Google in Africa

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Archive for August 2007

Google to open South African office, follows in Amazon’s footsteps

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Vinny Lingham

ITWeb reported that Google has finally appointed a Country Manager to setup it’s South African operations.

South African Internet usage has grown 120% in the past year, and it won’t be long until you see eBay, Yahoo & the others follow Google & Amazon’s recent foray (Amazon’s Cape Town office built EC2) into South Africa.

We have the fast growing user base (5m+), emerging middle class, 5%+ economic growth, broadband adoption growing rapidly, and SA is the gateway into Africa – over 1bn people – it’s only the logical next step. Oh, and did I mention, 30m+ mobile users!!!

I had the chance to meet with Stafford Masie today, the new Google South Africa Country Manager, and I can truly say that I was very impressed with his energy and I think that he is going to make a big difference here. I’ve read some blogs where people have stated some concerns – and this echoed the “behind the scenes” chatter within the industry – which went largely unpublished.

Prior to meeting Stafford for the first time ever today – I must admit that I was also a bit hesitant myself, as he is effectively an industry “outsider” to Search Engine Marketing and I wasn’t sure what to expect. In all honesty, if I don’t have something heartfelt to say – I’d usually just keep quiet, but I’m going to put my neck out here and say to all the naysayers, that I think you’ll be pleasantly surprised with Google’s appointment. As usual, time will tell – but he has my support and faith!

After the discussion today, I can only congratulate Google on an excellent choice in appointing Stafford!

One of the recent posts that emerged was one from Vincent Maher, that I must disagree with, was about Google discouraging entrepreneurs by entering the local market.

It’s not that South Africa is a major focus area for Google, though in the EMEA context it probably is big alongside Egypt, it’s that the impact of Google making direct and interpersonal connections with advertisers in this country might well have a significant impact on the online media industry and their margins. The fact is the local online ad industry doesn’t need a revitalisation, it has been going through one for the last two years and the entry of Google on a more serious level may have a negative impact on the local entrepreneurship we’re seeing.

Aside from that, local companies paying offshore companies for local ad-spots seems a bit like we’re a banana republic.

There are search engines in South Africa, that shall remain unnamed, that prey on the ignorance of advertisers trying to advertise online in South Africa – and that’s all I’m going to say on this point. I do believe that Google will “bring balance to the force” 🙂

Google being more local will actually assist the industry in weeding out the crap that has emerged from our recent boom in online and encourage entrepreneurs to focus on building valuable businesses, that can be monetized by Google’s Adsense, which has created thousands of $ millionaires – Google earns roughly 1/3 of it’s $14bn/year in revenues via AdSense – and a large percentage of that is paid back to publishers. If anything, Google encourages entrepreneurship, like no one else in this space (maybe even as much as eBay!).

As in all countries – Google has ruffled offline media feathers by forcing them to be held accountable to their media agency’s grandiose ideas. The reality is that online usage and time spent is growing, and offline media consumption is dropping, globally. Google’s model is to make advertising efficient, and inefficient media companies are forced to either adapt or face revenue drops. This has lead to agencies like IPG being forced to diversify their business through acquisitions. You’ll soon see similar moves in South Africa, as the market moves to a more efficient marketing platform.

Vincent’s comment on the “Banana Republic” only held true up until this point. If Google reinvests those profits in developing South Africa, and Africa – then it’s certainly not just milking the local economy for profits, it’s building the industry.

My prediction is that we’re going to see a lot of world first innovations coming out of South Africa, as a result of Google taking the initiative here and showcasing both our technical talents, but more importantly, the commercial opportunities for Internet multi-nationals in South Africa!

I trust that all my (local) readers will join me in welcoming Google to Africa – thanks for joining us, finally!!

Written by aheavens

August 15, 2007 at 2:37 pm