Building social networks, the TV way

LOG on to the sites designed by mainboard-listed Yuuzoo, and a user will notice slick links showing colourful pictures in big boxes for users to easily click on.

Yuuzoo, which focuses on the technology and new media space, is one of the more unusual companies on the Singapore Exchange (SGX). It made its debut in September after a reverse takeover (RTO) of components trader W Corp.

Coined from "your zoo", Yuuzoo aims to provide users with a menagerie of activities in a virtual shopping mall. Mobile and Internet users can browse the hundreds of social networks that Yuuzoo has built for communities as diverse as dog-lovers from China, Liverpool Football Club fans, and the Nigeria-headquartered Redeemed Christian Church of God.

They can also shop online for relevant goods through its e-commerce platform, use its online payments platform Yuupay, or even play mobile games like its latest Candy Crush-like release, Honey Snatch.

Yuuzoo executive chairman Thomas Zilliacus told The Business Times that he aims to offer consumers "a complete experience in social networking, e-commerce and gaming".

"We are not focused on a specific segment. We are focused on providing an overall experience to the consumer, as well as to brands," he said.

His pitch to businesses is for them to have a social network of their own, as well as personalised mobile apps, to complement their presence on popular social media sites like Facebook.

The company's strategy has made it some money. Last Thursday, Yuuzoo announced revenue of US$10.2 million for the three months ended Sept 30, up 38 per cent from a restated US$7.4 million a year ago. It made a net loss of US$16 million due to US$23 million of reverse takeover-related expenses, compared to a US$2 million profit a year ago.

For the first nine months of 2014, net profit excluding RTO expenses would be US$8.5 million on US$24.9 million of revenue. Adjusted earnings per share were 1.22 US cents. Averaged out for 2014 and excluding the one-off RTO expense, the company - trading at around S$0.32 last Friday - is priced at roughly 15 times historical earnings.

Mr Zilliacus said that the company is confident of strong growth in the fourth quarter. "Existing agreements are likely to generate growth and recurring income in e-commerce, payments, gaming and network developments, while discussions with new potential franchisees and clients are likely to generate new franchise and network development revenue," he said.

According to its 2013 accounts, Yuuzoo has four reportable segments. Its most profitable network development segment builds social e-commerce networks for businesses and consumers, including websites and mobile apps. Last year, this segment brought in US$8.6 million in revenues, while profit before tax was US$5.1 million. Yuuzoo charges about US$100,000 per client, Mr Zilliacus said.

The company also has an e-commerce segment that recognises revenue when sales are placed on its platforms. Payments can be made through Yuupay, its mobile payments platform, or other platforms. This segment generated about US$240,000 of profit before tax on US$11.9 million of sales last year.

Meanwhile, its mobile payments segment revolves around Yuupay. This segment made US$12.3 million last year but was running at a loss before tax of about US$260,000.

For countries with smaller markets, Yuuzoo operates on a franchise model. The franchisee takes responsibility for signing up brands to Yuuzoo's networks, and incoming revenue due to Yuuzoo is split across the previous three segments. Licence fees, in the fourth segment, are recognised separately. Yuuzoo first started using this business model in Australia, New Zealand, the UK and the US.

Looking ahead, Mr Zilliacus is trying a different strategy. He is planning to reach out to users through television networks in big emerging countries. "A really good marketing campaign on TV has a conversion rate of about 25 per cent - that is, people who see it who actually visit the site . . . you're constantly bombarded with reminders to go to the network," he said.

"TV marketing is in my mind the most efficient way of growing, but also the most expensive way. But if we have partnerships where TV marketing comes as part of the deal, we're in a good position."

To that end, Yuuzoo struck a deal with Great Sports Media (GSM), the sports, lifestyle and casual gaming division of China's Shanghai Media Group, earlier this year. It is also negotiating with networks in several other large countries. The China partnership allows the TV network to offer its clients a traditional as well as online advertising package - a bid to retain advertisers even as viewers migrate online.

Virtual shopping mall

Yuuzoo comes in to create social networks around brands and businesses linked to GSM's sports, celebrities, gaming and lifestyle shows. In return, GSM will market www.yuuzoo.cn, the mobile-enabled virtual shopping mall of over 200 brands and themes that Yuuzoo has built. Users can comment, post pictures, and buy products.

"For example, we are launching a network linked to a football show aired every Monday at 9 pm - the highest-rated sports programme in the studio, where experts sit and discuss football," Mr Zilliacus said. "After the programme has finished, the host will say, you can continue the discussion among yourselves and with us on the social network, and also buy anything football-related like theme shirts and tickets to games."

Yuuzoo gets a cut of the profits from the partnership. Revenue can come from targeted advertisements or from its e-commerce platform.

Mr Zilliacus is a familiar face in Singapore. He has lived here for 28 years, having arrived in 1986 and built handphone company Nokia's Asian business from scratch.

Energetic, with a knack for juggling numerous hats in business, sports and politics in his youth in Finland, the former CEO of Nokia's Asia-Pacific business even helped manage Geylang United football club pro bono for five years.

Yuuzoo began in 2007 as a provider of mobile services and applications like ringtones and wallpapers. It was set up by Australian technology entrepreneur Ron Creevey, who then roped in Mr Zilliacus. The company then expanded into developing specialised social networks, as well as a mobile payments service.

Ultimately, social networks and e-commerce are a powerful combination in emerging countries, Mr Zilliacus said.

"The goods and brands that are being offered, people have never seen them before. You can't go around the corner to the shopping mall to buy them," he said.

"You are faced with choices you don't know much about. So the social interaction becomes important. People want to hear from consumers what they think."

haoxiang@sph.com.sg

@HaoxiangCaiBT