Can RedNano survive as a Local Search Engine?

For those who don’t know who RedNano is, it is the child of Singapore Press Holdings Group (SPH), the state own media powerhouse and a Norway company.
So far, RedNano has been advertising heavily, trying to muscle its way into Local Search Engine business, just like the way Mocca (an online classified portal owned by MediaCorp) did with so many hours of TV ads, MRT ads, print ads etc…

However, up until now, i have failed to see how RedNano can be successful as the “First Local Search and Directory Engine”. Below are the reasons why:
(Please note that i have no personal grudge against RedNano in anyway and i dun know anyone from RedNano team. The below is just my personal opinion)

1. Who needs another Generic Local Search Engine in Singapore?

With the overly dominant size of Google and the trailing Yahoo in second place, if you are a consumer in Singapore, why you need to use another search engine?

The latest stats from Hitwise clearly shows us that

search engine market share in singapore may 2009

From the table above, for the 24 weeks ending 02nd of May 2009, Google commands 73.2% of the market share, Yahoo has 21.36%, MSN Live Search is no 3 with only 2.15%
The three search engines in total occupy 96.71% of the market share!

18 months ago in Sep 2007, according to Hitwise, Google only had 58.5% and Yahoo had 35% of the market share. At this rate, sooner rather than later, Google will reach 80% or even 95% of the market.

+) RedNano has very little market share in Singapore, even though it’s branded as a local search engine with a huge amount of marketing spend and the support from SPH
+) People are creature of habit (myself included :) and they just won’t start switching from Google or Yahoo to use RedNano simply because of the massive PR/marketing activities
+) Google clearly dominates the market place.
Besides, Google can always start providing Local Search service in Singapore when it sees fit since the technology is already there for them.
+) Many “blind” tests have been conducted to show that people think Google’s search results are more relevant than Yahoo or other search engines partly because of the perceived perception of the brand and this is a great barrier to any new comers to the search engine business.

2. RedNano Actual Search Results

On Rednano home page, one of the most popular search terms at the moment is “travel agencies”

popular search term on rednano home page

When i click on it, it redirects me to the directory list first and below are the top results

travel agency directory page on rednano

Personally i don’t see any of the big local agencies like Chan Brothers, Asa etc… and i will immediately question why this page is the first page that i see after clicking on top search terms.

I tried again the terms “travel agencies” but this time viewed the Web Result.

travel agencies rednano search result page

Come on, how “travelpear” can appear twice above the fold and none of the famous local agencies come up on the first page?!

Similar results are seen with keywords like “singapore travel agencies”

If RedNano fails to show me the “greater relevancy” from its search results then why i need to switch from Google

3. Singapore is just too small as a market

Well this is no brainier really. Singapore has only 3.6 million citizens and Permanent residents (according to Statistics Singapore by year end 2008). (Yup only 3.6 millions!)
Total population (including foreign workers, expats etc…) is only 4.8 millions!

Out of 3.6 million residents, only 2.6 million are between the ages 15-64. I assume this part of the population use internet more heavily and have more purchasing power.
From IDA Singapore, the internet penetration rate is around 80% so let’s say the total number of frequent internet users in Singapore is 2.8 millions users (2.1 million users from the Residents pool and 0.7 million users from Foreigner pool). This number is already higher than the number provided by InternetWorldStats.

Just to be fair, Singapore internet users conduct 164 million searches per month (according to monthly data for Apr, Jul and Sept by comScore 2008)
Search per Searcher for Singapore is, on average, 100 per month so this is not bad for a small population like Singapore.

Based on all the numbers above, we can roughly calculate that all other search engines (not only RedNano) in Singapore only command about 3.29% of the market share or 5.4 million searches per month.

(At this point, i wanted to dig deeper, trying to figure out with that 5.4 millions searches/month, how much the potential earning is for search engine like RedNano assuming an average click through rate on Paid ads, together with average CPC.
However, there are no publicly reliable data on the average click rate on paid ads on RedNano yet and we can’t use the ones from Google and Yahoo simply because the interface is quite different. Average CPC does not exist yet for RedNano i believe)

4. Scalability issue

This is a very big issue, scalability. After years of working in Singapore market, i am painfully aware of how low the search volume in Singapore is compared to other regional markets, let alone more mature markets.
With such low search volume, no agencies are willing to promote RedNano aggressively just in Singapore because the return is just too low. If RedNano can’t rely on agency to sell search inventories for them, they have no choice but to partner with Google or Yahoo

I recently came across the news that RedNano partnered with Yahoo to be part of Yahoo Search Network. Joining other people network instead of promoting your own means only 1 thing, your revenue needs to be shared with others and hell, the search market share for RedNano is already small.

If RedNano wants to reach out to SouthEast Asia markets, then i imagine it virtually has to start from scratch again. It’s because RedNano is in local search engine business (be it web search, mobile, image etc…) So i guess massive work need to be involved to localize the current technology to suit other SEA markets due to the difference in languages, infrastructure etc..

Southeast Asia is more challenging in that way, it’s too diverse. Besides, each country is at different stage of development from political stability, to e commerce infrastructure, to laws etc…

5. RedNano Search Engine Marketing platform

From “Advertise with us” section, RedNano offers Search Engine Marketing plan with fixed price per month and unlimited clicks.

This is absurd! This model is even worse than the way Yahoo SEA used to sell Keyword Search using CPM model
The old Yahoo CPM model worked like this: advertisers buy keywords just like the way they buy banner. Different keywords will have different fixed price based on their search volume on Yahoo.

From that time, Singapore market has been getting more and more savvy so i am very doubtful if RedNano model will work again even for SME market. I am pretty sure MNCs won’t accept this model because

  • It’s hard to evaluate the results
  • Even with dirt cheap pricing, resources still need to be allocated if a company decides to test this out. However, the volume i can imagine is painfully low.

It may work for some advertisers because of the low effective CPC for some keywords. However, this won’t work for larger crowd.

In addition, the only reason any search engine would want to “play” with this model is because they don’t have enough search volume to command better price.

How sophisticated RedNano SEM platform is from an advertiser point of view is another question also.

  • Can it do ad rotation?
  • Landing page rotation?
  • What type of keyword matching option is available?
  • Does it have an offline tool to manage campaigns?
  • Reporting interface? simple data like impressions, click, cost per click etc…?
  • How ad ranking is determined?

 

6. RedNano directory service

Yup, it looks like RedNano wants to go into Online Directory services as well.

My question is Why? again

People nowadays use Search Engine almost exclusively to find whatever they don’t know. Agree that we can’t always find what we want from generic search engines like Google and Yahoo hence the need for vertical search engines like Hungrygowhere.com for places to eat, Mocca for classified ads, Streetdirectory.com for mapping services etc…

The question here is how RedNano fits into this picture.
How much traffic RedNano imagine it can get to be able to earn enough money to survive? Is it trying to do so many things at once instead of just focusing on 1 key vertical?

Right now RedNano offers: web search, directory, image search, people, map etc… Basically everything!

From advertiser point of view, what is the value proposition of RedNano Directory listing? Why would the mass need a generic Directory service anyway? How often one uses Directory?
How about eGuide? YellowPages?

7. Search Engine ties with PC makers

Google and Yahoo dominate the distribution game by having ties with computer makers like Dell, HP, Lenovo embedding their search engines as the default engine on Internet Explorer or Firefox.

One can’t underestimate the power of this distribution channel simply because people are lazy and when they see a search box, they just simply type in what they want.
Only affluent users, who either like Google/Yahoo too, will bother to change the default search engine settings on their browser.

Danny Sullivan wrote a beautiful post to discuss in dept about the power of the distribution channel so i won’t repeat it here again.

In short, it might be my ignorance that i couldn’t see a way out for RedNano. How long did they estimate that they can break even and through which model?
Feel free to email me to discuss your thoughts/comment

New update: about 18 months after i wrote this post, RedNano closed shop in Singapore. RedNano was merged into Singapore Press Holding existing online classified St701. Now if you try to visit rednano.sg, you will be redirected to http://directory.st701.com/

rednano closesure statement dec 2010

 

1 comment for “Can RedNano survive as a Local Search Engine?

  1. April 10, 2012 at 9:54 pm

    As a local SEO marketer the one thing I have learned is to expect and embrace change. The tactics we use today are not likely to work tomorrow.
    - Rach

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