NEW YORK (AdAge.com) -- Don't look now, but the biggest U.S. websites are getting less and less American. What's a conundrum for some of the best-known web properties as they try to turn their growing international user bases into ad dollars is an opportunity for marketers. Big brands can do global online campaigns on the cheap.
Consider: The international web population grew 17%, surpassing 1 billion in just the past 10 months. China alone grew 22%, while the internet population in the U.S. grew just 2% to 193 million, according to ComScore. A look at the top-50 ostensibly U.S. websites shows that many are getting more traffic from abroad than from the U.S. The New York Times gets 42% of its visitors from abroad, Twitter 51%, YouTube 81% and Facebook 82%.
Traditionally, U.S. marketers haven't had much interest in foreign audiences and are sometimes surprised to learn that their online ad buys in the U.S. are showing up as impressions in Canada, the U.K., Israel or elsewhere. "It's very tempting," said Oren Netzer, CEO of Double Verify. "A lot of times the agency does not specifically say U.S. inventory. International impressions are the biggest source of waste that exists."
But as the international web population grows, there's a growing emphasis on finding ways to make the corresponding business international. Until five years ago, global ad buys rarely included an online component, and when they did they were pretty much restricted to the few web properties with sales operations around the globe, such as MSN, Yahoo and Google.
Now, there are quite a few more online and media players with international footprints, such as Facebook, News Corp.'s MySpace and Viacom, with its MTV and VH1 online properties around the globe. As the number of international users rises, it has become tempting for marketers to buy globally.
"The notion of global is less about the big marketing idea and more about gaining efficiencies," said Carl Fremont, exec VP-global director at Digitas, who oversees Kraft's online marketing. "I can aggregate audiences more efficiently if I am doing it with a media property that already has a global scale, rather than negotiate on a local basis."
The international pull of the web has been felt strongest in search, social networking and video sites. Google's performance-based ad model naturally scales internationally, and the search giant derives 50% of its revenue from outside the U.S. While that's impressive, note that 84% of all of all traffic to Google sites originates from outside the U.S., according to ComScore.
The reality for most websites is that international traffic represents more of a cost than a source of revenue. "They're getting 70% of your impressions [from international] but it becomes 5% of their revenue, if they're lucky," said Tyler Moebius, CEO of ad network Adconion, which was founded in Europe and gets about a third of its impressions each from the U.S., Europe and Asia.
That's particularly true for video sites, which undertake significant bandwidth costs as their overseas audiences grow. Video is extremely popular in countries with the infrastructure to support it, but poses difficult rights issues for U.S. content and is very hard to sell those audiences to advertisers.
Last year video site Veoh decided it wasn't worth the trouble and expense, and started blocking countries including Dominican Republic, Argentina, Lebanon, Brazil and Saudi Arabia, which were providing significant traffic and bandwidth costs, but no revenue. YouTube told The New York Times it may start throttling back bandwidth in some territories, making the site slower and lower quality video.
Facebook's foreign footprint
No web property has grown so fast, and so fast internationally, as Facebook, which just took a $200 million investment from Russian firm Digital Sky Technologies in part to gain some expertise in foreign markets. DST is also invested in one of the more prominent Facebook knockoffs, Vkontakte.ru. There are others in Germany and China.
A year ago, Facebook had virtually no overseas business. It hired its first overseas employee 18 months ago, Blake Chandlee, commercial director for Europe, the Middle East and Asia.
Facebook has plenty of overseas users in developed markets to monetize, but some of its fastest-growing markets, like Turkey and Indonesia, present challenges. Turkey, which according to ComScore just passed Italy to become Facebook's fifth-biggest market, has mostly performance advertisers, and very little online brand advertising. Ad rates in Indonesia are abysmal.
Moreover, some international territories in Latin America, India and Africa will be accessing Facebook -- and other online services -- predominantly by mobile phone, and Facebook doesn't yet have an ad model for that.
Users take global
Still, the notion of Facebook, which spread virally across the globe under the power of its user base, is attractive for marketers wondering how they can harness that for their brands. "Today the users are creating the global brands," Digitas' Mr. Fremont said. "Facebook didn't have to go in and change its infrastructure to build its brand globally -- their users did it for them."
That's a sharp contrast from just five years ago when Yahoo and MSN had to fight some very entrenched "portal" competitors when they built their global footprints.
For Facebook, the challenge is the same as it is in the U.S.: getting marketers to pay to leverage its platform. The company is trying to convince Adidas to do just that by pitching it on a plan to increase the reach of its Adidas Originals fan page, which now has nearly 2 million global fans.
Mr. Chandlee also sees potential in the trend toward global same-day movie releases, ideal for a single global platform that can drive consumers to theaters around the globe on the same day. This would be difficult and expensive if bought and coordinated locally around the globe.
"The concept of a global centralized buying across media owners is sexy," he said. "But the reality of it is that most of these organizations have channel conflicts and internal feuding."