Google Strikes Gold in Latin America

Alexandre Hohagen, above, was tapped to lead Google Latin America in 2008. He has recruited sales executives with industry expertise to work with advertising clients on their local and regional online strategies.

A mere five years after formally launching localized services in Latin America, Google dominates the regional search engine market. Its name has entered the popular lexicon – as a verb – in Spanish, just as it has in English. Its social networking site Orkut is wildly popular in Brazil, besting competitors like Facebook.
Next up for a company with an enviable marketing track record among users: Wielding its marketing skills with advertisers and convincing them that every search, even for a Google Map, may generate a new customer.
Based in part on Brazilians’ embrace of Orkut, regional operations were centralized in São Paulo in 2008. The company promoted its then-Brazil country manager Alexandre Hohagen, a former executive with HBO in Brazil and Internet service provider/portal UOL, to lead Google Latin America. Hubs in Buenos Aires and Mexico City further support the Spanish-language countries, with the Mexico office also responsible for the U.S. Hispanic market.
Google today boasts an average share of 85 percent of the search engine market throughout the region, Hohagen said. In a country like Peru, Google had a 94 percent share of the search market before it had established a commercial presence, he added.
With national search pages in Spanish or Portuguese for every country in Latin America – the Bolivian page also offers a Quechua option – Google can localize news and information and has made strides in showing local retailers and other purveyors how they can use the engine to market their products and services.
Google does not break out revenue data by region, except to say that a little more than half of nearly $24 billion in 2009 sales were generated outside the United States. Latin American revenue jumped by 60 percent for the year, outperforming other regions worldwide, Hohagen said. He expects the 2010 pace of growth will be similar.
“Even with the crisis, we saw so much activity in Latin America,” Hohagen said in an interview with Latin Trade. “From the second quarter on, there was an incredible level of activity, in every country.”
The economic recession helped Google demonstrate to advertising clients the value of an online presence.
“Search queries like ‘promotions’ or ‘discounts’ were never as popular as they were last year during the crisis,” Hohagen said. “That is why search engines [play] a big role in this game. At the end of the day, in the crisis, the Internet became a better opportunity than the regular media.”
Internet use in the region is low but increasing at a much faster tempo than in the industrialized world.
Pyramid Research, headquartered in Cambridge, Mass., estimates that 28 percent of people in the region currently have access to the Internet. It forecasts that the percentage will grow to 61 percent by 2015.
“There is very strong growth ahead for telecommunications operators and for providers such as Google,” said José Magna, senior analyst for Latin America at Pyramid Research.
Not owning a personal computer is not always a deterrent to getting online. In Peru, for instance, about 65 percent of online connections are made in Internet cafes.
Young people, who are most comfortable searching for jobs or products online, are the main drivers of activity, and they are increasingly getting access via smart phones. “They are going to catch up very quickly, so that is going to help providers,” Magna said.
Hohagen noted that Latin American users have started to branch out beyond the major e-commerce sites like MercadoLibre. Smaller businesses in the region are just beginning to offer products and services online.
Google has also been working more closely with local advertising communities and potential clients. An internal analysis revealed that the volume of online searches in Peru was comparable to that in Chile, but Peru lagged in advertising, a difference Hohagen attributed to having an office in Santiago. Google opened an office in Lima recently.
Having a Google representative in place creates new business, Hohagen affirms. “We start connecting with the right clients, with the right agencies,” he said. “We are able to drive revenue for those queries that are coming from those countries.”
Google further reworked its approach to clients by bringing in executives with industry expertise, Hohagen said.
One sales executive, a veteran of automakers such as Mercedes-Benz and Volkswagen in the region, recently joined Google. “This person is able to sit with the marketing director of Fiat or Ford and say, ‘I know exactly what you need and I know exactly what our products can do for your marketing strategy’,” Hohagen said. “Even though we sell advertising, we want to sell different solutions.”
The high costs of access, phones and computers continue to hamper expanded Internet use in the region. Pyramid Research’s Magna said charges are dropping, but even $10 a month for high-speed Internet access is expensive for much of the population in Latin America.
To bring service within reach of more consumers, Internet providers have turned to prepaid services akin to those offered by mobile phone providers. Users can use time by the minute to check email and do searches on a computer or a smart phone.
“That is also going to push Google even further,” predicted Magna.

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About the Author: Jane Bussey is editorial director of the Latin Trade Group and the BRAVO Business Awards.

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