and Peru outpace global average
Brazil
Mexico
Argentina
Colombia
Chile
Peru
Venezuela
Puerto Rico
24.3
24.1
25
20.1
22.8
24.7
19.8
17.1
Total hours online per Visitor in Latin Amer-ica
Worldwide Average: 22.4
Source: comScore
23
Young People Drive InternetConsumption in Latin America
15-24 year olds in Latin America are the heaviest Internet users, outpacing every other age group in Latin America as well as the global average for the age group
15+ 15-24 25-34 35-44 45-54 55+0
5
10
15
20
25
30
23
26.6
20.8 21.2 21.9 22.422.4 22.821.3 21.8
24.223.2
Average Time Online by AgeHours per Visitor
Latin America Worldwide
wor
ldw
ide
aver
age:
22.
6
Source: comScore
24
Social Networks Reached 88% of Latin American Internet Users
Social Networks continue to be a central touch point of the Latin American web experience
BrazilNetherlands
VenezuelaJapan
IndonesiaCanada
PhilippinesArgentinaSingapore
United KingdomTurkey
United StatesChile
MexicoColombia
22%22%
21%20%
19%15%
14%13%13%13%13%13%
12%11%
10%
Twitter.com Top 15 Markets by % Reach
PhilippinesTurkey
IsraelChile
MalaysiaArgentina
VenezuelaIndonesia
CanadaColombia
PeruMexico
United KingdomPuerto Rico
Finland
93.7%90.7%
90.2%89.5%
88.4%88.3%
87.8%87.4%
86.9%86.7%
83.4%82.6%
81.4%81.4%81.2%
Facebook.com Top 15 Markets by % Reach
Latin America Worldwide
82.2%
67.6%
87.7%
70.5%
Social Networking Sites Growth
Dec 2009 Reach Dec 2010 Reach
+7%
+4%
Source: comScore
Source: comScore Source: comScore
25
Instant Messengers, Social Networking, and Blogs are Key in LatAm
Search/Navigation
Social Networking
Multimedia
Instant Messengers
Photos
Directories/Resources
Blogs
Retail
Community
88%
88%
76%
71%
68%
66%
64%
63%
62%
60%
85%
70%
63%
67%
35%
53%
68%
50%
64%
58%
Worldwide Latin America
News/Information
Technolgy
Downloads
Games
Business/Finance
Education
Sports
TV
Travel
Automotive
57%
56%
55%
53%
35%
35%
31%
31%
22%
18%
60%
53%
57%
51%
46%
29%
32%
33%
30%
24%
Worldwide Latin America
Reach of Key Categories
Source: comScore
Index: 104
124121
10619612594
12697
104
94
10697
1037812199
9376
76
26
Group-buying Sites Showed Impressive Growth in Late 2010
Group-buying sites have taken off in Latin America and, based on what has been seen in the USA, are set to continue their growth in 2011
Argentina is Groupon’s top market, with one of every five web users visiting the coupon site in February 2011. Brazil is also one of top markets with 6% reach
Argentina
Norway
Poland
Taiwan
Spain
United Kingdom
Italy
France
Brazil
Ireland
21%
12%
10%
9%
7%
6%
6%
6%
6%
5%
Groupon Top Markets by % Reach
Source: comScore
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Top Players in the Region
Largest Online Commerce Platform in Latin America• IPO in August 2007 - $3.81 billion Market Cap (April 14th, 2011)• 2010: Revenues US$217 million – EBITDA $75 million• Stock performance (last 24 months): +300.69% (vs. Nasdaq: +66.43%)
Largest Shopping Comparison Website in Latin America• Acquired by Naspers in September 2009 for $374 million• More than 15 million products sold on over 60 thousand stores Leading Provider of Online Classifieds in Latin America and Asia• Over 125 million unique visitors per month, presence in 90 countries in
40 languages• Naspers bought a controlling stake in August 2010 for approximately
$200 million
Pioneer and Leader in Collective Purchases in Brazil• In nine months it registered over 5 million users and sold more than 2
million vouchers, generating savings of over $ 120 million to its users• Received funding from Benchmark Capital and Monashees Capital
(undisclosed amount)
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Top Players in the Region (cont.)
Leading Job Portal in Latam• Acquired by Tiger Global in July 2007 for $15 million• $1 million EBITDA when acquired
Leading Travel Portal in Latam• Over $125 million sales in 2007• Has raised over $60 million in funding
Leading Social Gaming Company in Brazil• Over 20 million active players a month• Has raised over $46 million in funding
Leading Spanish/Portuguese social networking site• Over 50 million registered users• Raised over $6 million in funding
