2011 Latin America Internet Market Research & Outlook

Latam 2010-2011

2011 Latin America Internet Market Research & Outlook

Latin America: Rising Star of the Global Economy Growing Internet Audience Online Advertising: Booming Potential E-commerce is Taking off More Mobile Phones Than People Latams Largest Market: Brazil The Opportunity with U.S. Hispanics Latams Online Users Profile Top Players in the Region

Latin America will continue growing at higher rates than developed economies

Real GDP (annual % change)

Latams GDP growth for 2011-2012*:
20%

Argentina: 5% Brazil: 4,3% Chile: 5,8% Colombia: 4,3% Mexico: 4,1% G7 countries: 2,04% European Union: 1,7%

15%

10%

5%

0% 2005 -5% 2006 2007 2008 2009 2010* 2011* 2012*

-10% Major advanced economies (G7) China Brazil European Union Argentina Chile

Source: International Monetary Fund, Scotiabank Group

Top 14 Cities of Latam: All of them will climb in World GDP rankings

Latam Rank 1 2

City (Country) Sao Paulo (Brazil) Mexico City (Mexico) Buenos Aires (Argentina) Rio de Janeiro (Brazil) Santiago (Chile) Brasilia (Brazil) Lima (Peru) Belo Horizonte (Brazil) Monterrey (Mexico) Bogota (Colombia) Porto Alegre (Brazil) Guadalajara (Mexico) Medellin (Colombia) Curitiba (Brazil)

Current Population 20.800.000 22.800.000 14.800.000 12.500.000 6.050.000 3.925.000 9.200.000 5.700.000 4.350.000 8.850.000 4.100.000 4.700.000 3.625.000 3.300.000

2010 GDP World Rank 8 9 12 30 51 55 56 61 63 64 66 81 104 113

2025 GDP World Rank 6 7 10 24 50 51 52 89 58 61 85 74 103 112

GDP per Capita (by city) $18.654 $17.105 $24.459 $16.080 $19.835 $28.025 $11.848 $10.702 $23.448 $11.299 $16.098 $17.234 $13.793 $13.333

Paris (6th) and Osaka (7th) will be overtaken in 2025 GDP by Mexico City and Sao Paulo. Buenos Aires will overtake Boston (12th) and Washington DC (11th) by 2025 GDP.

3 4 5 6 7 8 9 10 11 12 13 14

Source: PriceWaterhouseCoopers

Latam doubles the Worldwide growth rate of Online Population

Online Population Growth 2009-2010 (%)

32%

According to eMarketer, the number of internet users in Latin America has been increasing at about double the rate of population growth.
15%

8%

8% 6% 3%

Middle East - Latin America Africa

Worldwide

Europe

Asia Pacific

North America

Source: comScore

And Latams Online Population is far from saturation

Internet Penetration (%)

78.20% 77.30%

Internet penetration in South America is still relatively small Online Populations of Latam will boom with increasing internet penetration
42.80% 36.50% 36.20% 31.60%

6.90%

Japan

United States

Russia

South America

Brazil

China

India

Source: Internet World Stats

Most major markets in Latam have grown significantly

Audience growth in Latam 2009-2010

Eric Schmidt
(Googles former CEO):
40 33.3

2009 2010

..internet usage has increased dramatically [in Latin America]. In the last years, Brazil and Argentina are having the fastest growth in the world. We are looking forward to make strong investments in both countries
(April 2011 Interview Diario Perfil)

17.8 14.8 12.5 12.8 9.8 12.3 6.7 7.3 2.2 2.9 Brazil Mexico Argentina Colombia Chile 1.1 1.2

Venezuela Puerto Rico

+20%

+21%

+3%

+26%

+9%

+27%

+9%

Source: comScore

Latams Online Ads: in infant stages but with booming potential

Fastest-growing region in the world in online ad spending with a growth rate of 13.3% over the next five years. (Magna Global)

Latin America Online Advertising Spending Metrics, 2009-2014

(billions, % of total and % change)

Online ad spending will more than double over the next four years, growing from $2 billion in 2010 to $4.2 billion in 2014. (eMarketer)

2009

2010

2011

2012

2013

2014

Worldwide $ 55,2 $ 61,8 $ 68,7 $ 79,0 $ 87,4 $ 96,8 Latin America % of worldwide

$ 1,7 3,0%

$ 2,0 3,3%

$ 2,5 3,6%

$ 3,1 3,9%

$ 3,6 4,1%

$ 4,2 4,3%

% change 13,3% 23,1% 21,2% 24,6% 16,2% 16,2% Source: eMarketer

Latams e-commerce is taking off...

E-commerce in LatAm
34.5 27.6 US$ Billions

1.20% E-commerce as a % of GDP 1.00% 0.80%

Growing 51% per year during the period 2003-2009

21.8 15.6 10.6 7.5 3 4.9 0.60% 0.40% 0.20% 0.00%

E-commerce has also grown in importance: it has increased as a percentage of GDP at an average rate of 34% per year.

1.9 2003

2004

2005

2006 Sales

2007

2008

2009

2010*

2011*

E-commerce as a % of GDP

Source: :AmericaEconomia Intelligence

And it will continue growing

By 2014, global e-commerce spending is projected to increase more than 90 percent. In Latin America, the amount spent online is projected to more than double.

Source: Euromonitor International

10

E-commerce by country

Its not a matter of size Its about development

Infrastructure Technology adoption Supply of goods and services Buying patterns and cultures Banking and credit card penetration

1.3% 2.7% 2.9% 4.0% 4.0% 4.2% 4.7% 60.8% 12.1% 2.0% 1.3% Brasil Mexico Chile Venezuela Argentina Caribe sin PR Centro Am. Puerto Rico Colombia Peru Other

Source: :AmericaEconomia Intelligence

11

E-commerce categories in Latin America

Taxes, 2% C2C, 6% The travel category is still the most important in Latin America The retail category is growing the most Paying taxes online has a high potential Retail, 34%

International Retail, 13% Travel, 45%

Travel Retail International Retail C2C Taxes

Source: :AmericaEconomia Intelligence

12

Credit Card Penetration

Number of credit cards per 10 individuals

19

Brazil is the clear leader, but its still far behind penetration in developed countries
4-5 2 or less

Latam's Leader
7

10

Colombia, Mexico and Other

Argentina, Chile, Puerto Rico, Uruguay

Brazil

Spain

USA

Non-Latam countries Source: Fuente: Estudio Regional de Comercio Electrnico Amrica Economa 2010

13

Latam: more mobile phones than people

According to Informa Telecoms & Media, Latin America will reach more mobiles than people by the end of 1Q11 Prepaid represents over 80%

Mobile Phone Users in Latin America 2009-2015

90% 70.7% 72.9% 80% 70% 354.6 375.5 396.2 415.6 432.7 450.7 60% 50% 40% 2009 2010 2011 2012 2013 2014 2015

Mobile Phone User Penetration by Country, 2009-2015

57.3%

60.6%

63.4%

66.2%

68.6%

331.5

2009

2010

2011 Brazil

2012

2013

2014

2015

Mobile Phone Users

Argentina

Mexico

Latin America

Source: eMarketer

Source: eMarketer

14

Latams largest market: Brazil

Brazil: Internet Users and Total Visits

2,210 2,176 2,199 2,253 2,252

2,155 1,966 1,978 1,848

2,113

2,153

2,132

2,163

Unique Visitors (MM)

It is the 8th largest internet audience in the world (15+, H&W). Mexico is 16th and Argentina is 19th

33.3

33.8

34.2

34.8

35.3

35.9

36.4

37.0

37.5

38.1

38.7

39.3

40.0

Unique visitors (MM)

Visits (MM)

Source: comScore

15

Visits (MM)

Brazil has nearly 40% of Latams internet users

Brazils e-commerce

Brazils e-commerce is expected to grow at a compound annual growth rate (CAGR) of 18% over the next five years. According to Forrester Research, Brazilian e-commerce is set to jump to 178% by 2016.
Millions of e-consumers

E-consumer evolution in Brazil

11.3

9.4

Retail Sites Growth

+9% 69.6% 63.8% 61.8% +3% 63.9%

5.2 4 2.8 13.2 7 9.5 17.6 23

27+

Brazil
2009 Reach

Worldwide
2010 Reach

2006

2007

2008

2009

2010 Sales

2011*

E-consumers

Source: comScore

Source: Camara Brasileira de Comercio Eletronico

Billions of US$

6.7

16

Social Networking in Brazil

The reach of the Social Networking category continues to be very high throughout Latin America In Brazil, even with such a high reach, the category is amazingly still growing: In October 2010, Brazil was Twitters #1 market

Twitter.com Top 15 Markets by % Reach

Brazil Netherlands Venezuela Japan Indonesia 22% 22% 21% 20% 19% 15% 14% 13% 13% 13% 13% 13% 12% 11% 10%

Social Networking Sites Growth

+10%
85.3% 77.9% 67.6% 70.5%

Canada Philippines Argentina Singapore

+4%

United Kingdom Turkey United States Chile Mexico

Brazil 2009 Reach

Worldwide 2010 Reach

Colombia

Source: comScore

Source: comScore

17

Hispanics in the U.S.

2010 Population (Millions)

White non-hispanic Hispanic Black Asian Multi-racial

4% 200.9

U.S. Population (by race, % of total)

2% 13%
White non-hispanic Hispanic Black

49.7 39.9 14.4 5.4 Source: U.S. Census Bureau

16% 65%

Asian Multi-racial

Source: U.S. Census Bureau

Hispanics are the 1st minority of the U.S. with an approx. population of 50 million That makes U.S. Hispanics the 2nd largest concentration of Hispanics in the world: only behind Mexico
18

Hispanics are a rapidly growing population

Projections of the Hispanic Population (Millions)

According to U.S. Census Bureau projections, Hispanics will grow 167% (White Non-Hispanics will only grow 1%) from 2010 -2050, across all ages. It is also projected that by 2050, Hispanics will account for 30% of the U.S. population. Thats almost double from their current percentage
57.7 66.4 27% 28% 30% 132.8 120.2 108.2 96.8 85.9 75.8 49.7 16%

18%

19%

21%

23%

25%

2010

2015

2020

2025

2030

2035

2040

2045

2050

Numer of hispanics in millions

% of total population

Source: U.S. Census Bureau

19

With More Buying Power

Hispanic Buying Power (in billions)

Hispanics percentage of buying power is expected to double in the period of 19902014
+100% +36%

1,330

978

Thats twice to growth in percentage of non-Hispanics In comparison, Brazilians buying power for 2009-2014 will grow over 30%
+130%

489 212
5.0%
1990

6.8%
2000 Buying power in billions

9.1%
2009 % of total buying power

10.2%

2014

Source: Selig Center for Economic Growth, University of Georgia, International Monetary Fund

20

Compared to non-Hispanics, Hispanic adult Internet users

...are younger: On average, 8 years younger Twice as likely to be 18-24 50% more likely to be 25-35 live in larger households: On average, 1 person more per household (4 vs. 2.9) 3x as likely to live in 5+ households ...are twice as likely to live in households with 3 or more children, and ...are 77% more likely to live in households with 3 or more employed adults

Larger households with more kids and employed adults

Attractive Audience

Source: Simmons NCS. Leading sources used: Interactive Advertising Bureau

21

Latams Online Users Profile

Brazil has the largest online population in Latin America 45.1 million is currently the comScore estimate of 6+, home & work Extended universe estimate is 77.3 million, larger than the total populations of France and the UK (66 and 62 million, respectively) Average usage in Brazil, Mexico, Argentina, Chile and Peru outpace global average
Brazil Mexico Argentina Colombia Chile Peru Venezuela Puerto Rico

Total hours online per Visitor in Latin America

Worldwide Average: 22.4

24.3 24.1 25 20.1 22.8 24.7 19.8 17.1 Source: comScore

22

Young People Drive Internet Consumption in Latin America

Average Time Online by Age

Hours per Visitor

15-24 year olds in Latin America are the heaviest Internet users, outpacing every other age group in Latin America as well as the global average for the age group

30 worldwide average: 22.6 26.6 25 20 15 10 5 0 15+ 15-24 25-34 Latin America 35-44 Worldwide 45-54 55+ 23 22.4 22.8 24.2 20.8 21.3 21.2 21.8 21.9 22.4 23.2

Source: comScore

23

Social Networks Reached 88% of Latin American Internet Users

Twitter.com Top 15 Markets by % Reach

Social Networks continue to be a central touch point of the Latin American web experience

Social Networking Sites Growth

+7%
82.2% 67.6% 87.7%

Brazil Netherlands Venezuela Japan Indonesia Canada Philippines Argentina Singapore United Turkey United States Chile Mexico Colombia

15% 14% 13% 13% 13% 13% 13% 12% 11% 10%

22% 22% 21% 20% 19%

Source: comScore

Facebook.com Top 15 Markets by % Reach

+4%
70.5%
Philippines Turkey Israel Chile Malaysia Argentina Venezuela Indonesia Canada Colombia Peru Mexico United Kingdom Puerto Rico Finland 90.7% 90.2% 89.5% 88.4% 88.3% 87.8% 87.4% 86.9% 86.7% 93.7%

Latin America Dec 2009 Reach

Worldwide Dec 2010 Reach

83.4% 82.6% 81.4% 81.4% 81.2%

Source: comScore

Source: comScore

24

Instant Messengers, Social Networking, and Blogs are Key in LatAm

Reach of Key Categories

Search/Navigation Social Networking e-mail Multimedia Instant Messengers Photos Directories/Resources Blogs Retail Community

Index: 104 124 121 106 196 125 94 126 97 104

Worldwide 35% 53% 70% 63%

88% 85% 88%

News/Information Technolgy Downloads Games Business/Finance Education Sports TV Travel Automotive

94 106 97 103 78 121 99 93 76 76

22% 35% 35% 29% 31% 32% 31% 33% 30%

57% 60% 56% 53% 55% 57% 53% 51% 46%

76%

71% 67% 68% 66%

64% 68% 50% 63% 62% 64% 60% 58%

18% 24% Worldwide

Latin America

Latin America

Source: comScore

25

Group-buying Sites Showed Impressive Growth in Late 2010

Group-buying sites have taken off in Latin America and, based on what has been seen in the USA, are set to continue their growth in 2011 Argentina is Groupons top market, with one of every five web users visiting the coupon site in February 2011. Brazil is also one of top markets with 6% reach

Groupon Top Markets by % Reach

Argentina Norway Poland Taiwan Spain United Kingdom Italy France Brazil Ireland 7% 6% 6% 6% 6% 5% 10% 9% 12% 21%

Source: comScore

26

Top Players in the Region

Largest Online Commerce Platform in Latin America IPO in August 2007 - $3.81 billion Market Cap (April 14th, 2011) 2010: Revenues US$217 million EBITDA $75 million Stock performance (last 24 months): +300.69% (vs. Nasdaq: +66.43%) Largest Shopping Comparison Website in Latin America Acquired by Naspers in September 2009 for $374 million More than 15 million products sold on over 60 thousand stores Leading Provider of Online Classifieds in Latin America and Asia Over 125 million unique visitors per month, presence in 90 countries in 40 languages Naspers bought a controlling stake in August 2010 for approximately $200 million Pioneer and Leader in Collective Purchases in Brazil In nine months it registered over 5 million users and sold more than 2 million vouchers, generating savings of over $ 120 million to its users Received funding from Benchmark Capital and Monashees Capital (undisclosed amount)
27

Top Players in the Region (cont.)

Leading Job Portal in Latam Acquired by Tiger Global in July 2007 for $15 million $1 million EBITDA when acquired Leading Travel Portal in Latam Over $125 million sales in 2007 Has raised over $60 million in funding Leading Social Gaming Company in Brazil Over 20 million active players a month Has raised over $46 million in funding Leading Spanish/Portuguese social networking site Over 50 million registered users Raised over $6 million in funding

28

Gustavo Victorica
CFO gustavo.victorica@fnbox.com

Federico Yu
Finance Analyst federico.yu@fnbox.com

For more information visit: http://www.fnbox.com