REV Asia looking for partners in Indonesia, Philippines to grow overseas businesses
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Digital media group REV Asia is on the lookout for local partners for its operations in Indonesia and the Philippines, says managing director Voon Tze Khay.
The group’s initial plan, which was to grow its market share in social media advertising revenue in those markets, hit a snag one-year into operations, leading it to seek home-grown partners.
“We thought if we could run Malaysia at such a successful pace over the last three years, why not try it ourselves? However, after 12 months, we realised that the opportunities in these markets are plenty but the right way and more strategic way to do it is through a local partner, either in the form of merger and acquisition (M&A) or joint venture (JV),” Voon told in an interview.
He said the group faced operational challenges in both markets, in terms of understanding the local business culture, dealing with local advertising agencies and brands as well as challenges in working style and expectations in the delivery of campaigns.
“Running a business in these two countries is very different to how we run it in Malaysia simply because the understanding of local and business culture is a fairly important tool. We have not seen it grow in the way that we expected,” he added.
Voon said it has identified certain players that could be potential partners but talks have not begun as it is still mapping out how to grow with a local partner. The group entered both markets in 2015 with their Says.com and 8share.com brands. These markets contribute about 5% to total group revenue and there are no plans to expand its other brands there in the immediate term.
“In the next 24 months, we are looking at international revenue (contributing about) 5-8% because our focus is going to be Malaysia. We are expecting Malaysia to grow in the double digits year-on-year in both revenue and bottom line.
“For international markets, there’s still a lot more groundwork to be done for local business understanding and a lot more research to be done from data point of view. That doesn’t mean we are not putting in efforts to grow it. But growth compared with Malaysia will be a lot smaller,” said Voon.
“These markets contribute about 5% to total group revenue and there are no plans to expand its other brands there in the immediate term.”
In 2017, the group aims to grow in terms of audience and revenue in Malaysia, through organic growth and M&As, by shifting its focus to videos and small and medium enterprises (SMEs).
Voon said consumption of videos on mobile has grown tremendously and will continue to grow. It also aims to tap into the 700,000 SMEs in Malaysia by offering them specific packages to promote their services across the group’s platforms.
In 2016, total video revenue contributed 10% while total SME revenue contributed only 2%. This year, it aims to grow contribution from these two products to 25% and 12% respectively.
In terms of M&A, Voon said, REV Asia is always on the lookout for opportunities within the three main languages in Malaysia.
“We will continue to seek out M&A opportunities but we will be selective. It has to be a digital media product with a sizeable audience already visiting the site and we will look at how that particular brand fits within the entire REV Asia set-up,” he said.
Recall that the group acquired two Chinese websites, Viralcham and Rojaklah, in 2015 and last year it acquired three Malay-language websites, namely Siraplimau.com, Myresipi.com and Kongsiresepi.com.
Meanwhile, REV Asia Bhd (holding company of REV Asia) saw its shareholding in iCar Asia Ltd diluted to 17.28% in September last year and in November shareholders approved the transfer of its shareholding into a special purpose vehicle (SPV).
“The process is underway, we are waiting for the finalisation of a court order to reduce the share capital and to fully formalise the transfer of the shares of iCar Asia out from REV Asia Bhd into an SPV. We hope to complete the transfer by first quarter this year,” said Voon.
Questions & Answers
Q.What challenges did REV Asia face when trying to grow its operations in Indonesia and the Philippines independently?
What challenges did REV Asia face when trying to grow its operations in Indonesia and the Philippines independently?
The group faced operational challenges related to understanding local business culture, dealing with local advertising agencies and brands, and differing working styles and expectations for campaign delivery. This led them to realise they needed local partners.
Q.What is REV Asia's immediate focus for revenue growth in the next two years?
What is REV Asia's immediate focus for revenue growth in the next two years?
REV Asia's primary focus for growth in the next 24 months is Malaysia, where they anticipate double-digit growth in both revenue and bottom line. International markets will receive less attention but efforts will still be made.
Q.How does REV Asia plan to achieve its growth targets for Malaysia in 2017?
How does REV Asia plan to achieve its growth targets for Malaysia in 2017?
In Malaysia, the group aims to grow audience and revenue organically and through M&As. They plan to shift focus to videos and small and medium-sized enterprises (SMEs), offering specific packages for promotion.
Q.What criteria does REV Asia use when considering M&A opportunities in Malaysia?
What criteria does REV Asia use when considering M&A opportunities in Malaysia?
REV Asia looks for digital media products with a sizeable existing audience and considers how the brand fits within their current structure. They are specifically interested in opportunities across the three main languages in Malaysia.
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