Category Archives: Insights

How Google and Facebook are Eating the Digital Industry in APAC

By Tom Simpson

A quick check of their books reveals that in the first quarter of 2017, 92 cents of every new dollar spent in online advertising across Asia Pacific (ex. China) went to Facebook and Google.

APAC Ad Revenue - Digital in Asia.com

That’s an incredible statistic. The good news is that digital marketing in the region is clearly experiencing strong growth, with revenues up by $1.23 billion year-on-year in 2017. The bad news? Of that $1.23 billion in growth, virtually all of it – $1.13 billion in total – goes to Google and Facebook, with only $100 million to share across the remainder of APAC publishers.

apac ad revenue growth yoy

Facebook and Google combined revenue this quarter hit 51% of all APAC revenue, meaning more budget goes to to Google and Facebook than every other digital publisher in the region put together.

Share of APAC Ad Revenue

Google and Facebook also forge ahead in terms of revenue against all media in the region, taking 15 cents in every 1 dollar spent. This is up from 12% – or 12 cents in the dollar – last year, and represents the increase in budget flowing from traditional media, including TV.

share of apac all media ad revenue q1 2017

None of the above is new news, with commentators globally highlighting the unhealthy hold this duopoly already exerts over the advertising industry.

But in a week where Fairfax journalists in Australia strike in protest at cutbacks, and against a wider backdrop of losses and job cuts at traditional media outlets across Asia Pacific, it is especially concerning.

Where next? Publishing in general, and the ad tech industry specifically, is a challenging area, with multiple undifferentiated players, sometimes murky value chains, and VC money looking for safer havens. Many analysts predict massive consolidation in the years ahead. In fact with telcos and consultancies worldwide already positioning for unified marketing technology stacks, most would say the consolidation has already started.

Beyond that, The TradeDesk continues it’s roll with an IPO and recent big win on P&G; AppNexus and other major players forge a data alliance to bring much needed people based marketing data to open programmatic; and Integral Ad Science plus other key players have launched in the region, aiming to bring much needed transparency to what can be a difficult to navigate ecosystem. Even Google and Facebook cannot be sitting easy in the face of recent brand safety issues, fake news and Amazon putting increased focus on a server-to-server header bidding product that promises to put power back in the hands of publishers. P&G’s Chief Brand Officer Marc Pritchard has made a call for transparency and open measurement across walled gardens in recent speeches, and this also seems to be making an immediate – and deserved – impact.

Finally, a note from history. In the early 1900s, the United States had about 2,000 firms producing one or more cars. By 1920 the number of firms had decreased to about 100 and by 1929 to 44. In 1976 the Motor Vehicle Manufacturers Association in the US had only 11 members.

In many ways digital advertising, and the industry that surrounds it, is it’s own worst enemy. All dollars eventually become digital dollars, so it is the only show in town. But a show obsessed with the next shiny thing, full of incomprehensible – and often meaningless – metrics, and more importantly, critically lacking in real transparency. Programmatic has only accelerated these tendencies.

Google and Facebook have done a huge amount to bring new money into digital advertising by simplifying advertising for brand marketers. And they have reaped the rewards.

However, they are now part of a systemic change representing an existential threat to an entire industry – media, advertising, agencies, publishing, journalism are all caught up in this – across the region and globally. Change rarely comes without casualties. The struggle for monetisation continues.

A huge debt to Jason Kint (this chart in particular) and Brian Nowak at Morgan Stanley for the inspiration for this article, and the work they have done creating similar graphs for Global and US ad revenues. Corrections welcome. Numbers are based on Facebook and Google publicly filed earnings information and best industry advertising revenue estimates – but someone out there may have a better view. The major assumption in this data is to exclude Chinese advertising spend both from Google and Facebook earnings information and APAC industry spend estimates to avoid distorting the data in a market where Facebook and Google have small (although not insignificant) advertising businesses. All the data is available on a public Google sheet (yes, sorry, it’s Google!) here.

Notes and References.

1. Google 2017 1st Quarter Earnings Report: a. Estimated based on reported total APAC revenues x 90% (percentage of Google revenues represented by advertising) b. Excludes Google revenue in China estimated based on APAC revenue data sources.

2. Facebook 2017 1st Quarter Earnings Report: a. Estimated based on reported total APAC revenue by User Geography b. Excludes Facebook revenue in China estimated based on APAC revenue data sources.

3. APAC digital revenue data compiled from: IAB, eMarketer, GroupM, ZenithOptimedia, McKinsey & Company

4. APAC all media revenue data compiled from: IAB, eMarketer, GroupM, ZenithOptimedia, McKinsey & Company.

iKorea: Media Reps – Past, Present, and Future

iKorea is a new column by Soyoon Bach, a Digital Marketing professional in Seoul, covering developments in the Korean digital ecosystem.

If you work in advertising in Korea, you will most definitely have heard of the term “rep sa.” “Rep” is short for “representative” and “sa” in Korean means “company.” This is a shortened phrase for agencies that Koreans refer to as “media representatives.” So what exactly are media reps?

The general hierarchy of the Korean digital advertising landscape goes like this:

Advertiser → Ad Agency → Media Rep → Publishers

Simply put, media reps act as liaisons between agencies and publishers. They arrange the sale of media inventory on behalf of advertisers (or agencies). Media reps also provide media plans, intricate reporting, optimization recommendations, updates about the newest publishers and ad types, etc. Many media reps have proprietary technologies that make setting up ads easier, provide key insights, and run ads more efficiently.

The first ever media rep can be traced back to 1980 with the establishment of KOBACO. They were resellers for TV ad inventory and became the sole entity to control all the domestic TV ad inventory. They retained their power until a constitutional court ruled this as illegal monopolistic practice.

Since then, Korea has diversified its media rep offerings and media reps have especially become a key player in the complicated world of digital advertising. Usually, ad agencies don’t have the time or resources to keep contact with every single publisher or media platform out there and know which ones are best for their needs. This is where media reps come in. They synthesize all media-related information and updates and provide agencies with the insights they need. They let us know which creative is best served on which platform. Some platforms also have strict inventory booking processes. There are minimum spends, minimum ad periods, and cancellation fees. Media reps keep track of these processes and give ad agencies a heads up when they think certain bookings will become an issue.

The initial idea of media reps started out as a broker, a simple reseller. Now, they have evolved to so much more. They are media agencies for ad agencies, providing critical services that they can’t get from publishers directly. For instance, if an ad agency is working with multiple media platforms without a media rep, it’ll be up to them to individually communicate and negotiate with the publishers, set up the ads, aggregate the data, and compile the reporting. However, when you go through a media rep, they provide all these services for you so that you can spend more time tending to your clients.

Because this is such a common practice that’s taken for granted, it’s easy to forget that there are actually no regulations in place regarding this process. There’s no restrictions preventing agencies from bypassing media reps and going directly to the publishers. Similarly, there’s nothing to stop media reps from reaching out directly to advertisers. However, this practice continues to exist because this breakdown and distribution of tasks lets everyone do their jobs more easily.

A client can have one contact point for all their media dealings (the agency) instead of having to individually contact the publishers. Agencies can also focus more on making creatives and strategizing on the overarching direction of the campaigns. Media reps gain more clients and without much effort by teaming up with an agency and publishers also have the same benefits by teaming up with a media rep. The benefits are so real that Korean publishers will also pay back some of the money to media reps or agencies as a sales commission. And this commission could be as high as 20%.

For how much longer this model will persist, only time can tell. But media reps are already starting to feel the onset of programmatic media buying as a threat to their business. Global agencies are receiving pressures from their global headquarters to implement systems such as DBM and manage it internally, taking some business away from media reps. Media reps are frantically trying to develop their programmatic departments so that agencies will still be incentivized to use them for these services.

What’s for sure is that we’re hitting another disruptive phase in digital advertising and how media reps will fit into this picture is still to be determined.

From IOP to IOT: Consumers, Marketers and the Connected Future

Aparna Krishnan, Associate Director of Strategic Planning, Mindshare, Malaysia

From the Internet of People (IOP) to Internet of Things (IOT): we are at the cynosure of behavioural change and technology. Asia Pacific known for its heterogeneity is a motley of sub-cultures and mind-sets, yet consumers in the region are unvaryingly relinquishing control and giving authority to technology. The screen bathing Asian consumer is appraising Connected Living as an evolution mandated by reliance on technology and the need for convenience. The numbers say so.

Within the APAC region, the adoption rates for smart technologies/connected objects have been slow yet steady. The most popular connected object being Smart TV, followed by Smart wristbands and then the Smart watch. In terms of appetite of markets towards connected objects – China leads ahead of the curve, followed by Thailand and then Japan.

sdhliush;ODQSource – Global Web Index, Q4 2016

In lieu of the profusion of data and our knowledge on adoption of smart technology, below is a realistic prophecy at APAC’s ‘smart’ future both from a Consumer and Marketer perspective.

The Consumer Perspective

The jarring digital sever at home

With the multitude of solutions that smart objects provide, more and more consumers could fall prey to the Ostrich problem – the tendency to bury their head in sand and intentionally avoid or reject information. Picture this – a family sitting around a smart dinner table not talking to one another in the real world, the parents looking at data records transmitted to the table from the kid’s shoe that monitored how the kid had been holing up and not interacting with friends!

Connected living could be constructing glass walls between individuals who can communicate with each other but instead choose not to. We could be rewiring ourselves to function better online than offline!

Return of TV time!

With Connected living freeing up more time in consumer lives there is bound to be a rise in Couch Culture, this could possibly spell the comeback of TV time in Asia. It might not be linear TV or a streaming service on the TV screen it could be content being rendered on any flat surface in a smart home. This surface agnostic content streaming could be intuitive and customized with input feeds from other smart objects such as their mood info relayed from their smart clothes.

Picture this –  In Singapore, an overworked millennial is trying to get some sleep after a long day at work, however brain activity measured predicts that sleep will be induced only 3 hours later thereby turning the ceiling into a screen streaming his favourite TV show that automatically switches off when he dozes off.

Circle of Trust will wear out

Due to the eavesdropping ability of connected objects privacy concerns in consumers will touch an all-time high. Mindfulness of consumers towards the types of data being collected and shared by connected objects will be questioned; they will empower themselves to read the labels (like wash care labels) on smart objects. Because of a chunk of responsible and mindful consumers there will emerge conversations around what kind of data can be shared and stored by smart objects. This could possibly also create room for housekeeping rules related to privacy.

Living in the moment, we are all aware that though data steers the marketing of today, it is the consumer who keeps control. This is explicit from the fact that in spite of exponential growth in mobile penetration advertising is not embraced to the same extent. In such a chaotic context, we marketers cannot be desperate for order and a rulebook – we must avoid being overwhelmed by the data and avoid a fool’s rush in mentality.

The Marketer Perspective

Real time data will deliver immediate insights

There will be a new source for observed behavioural data of consumers that could feed in as inputs enabling faster insights into product performance, consumer trends and purchase behaviour. For example, through connected vending machines, Coca-Cola reports spikes in its beverage consumption on college campuses before certain television shows air, a specific insight that not only leads to better understanding of customer demographics, but one that also presents opportunities for targeted marketing.

Diversity in devices and skills

There will be richer diversity in the ‘devices’ and ‘skills’ that can integrate with AI systems , fuelled by an open source model.

Eg: C by GE is a table lamp that incorporates the Alexa Voice Service, a microphone and a speaker, and consumers can use it without possessing an Echo – or even a smartphone.

Hyundai providing members of its My Hyundai program with the ability to start their vehicle, set the internal temperature and switch on the lights before leaving the house.

Shift in the dynamics of advertising

There will be a transformation in the way low involvement products are being purchased.

FMCGs being the key Adex contributors in the APAC region could be frontrunners and the biggest beneficiary of Smart living. The replenishment of detergents by the washing machine through e-commerce partnerships, the refrigerator ordering milk for you to pick up on your way back home etc. The categories and brands with loyalty and high frequency of purchase stand to benefit the most. It might even usher in a change in the dynamics of advertising – with marketers having to focus only on brand building efforts.

A breakthrough example of Connected objects used as a marketing tool to deliver sales is the case of Rexona Deodorant in Malaysia. We used Wearables to communicate the Motionsense technology that releases freshness withheld in capsules on moving. This was a great example of media integrating with Smart objects to deliver business results, a 2% increase in penetration!

Undoubtedly, adrenaline times are here!

As marketers in the quest to future proofing businesses in the Connected landscape, we need to win both hearts and minds; the trick is to be User first, technology second and to dwell in the possibilities.

Digital in Asia 2017 Overview

Digital growth accelerated over the previous 12 months in Asia Pacific, with internet users up 15% to pass the 1.9 billion mark. There are now also 4 billion mobile phone subscriptions across APAC, a penetration rate of 96%.

These findings have exciting implications for businesses, governments, and society, but they are also testament to the speed with which digital (and mobile) connectivity is changing the lives of people in the region.

More than 1.4 billion Asian consumers now use social media on a monthly basis, with 95% of them accessing platforms via mobile devices – the highest ratio in the world.

Digital in 2017: Southeast Asia

Digital in 2017: Eastern Asia

Digital in 2017: Southern Asia

Digital in 2017: Australia, New Zealand & The Pacific

Source: We Are Social

Samsung is Top Brand with Asian Consumers, ahead of Apple

Brands at the forefront of tech and media shine in the 2016 Asia’s Top 1000 Brands ranking. Number 1 position was taken by Samsung, with Apple and Sony in 2 and 3 respectively.

Samsung retained its top spot in terms of customer perception, despite a tough year which saw mobile phone sales squeezed by Android competitors. They released the Galaxy S6 Edge Plus and Note 5 in August 2015, beating new iPhones to the market by about a month. These models debuted after slow sales of the premium Galaxy S6 prompted price cuts and customer refunds. Samsung then wasted little time in launching the Galaxy S7 Edge in January 2016, largely to favourable reviews for its expandable storage, a dual-pixel camera, battery and always-on display.

In the new entries, Airbnb’s debut on the Top 1000 Brands ranking means it’s only a matter of time before Uber, Netflix and Grab displace more traditional incumbents.

Find the full Campaign Asia Top 1000 ranking here.

The Google Consumer Barometer: Free APAC Market Research

The Google Consumer Barometer is a fantastic new tool to help you understand how people use the internet – both mobile and online – across the Asia.

It’s a rich consumer research resource available for free, based on studies done by Google and partners globally over the recent past.

Curated insights are available for Singapore, Indonesia, Vietnam and many other APAC markets.

Definitely worth digging into next time you need to know the percentage of smartphone users in The Philippines, or the online population of Malaysia.

29_full_size_google-barometer-10

2015 in Review: Top 5 Digital in Asia Content

2015 was another exciting year for digital and programmatic in Asia, South East Asia especially.

There is a definite sense that individual markets are outgrowing Singapore as a regional hub – evidenced by rapidly increasing spends at individual market level, and a resurgence in agencies, both local and global, doing outstanding digital work in local markets.

In celebration of the year past, here are the top 5 Digital in Asia articles for 2015.

  1. Asian Brands Must Be More Innovative Than Those in the West

In our most popular piece of content, we talked to Joanna Kalenska, Managing Director at Razorfish Hong Kong, about Asian consumers, brands’ challenges and opportunities.

2. APAC Social and Mobile Usage Surge in 2015

The ever comprehensive We Are Social Annual Report highlighted robust growth for social, digital and mobile in the region over 2015.

3. A Quick Guide to Social Media in China

Ogilvy released the latest in their guides to Social Media in China highlighting the (mostly) differences but sometimes surprising similarities to global platforms.

4. Digital Savvy but Shy: How Vietnam’s Generation Z is Making Brands Work Harder

A report from market research company Epinion and OMD looking at Generation Z in Vietnam. Numbering 14 million, and with an average monthly disposable income of 112 USD – significant in this emerging market – these consumers are incredibly valuable for brands.

5. 2015 in Preview: Top 10 APAC Digital Trends 2015

2015 promised to be an exciting year for Digital Marketing and Media in Asia. These were the ten trends that, in DIA’s view, would change online advertising over the last year. How many did we get right?! Don’t worry, we’ll be right back very soon with another 10 trends for 2016.

 

 

 

 

Selling Beer in Vietnam, a Digital Challenge

Over the last five years Vietnam has seen its beer sales climb at more the double the rate of its GDP, making it South-East Asia’s largest consumer of beer.

In fact, in 2012 a staggering 3 billion litres of beer were consumed in Vietnam meaning there should be huge opportunities for local and international bands to market and sell here.

However, it’s not as straightforward as it should be.

Firstly the infrastructure of Vietnam’s cities, towns and villages which can be described as politely referred to as ‘disorganised’ makes it very difficult for brands to establish where or why there beer is selling well.

This is made even more complicated as many vendors will buy stock from one shop then move around so even consumers will not know where they bought the product from.

This can prove a huge hindrance for brands who want to monitor sales, establish demand for a new product or establish consumer sentiment.

Another challenge is the competition from liquor and wine brands who are looking to get a slice of Vietnam’s youthful and rapidly increasing middle class.

A recent report showed Ho Chi Minh City in the south of Vietnam has one of the fastest growing multi-millionaire populations in the world, and the thirst to match it.

Beverage companies with high-end products such as Diageo (whose brands include Schmirnoff vodka, Tanqueray gin and part own Moet-Hennessy) have been working hard over the last few years to establish a foothold in Vietnam.

While it looks unlikely spirits will ever usurp beer, their appeal is growing (though they are not really present at the street-side eating venues many Vietnamese like to eat and drink at). 

Another problem beer brands in Vietnam face is their struggles to connect with an increasingly digitalised audience.

A spokesperson from market research and insights company, Epinion said: “In order for brands to run effective social media campaigns they need to have a good understanding of who their audience actually is. Without this information you run the risk of analysing the effectiveness of digital campaigns based on falsified and biased data which is a huge waste of time and money.

“In a project we worked with Vietnam’s leading brewery Sabeco we helped them establish who of their more than 100,000 Facebook fans were ‘true’ and who just liked the page for the sake of it, then established the effectiveness of their digital campaigns. 

“As a result of our study, Sabeco gained valuable insight on how they could gain greater engagement with their ‘true fans’ and leverage further impact from future digital campaigns, reducing time and money spent on ineffective digital marketing campaigns.

“Sabeco, along with other beer brands, has to embrace digital media as this is where their consumer is, but they must also know how to connect with them online.”

For more information on beer brands in Vietnam click here. 

Chinese consumers want innovation, but suspicious of big business

Chinese consumers say concerns about personal privacy, the environment and their security will stop them from purchasing new products, according to a new study from Edelman.

Raised in a high growth, fast changing society, a vast majority (94%) of Chinese consumers now view innovation itself as an essential component of society’s progress. And more than 4 in 5 (85%) believe it’s the responsibility of business to drive this innovation.

However, there is discomfort at the role of business in innovation. The majority of respondents believe innovation comes at a personal and societal cost with privacy (58%) and environmental impact (52%) the major concerns.

“It seems innovation in and of itself is not enough to be liked, trusted or bought,” said Carol Potter, executive vice chairman, Edelman Asia Pacific, Middle East & Africa. “We find consumers simultaneously positive about the benefits of innovation at the same time as anxious, uncomfortable and skeptical about the companies that bring it.”

The full report is worth reading to find out more about Chinese consumers conflicted attitudes to business.

Innovation and the Earned Brand in China [Edelman]