Seismic shifts are now taking place in digital marketing in Asia Pacific that will impact how campaigns are constructed, how tools are deployed, and how results are measured.
The overall theme of these changes is that addressable markets online in Asia Pacific have reached a size and scale at which consumer and B2B marketers can achieve significant business results. Engaging consumers online and joining conversations is only the start. Marketers can now actively influence and enable purchases. Measuring impressions, “likes”, click-throughs, costs per click, and email open rates are still useful metrics, but marketers can increasingly also drive e-commerce and offline retail sales revenue, create sales leads, increase a brand's net promoter scores, and make a significant contribution to CRM.
Statistics and insights from this year's Yearbook reveal these trends. In 2010, Asia Pacific had more than 825 million internet users, 42% of the global total. With a penetration rate of 21.5%, there is lots of room for growth, and 700 million more users are expected to come online in the region by 2015. The broadband revolution that makes so much of cloud computing and real time video possible is sweeping through Asia Pacific, with 130 million broadband users in China (all of Europe has 188.88 million), and rapid growth expected in Korea and Japan. Singapore already has a more than 195% penetration rate for broadband, including wireless connections.
Mobile remains a key factor, with 2.6 billion subscribers in the region in early 2011, and 400 million people having access to the mobile internet. Smartphones are driving new functions such as mobile banking, mobile commerce and fuelling consumption of mobile video. The 59 million mobile video users in the region at the end of 2010 are expected to mushroom into a community of 250 million over the next five years, and drive a US$35 billion mobile video service market.
The connections between online and offline purchasing behaviours are growing. Some examples:
- 65% of consumers use online services to locate nearby products and brands.
- 26% of mobile users say they will use their mobile device in-store to research products and prices.
- 35% of Asia Pacific consumers say that more than 10% of their monthly shopping expenditure is done online.
- Taiwanese internet users spent an average of US$4,041 online in the past 12 months, and the Chinese were second with US$2,557
- E-commerce sales (excluding travel) hit US$156.9 billion in the region in 2010, and are expected to grow to over US$250 billion in 2012.
- The web's travel sector is red hot, with US$15.4 billion in revenue in China in 2011, and US$4 billion in India.
- Online music sales are up 28% YOY in the region to US$7 billion.
The top three reasons people in the region are going online are to get news and stay up-to-date, research products, and stay in touch with friends. Social remains a major phenomenon, with 284 million unique visitors in January 2011, 115 million of whom were on Facebook, and four of the world's top ten Twitter usage countries are in Asia
Pacific. Asia Pacific's top retail sites also clocked up a total of more than 300 million unique visitors in the same month, with Alibaba and Amazon in the lead.
Each market in the region is increasingly developing its own characteristics and dynamics. You will see from the statistics in the Yearbook that the popularity of IM, gaming, SMS, e-commerce, apps, blogging, watching videos and use of search vary widely from country to country. Each market has own dynamics, such as consumers' willingness to share their identities online, their ability to pay safely online, or their use of mobile. The overall trend is clear: online and mobile audiences are reaching critical mass, and the size of communities interested in just about any topic is growing large enough to attract serious business attention.
To reach these audiences, companies boosted their Asia Pacific online advertising expenditure to US$ 16.8 billion in 2010, with growth estimated at more than 12% per year through 2015. Search accounts for more than one third of all online advertising, and grew at more than 20% last year. That being said, the proportion of online advertising still remains out of sync with consumer behaviour. In Singapore, for example, online ad spend is estimated to be 6% of total advertising budgets even though internet users spend an average of 22.3 hours per month online. Online advertising there is estimated to grow at more than 15% per year.
In addition to what I see from the hard data, as Chairman of the ADMA, I have heard industry leaders talk firsthand about the evolution taking place around the region at events such as ad:tech, the iMedia Brand and Agency Summits, the Digital Matters conference, and the ADMA's roundtables with senior marketers and agencies. The roundtables, conducted in Singapore and Hong Kong earlier this year, revealed that marketers are looking closely at online's value in brand development, as well as the its better understood direct marketing benefits. Marketers previously may have turned to the web for the measurability of online campaigns, but now they are staying to maintain sustained relationships and drive longer-term brand-building. Marketers are pushing their agencies to look “beyond the click” to understand online users' behaviour and the sometimes less-than-linear progression from generating brand awareness to making a sale to establishing a customer relationship.
There is also a new digital divide opening up, between companies that truly understand the potential to go deep with their digital marketing efforts, and those that are still contemplating what to do with their Facebook presence, if they have one at all. Some marketers are adding social media and online services as window-dressing to their traditional campaigns, which is a start towards integration, but true transformation is needed. At the same time that some of the world's most sophisticated work is being done in this region, other companies are still not going beyond the basics.
A few years from now, we will see that some brands morphed to meet demand for data-driven communications and truly embraced digital as part of a multi-channel strategy while others did not. Sadly some that don't adapt may not be with us then.
The tipping point is when marketers go from “influencing the influencers” to engaging directly with consumers and B2B decision makers. Marketers increasingly “get” social media, as an extension of the storytelling and interactive engagement with audiences that forms the basis of public relations. The next step is seamless integration across customer and prospect engagement, brand building, database building, lead generation and through to e-commerce sales to “connect the dots” in the marketing value chain. In this integrated environment, no company expects their online campaigns to be the sole contributor to their financial success, and they are developing attribution models that allow them to predict and measure the contribution each part of the marketing mix delivers. As this happens, marketers will be able to increasingly map KPIs against true business outcomes, as well as communications outputs.
David Ketchum is Chairman, Asia Digital Marketing Association
and President of Bite Communications, Asia Pacific.