Vietnam Online
Adver/sing Industry:
A Quick Overview
26‐Nov 2008
Bryan Pelz

Vietnam Online
Troubled *mes

Vietnam: Basic Stats
Annual data 2007(a) Historical averages (%) 2003‐07
Population (m) 85.9 Population growth 1.3
GDP (US$ bn; market exchange rate) 70.7 Real GDP growth 8.1
GDP (US$ bn; purchasing power parity) 221.6 Real domestic demand growth 8.4
GDP per head (US$; market exchange rate) 823 Inflation 7.1
GDP per head (US$; purchasing power parity) 2,579 Current‐account balance (% of GDP) ‐3.6
Exchange rate (av) D:US$ 16,179 FDI inflows (% of GDP) 4.9
2006 2007 2008c 2009c
Real GDP growth 8.2 8.5 6.9 7.7
Industrial production growth 17 17.3 15.9 16.5
Gross agricultural production growth 3.4 3.4 3.5 3
Consumer price inflation (av) 7.4 8.3 23.3 12
Consumer price inflation (year‐end) 6.6 12.6 21.9 8.9
Lending rate 11.2 11.4 20.8 17.3
Source: Economist Country Briefing Jun-2008

Recent news
• AC Nielsen: Consumer confidence • Vietnam Net: October 2008 vs
down in Vietnam October 2007 Consumer Price
Index
HANOI, Nov. 10 — An AC Nielsen
survey has shown that Vietnamese
consumer confidence con/nued to
drop in the second half of this year
due to high infla/on and slower
economic growth, Vietnam
Investment Review reported on
Monday. In the first 10 months this
year, Vietnam's infla/on rose 23.15
percent over the same period last
year. The economy rose by 6.52
percent in the first nine months year‐
on‐year, lower than the 7.4 percent
growth for the first quarter, official
sta/s/cs showed.
Source: AC Nielsen, VietnamNet

Tech company layoffs announced in the last 5 weeks
Company Date How many Company Date How many
Sun Microsystems 11/14/08 6,000/15‐18% Xerox 10/23/08 3,000
Applied Materials 11/12/08 1,800/12% Avid Technology 10/23/08 500
Wired.com 11/11/08 3 of 28 Nokia 11/4/08 600
Six Apart 11/11/08 8% Tektronix 11/3/08 150
Tucows 11/11/08 15% Spot Runner 11/3/08 115, < 30%
Circuit City 11/10/08 20% Circuit City 11/3/08 17%
BitTorrent 11/10/08 50% THQ 11/3/08 4‐5 studios
Insight 11/10/08 240, 4% Break.com 10/23/08 11 of 80
Honeywell 11/7/08 700 Eons 10/23/08 8 of about 33
Zappos 11/6/08 8% Dell 10/22/08 8,900
LinkedIn 11/5/08 36, 10% SanDisk 10/22/08 TBA
AMD 11/5/08 500, 3% ManiaTV 10/22/08 20 of 70
Nokia 11/4/08 600 iMeem 10/22/08 25% of 80
THQ 11/3/08 4‐5 studios HP 10/22/08 24,600 over three years
Motorola 10/30/08 3,000 Yahoo 10/21/08 10% of ~14,300
Electronic Arts 10/30/08 600 Sony Ericsson 10/17/08 2,000 globally
Xerox 10/23/08 3,000 eBay 10/6/08 1,000
Source: CNet

More recent doom & gloom
• VinaSME Urges a Rescue of SMEs
Vietnam Net – Nov 14, 2008
VinaSME has released the report that said 20% of SMEs are currently on the verge
of bankruptcy. These enterprises have narrowed or stopped produc/on, while the
business of some enterprises has come to a stands/ll. Vinasme’s sta/s/cs showed
that 95% of 200,000 businesses that pay taxes to the state are SMEs. The SMEs
make up 40% of GDP and put out 30‐40% of export and consumer products for the
country. Moreover, SMEs use up to 50% of the total laborers used by enterprises
throughout the country. SMEs contribute 17.6% to the state budget.
Source: Vietnam Net

2009: What we might see
• As global situa/on worsens, local economy will face more challenges
• Infla/on will subside
• Housing prices will con/nue decline; construc/on will stall
• Foreign investment will contract
• Exports will slow
• Businesses and consumers will become more conserva/ve
Bryan’s guesses. Your results may vary.

Time to get innova/ve
Source: VN Express

Vietnam Online
Huge poten*al,
despite the environment

South
East
Asia

Vietnam Internet Growth
100% 100,000,000
90% 90,000,000
>Web Content
80% 80,000,000
>Mobile
70% Internet
70,000,000
60% Online Games 60,000,000
50% 50,000,000
Broadband
40% 40,000,000
30% 30,000,000
20% 20,000,000
10% 10,000,000
0% ‐
VinaGame projections
Population Internet Users Growth

Top 20 Internet Countries 2007
Japan USA
Korea
Internet Penetra/on
Vietnam
China
India
GDP / Capita
50M

Vietnam & developing countries
Vietnam 2009?
Internet Penetra/on
Vietnam 2007
Vietnam 2005
China 2007
India 2007
GDP / Capita
50M

Vietnam: Home Internet access is growing
Urban Home Internet Urban v Rural – 2008 (%)
Penetration (%)
40 Surfed Internet in
Past Wk 54
35 34
30 Mobile Phone 33
Penetration 84
25
21
Rural
20
Home Internet 1 Urban
15 Penetration 37
10 8 9
Home PC 9
5 3 Penetration 51
0
1999 2001 2004 2006 2008 0 20 40 60 80 100
Source: TNS Consumer Trends 2008

Vietnam Internet Users – by Age
2006 2014
16m 47m
16 16
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
0‐4
5‐9
10‐14
15‐17
18‐19
20‐24
25‐29
30‐34
35‐39
40‐44
45‐49
50‐54
55‐59
0‐4
5‐9
10‐14
15‐17
18‐19
20‐24
25‐29
30‐34
35‐39
40‐44
45‐49
50‐54
55‐59
Internet Users Popula/on Internet Users Popula/on
VinaGame projections

Vietnam Online
The good, the bad, and the ugly

Online ad growth in US grinding to a halt (US$M)
$9,000 14.0%
$8,000
12.0%
$7,000
10.0%
$6,000
8.0% AOL
$5,000
Microsoft
Yahoo
$4,000 6.0%
Google
$3,000 Growth (%)
4.0%
$2,000
2.0%
$1,000
1%
$0 0.0%
Q3‐2007 Q4‐2007 Q1‐2008 Q2‐2008 Q3‐2008
Source: TechCrunch

Vietnam Online Adver/sing Market ($M)
10% 80
• We had expect the online
9% 70 ad market to reach $75m by
8%
7%
60 2014
6% 50 • We had expected online
5% 40 would exceed 9% of total
4% 30 ATL adver/sing (on+off)
3%
20
2%
1% 10 • PROBLEM: adver/sing will
0% 0 ramp at a slower rate due to
2007E
2010E
2012E
2014E
2008E
2009E
2011E
2013E
troubled economy
Online Advertising
Internet Users
% of ATL Advertising
VinaGame projections

Evolu/on of VN Ad Market: 2009 vs 2014
80
• We had expected increase
70 in paid search
– Paid search would reach >
60
$35m
50 – Paid search would reach
0.036% of GDP in 2014,
40 eventually exceeding 0.10% in
30
long‐term
20
• PROBLEM: adver/sing will
10
ramp at a slower rate than
0 an/cipated
2009E 2014E
Display Paid Search
VinaGame projections

Some bright news from China
• CCTV prime /me auc/on
– strong ad spending by domes/c Chinese firms, up 15% YoY
• Online ad spending may s/ll grow, es/mates are ~20%
– Online media demographics are complementary to TV’s, as most youth
spend more /me on online media than TV
– Online media rate card will be raised auer the raising of CCTVs rate
cards
– Due to economic slowdown, people will spend more /me at home
and, thus, both Internet and TV will benefit.
• THE PROBLEM IS: China is a more mature market than VN
– Twice the GDP/Capita
– Large base of SMEs adver/sing already

Vietnam Online
It’s up to us to make a difference

The market situa/on here
• More people spend *me online in a troubled
economy
– Cost‐effec/ve form of diversion
• Online becomes more important to young
people
– This country is full of early adopters
– Using the Internet in increasingly diverse ways

Business environment
• In hard *mes, spending should shiH from
retro media to online ;‐)
– The ROI for online is quan/fiable
– Retro media is only indirectly quan/fiable
• No shiH in VN (yet). Why?
– Companies don’t pay enough aven/on to the
numbers
– Our ecosystem is incomplete (does anyone verify
our numbers?)
– No serious effort to evangelize SMEs

What we should do
• Shiu spending to online
• Educate the market
• Cooperate to develop the ecosystem
• Invest in evangelizing SMEs

Q&A
Contact info:
email: bryan@vinagame.com.vn
skype/twitter/yahoo/gtalk/yahoo/tumblr: bryanpelz