Today’s international online advertising revenues for US sites remain nowhere near international traffic levels (last week an article in the WSJ claimed a 5%-50+% ratio for many US sites), yet companies are still counting on growing global advertising spending to boost their long-term revenues. Video is increasingly a part of the new content being integrated into new international offerings, albeit at a tempered pace.

Today’s launch of Glam Media in Germany exemplifies this trend. According to the press release,

“The site will feature original stories, photos and videos as well as content from German publishers”

Currently, however, just two videos from Elle appear on the site (the US version offers almost 5,500 in total). More video content will certainly be added over time, and Glam is taking the right approach in adding local partners rather than trying to create all of its own content or localize existing content for the German market. Such a strategy allows them to build a library of content while developing their own offerings and potentially localizing existing video content.

Indeed, the creation of new localized online video for markets outside of the US - and the localization of existing online video assets for non-US markets - is a strategy that many companies are just starting to pursue, but one that US publishers will increasingly embrace as part of their global expansion.

Indeed, as with online retailers, the assumption tends to be that US online advertisers are operating in the largest global online markets, whereas in fact they’re most likely to be in the English-speaking ones first and then other European markets subsequently (see my previous post on online retailers’ global expansion).

The following is a ranking of key international markets in which US advertisers are marketing products or services online, as measured in our Advertiser Executive Survey last month:

1. Canada
2. UK
3. France
4. Germany
5. Japan
6. China

By contrast, a comparable list of the largest global online advertising markets has Japan and Canada roughly switched: outside of the US, estimates of the online ad market tend to put Japan at #1 or #2 alongside the UK. Canada, by contrast, falls further down the list after Germany and France, closer to estimates for China.

It is not surprising that the list of top international markets for US online advertisers maps to the markets in which US online retailers are operating, it simply reinforces the fact that Canada factors in with US companies well above its market size as a result of its common language, geographic proximity and existing trade relations with the US.

As the balance of global users shifts to Asia and an increasing number of both online content and commerce providers tap into the growing Asian marketplace, look to see the percentage of US companies advertising online in the region increasing. For now, however, it’s most likely that a US company touting its international online ad campaigns is operating north of the border.

What’s also interesting is the continuing discrepancy in preferred payment methods by country and reliance on traditional channels despite growing credit and debit card penetration and e-payment adoption. While some payment preferences such as checks are losing traction in several European countries, in others they remain a popular form of payment. Preferences for bank/credit transfers, too, continue to vary greatly by country.

More on global credit card penetration and preferred online payment methods in the upcoming report.

We’ll be using this information in several upcoming reports, but a few preliminary findings:

- Website spending on non-US properties has increased significantly.
- Centralized staffing models remain the most popular for US companies operating international sites.

- US-based advertisers are most likely to conduct online campaigns in other English-speaking markets (eg Canada, UK); Japan is almost as popular a market for online campaigns as is Germany.
- Campaign goals vary greatly, but a large percentage aim to drive consumers back to US websites to consume content or to conduct online transactions.

Stay tuned this summer for more insight into - and details on - US companies expanding into international markets.

There’s growing interest in the consumer online space, however, particularly as sectors such as online retail increasingly look to international markets for expansion. At this event, social media was a clear favorite topic among presenters, both LSPs and others. Indeed, the issue of crowdsourcing – the translation model being deployed by social networks such as Facebook and Hi5 – continues to be a key topic, particularly when it comes to user-generated content. And developments in machine translation (MT) still featured prominently: AsiaOnline, for example, is applying MT to “bring the world's content to non-English language speakers in Asia”.

A final area of great interest to the LSPs right now is international search. With many companies simply translating their sites rather than optimizing based on keywords used in international markets, LSPs are viewing international SEO as a core growth area over the next few years.

During the afternoon, I moderated a panel on Hispanic social media with Jose Rivera-Font from Yahoo! Hispanic Americas, Rick Marroquin from Batanga and Lee Vann of the Captura Group. Great panelists and lots of good conversation with the audience.

A few takeaways from the panel:

Hispanics overindex in almost all categories of UGC, but especially social networking. Hispanics remain highly committed to social networks, whether general social networks (MySpace remains the leader among Hispanics in the US) or those with a Hispanic focus such as Batanga. Young US Hispanics are especially tied to social networks: almost one-half of Hispanic online teens in the US visit one or more sites daily. US Hispanics also overindex when it comes to podcasts, both audio and video.

Music content is especially essential. Both Yahoo! and Batanga cited their music offerings as core areas of focus within the Hispanic market. While MySpace has also carved out a niche for itself in the music category, their 8 million+ artists and bands means Hispanic users must weed through a lot of content to find Latin music.

Targeting remains key. Effective targeting will remain essential to monetizing user-generated content. Yahoo! pointed to their acquisition of BlueLithium last year as one example of their strong targeting capabilities, and said sophisticated targeting would be core to selling social media to advertisers.

No template exists for a successful social media campaign. Since the success stories on social media sites have varied greatly and been limited overall, it’s hard to point to any rigid set of guidelines for building a successful campaign. Marketers have devoted relatively limited funds to social media campaigns to date, and should continue to experiment at this stage.

Users won’t give out information without receiving something valuable in exchange. In discussing Facebook’s difficulties with Beacon, it was pointed out that users had received nothing in exchange for information on their purchases being publicized on the social network. One panelist felt that consumers would only give up personal information if incentivized, and Beacon hadn’t provided enough upside for consumers.

Localization is important on a selective basis. Although localization remains a mantra for targeting the US Hispanic market, localization does not mean creating entirely new offerings for this market. Companies must feature content that speaks to this audience, but should also realize that much of their site framework and core value proposition need not change as they roll out offerings for the Hispanic audience.

Finally, although most of the event dealt with the Hispanic marketplace, there were a couple of interesting points on social media in Brazil from a separate session held during the morning:

Blog advertising is virtually non-existent. There are very few professional blogs in Brazil, and almost no blog advertising. This differs greatly from social networks, which have gained great traction in the country.

Facebook is for adults. Although Orkut is responsible the lion’s share of social networking traffic in Brazil (43% of Orkut’s global traffic comes from Brazil), Facebook has begun to make inroads. However, unlike Orkut, which has done very well among young users, Facebook has become most popular among the adult population.

The company’s initiatives are noteworthy less in that they’re targeting the mobile platform - several MT offerings are already available via mobile devices - and more because they’re attempting to tackle colloquial language, traditionally an area in which machine translation does not perform well.

CelloTrip faces competition from larger MT companies with established offerings, as well as a handful of niche companies such as Transclick with a similar focus. Transclick requires a $5 monthly subscription but currently offers its service in 16 languages; by contrast, CelloTrip offers fewer languages but bundles in a targeting platform to enable ads to be delivered based on keywords translated.

The topic of instant messaging translation garnered much attention and excitement several years ago, but hasn’t yet caught on as a mainstream application. However, with both mobile and machine translation being areas of great focus for companies this year – Google, for example, added 10 new languages to Google Translate this month and offers its translation services via SMS – expect to see a renewed focus on translation in the mobile messaging arena.

A handful of figures on the industry, courtesy of the show: The global licensing market is set to surpass $200 billion dollars this year, with the top markets consisting of the US ($108 billion), UK ($17.2 billion), Germany ($12.7 billion), Japan ($11 billion) and France ($7.7 billion). Character licensing remains one of the largest categories at $2.7 billion in retail sales worldwide.

Some takeaways from the panel:

- Interest in licensing mobile applications is growing rapidly. World Poker Tour, for example, has a TV presence in more than 100 markets; the mobile game application is available in over 50. Mobile remains an enormous growth area for them, particularly in developing markets where mobile penetration far outpaces PC or Internet penetration.

- While brands may be licensed in multiple countries, localization of licensed goods remains critical. With Jeep, the South African market proved a strong match for Jeep’s outdoorsy, rugged image. In China, by contrast, Jeep focused more on developing products such as polo shirts that connoted an upscale, clubbier image.

- India’s logistical infrastructure has improved drastically over the past five years, and as a result is becoming a much more compelling licensing market. However, with 12 million retail outlets in India - and 95% of those estimated to be mom-and-pop organizations - the highly fragmented retail market remains a challenge. Some companies are localizing their products by language or region to try and compete, but most still have a nationwide offering. Sesame Workshop, a highly advanced organization when it comes localizing global offerings (there are 20 co-produced Sesame Streets in more than 120 countries), provides uniform content throughout the country but has localized for different Indian languages.

- Although there’s been much focus on the youth market in developing economies, companies are more often targeting the older demographic given the greater disposable income among adults.

For those of you reading the report, I welcome your thoughts and feedback.

The company has been a strong proponent of launching its own Best Buy-branded stores while simultaneously engaging in joint ventures or acquisitions run by local managers, thereby gaining local expertise that can help in the development of successful offerings. Indeed, CEO Brad Anderson stresses the need to move cautiously and to get the strategy right before scaling, as he describes the company as “extraordinarily concerned” about the dangers of moving too quickly with global rollouts.

Best Buy will follow its current international expansion with an e-commerce offering, allowing the company to tap into markets where no physical stores exist. Indeed, for retailers such as Best Buy that have substantial physical presence in multiple markets, an e-commerce offering is a logical next step, as purchases made online can generally leverage the company’s existing fulfillment and customer service infrastructure.

Other retailers should carefully watch Best Buy’s global expansion as the US retail giant tries to nail international markets with a thoughtful strategy that takes advantage of local expertise rather than simply relying on skills obtained domestically.

A handful of companies are getting creative to maintain multi-language support. In a conversation with eGain’s CEO Ashu Roy earlier this week, for example, he indicated that some multi-channel merchants in international markets have turned to their local employees to assist with customer service requests. These employees are obviously well versed in the local language, as well as aware of local customer preferences and resources. As companies expand into markets where there may be multiple languages or dialects spoken, not all of which are supported through traditional customer care channels, such a strategy can help fill in the gaps.

Indeed, while there are certainly areas where companies can contain costs in international markets (and the report will help identify these areas), companies must ensure they don’t miss out on an opportunity to differentiate based on customer care. US-based companies are often taken to task for their missteps in global markets; by contrast, there is often a perception that these companies provide superior customer care. In our report, we outline how US companies can take advantage of their expertise in customer service, and identify which tools and options can help them build a leadership position in customer care outside of the US.

Daily publications, too, are addressing this issue in great number. In the past few days alone, the UK-based Times Online published an article citing Club Penguin’s localization strategy while The Wall Street Journal’s Marketplace section featured a front-page look at Kraft’s localization of Oreos for the Chinese market (the story was subsequently picked up as a feature on Yahoo!). CNET covered the launch of a new localized Twitter Japan.

Asian-based publications are also eagerly following localization: ChinaDaily, for example, published a story yesterday on the successful localization strategies of Chinese appliance manufacturer Haier. In India, The Economic Times recently covered the trend of retailers localizing by region within India rather than trying to create products with nationwide appeal.

Localization is a topic that’s only becoming more important to global companies; don’t expect coverage to wane any time in the near future.

- Size of e-commerce market
- Regulatory environment
- Existing operations in-country
- Use of English language
- Internet penetration
- Broadband penetration
- Potential to repurpose foreign-language content

To determine which factors are having the greatest impact on decisions, I’ve spent some time mapping online retailers’ global transactional sites to a variety of different metrics. Overall, there’s no single factor driving their expansion route, but some clearly play a greater role than others.

Common language. Canada and the UK figure highly among US online retailers’ global sites; in the case of Canada, it's far beyond its relative market size. While Canada certainly comes with non-English language regulations and challenges, retailers often cite the use of English as a key factor in their Canadian expansion. And in Europe, US-based online retailers almost always target the UK as their first market.

E-commerce market size. For US online retailers expanding into Europe, market size tends to trump the leveraging of local-language content or overall Internet penetration levels. US online retailers are more likely to expand into the relatively larger markets of UK, Germany, France, Italy and Spain – all of which mandate different languages - than to expand into one or two in this group and then leverage their local-language content across borders into smaller countries (eg Austria, Switzerland). Similarly, Internet and broadband penetration, while cited as an important factor to many companies, hasn’t driven most US online retailers to the Internet- and broadband-intensive areas of the smaller northern European countries.

Broader trade relations. Neither a common language nor e-commerce market size completely captures US companies’ focus on their NAFTA partners, however. Online investment in Canada and Mexico incorporates geographic proximity, trade agreements and companies’ existing relationships within these countries. Indeed, one metric that does capture some of the dynamics of US retailers’ online expansion route (and includes the regulatory issues and existing in-country operations mentioned above) is the top export markets for US companies overall. As demonstrated in the graphic below, every one of the top 10 export countries is served by at least three of Internet Retailer’s top 10 US-based online retailers. As the US’ largest trading partner, Canada is served by nine. The list also reflects US online retailers’ interest in Mexico, although the country is arguably underserved given that transactional sites are operated by less than half of the top 10 online retailers.

More on this topic – and how companies should be assessing different international markets – to come in our research.

The report will contain information on which global markets are gaining the most traction among US-based online retailers, how retailers should be staffing their global initiatives and which vendors are best positioning themselves to help online retailers with their international expansion. It’ll also include international best practices when it comes to areas such as customer service and payments.

This is an area we’ll continue to cover in detail going forward: if you’re a company with an offering in the global online retail space, we’d love to hear from you.

At the same time, equally important for US marketers is the fact that the composition of the US online population is also shifting at a steady pace. Our recently released US Online Population Forecast shows the percentage of Hispanic online users increasing from 30 million online users this year to 37 million by 2013. An additional 5.5 million African-American households will come online during that time. Indeed, new users coming online during the next five years are over 40% more likely to be Hispanic or African-American than Caucasian.

Given the increasing diversity of the US population, it’s not surprising that marketers place multicultural marketing as one of the key issues for 2008. For many, it's already underway: a recent survey we conducted among Web site decision makers at large US companies showed Spanish to be by far the most popular translated language for their site content. While some of these translations are for the market in Spain and Latin America, many have been targeted the US Hispanic market.**

Those companies that aren’t considering how the increasingly diverse online population will affect their businesses risk losing out to their more forward-thinking competitors that have already begun to integrate these groups into their growth strategy. Indeed, marketers that haven’t given thought to the multicultural audience in the US will risk missing out on one-third of the online population within the next five years.

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** An interesting side note on Spanish translation: Lionbridge’s Zeitgeist 2007 summary, which tallies up all language translations the localization vendor did for clients around the globe in 2007, places Spanish for Spain as the most popular type of translated Spanish; Spanish for Latin America and the US were roughly tied in second place, followed by “International Spanish” and Spanish for Mexico. Rolled up, these different translations push Spanish to the #1 position on Lionbridge’s list. By contrast, Spanish is outpaced by Canadian French on competitor SDL’s 2007 list of world languages.