The rise of digital marketing

Saturday September 19, 2009
The rise of digital marketing
By LEE KIAN SEONG

Online trading has grown in importance and companies want a piece of the action
THE World Wide Web helps self-proclaimed techno-geek Marcus Chong, 19, choose what brands to go for when he’s looking for the latest electrical and electronics goods in the market.
"It has changed as people connect and communicate in new ways across a multitude of new and uncontrolled channels" KU KOK PENG FH COMMUNICATIONS GM
Avid traveller Peter Dass, 32, surfs the Net regularly to find the best holiday destinations with the best value-for-money travel packages.
Razlan Mahmud, 37, and his wife prefer to do all of their banking online because it accommodates their hectic lifestyle.
They are among the 15 million Internet users in the country, largely within the 15-40 age group, who are increasingly being targeted by marketers through the digital space.
The popularity and growing penetration of the Internet have made online media an inevitable and essential part in many companies’ marketing plans.
Prashant Kumar, chief executive officer of media specialist Universal McCann, says Malaysia is one of the “youngest” countries in the world, with half of its population below the age of 25 and they make up the group that are using the Internet widely.
“These people will be the key decision-makers for 90% of brands in the next 10 to 20 years,” Prashant says.
He says digital media in Malaysia are poised for “explosive growth” and are finally gaining credibility as mainstream – as opposed to niche – media among the majority of advertising clients.
Prashant says digital marketing is already big enough to make other mainstream media niche, adding that most in the advertising industry concur that a good campaign would be incomplete if it lacks Internet presence.
"Digital spending is projected to grow at a compounded annual rate of 31% between 2008 and 2013" TAN SIANG LIN MEDIA SPECIALISTS ASSOCIATION PRESIDENT
“Today, a lot of advertisers who were initially resistant and skeptical to what digital advertising could do are turning into adopters. I cannot imagine a media agency today that is not providing digital advertising services because that is the future of advertising,” he says,
Agencies are striving to boost their digital marketing capability, driving up demand for talents with digital knowhow. Just prior to the economic downturn, headhunter Aquent, in its biennial report, had forecast that salaries of digital agencies’ creative staff in Malaysia were expected to grow by 15% on average, against 10% for advertising agency’s creative and account management staff.
Nielsen, the country’s top provider of media-related data for the ad industry, only monitors a few online sites and does not cover a myriad of ways marketers use to sell their products and services in the digital media, from YouTube to mobile marketing.
Based on Nielsen’s research, the Internet represented RM32mil, or just 0.5%, of the advertising spending in the country. In the first six months of this year, that figure was RM19mil and 0.6% respectively.
Prashant says the figure was likely to be bigger. He values Internet ad expenditure (adex) for the first half at RM100mil and says it would surpass the RM200mil mark in 2009.
"I cannot imagine a media agency that is not providing digital advertising services, as that is the future of advertising" PRASHANT KUMAR UNIVERSAL MCCANN CEO
“Only the adex of a few websites are captured (by Nielsen). Statistics for some of the big boys, like Google, are not captured,” he says.
“Also, a lot of Malaysian digital media are on international websites, which may not be captured.”
Tan Siang Lin, managing director of MediaCompete Sdn Bhd (a member of WPP Group’s media specialist arm GroupM), says GroupM forecasts digital media spending in Malaysia to account for 1.4% of total spending this year due to rapid Internet and mobile penetration.
Malaysia’s digital spending is projected to grow at a compounded annual rate of 31% between 2008 and 2013.
“The adspend monitored by Mobile Entertainment Forum (a global trade association of the mobile industry) for the year 2008 was US$3.04mil and is targeted to rise to US$20.5mil in 2013,” Tan says.
Opera Software reported that there is vast potential to tap into digital advertising on mobile devices. The report points out that Malaysian mobile Internet users are engaging more in mobile web offerings, with a 474.5% increase in page views since 2008, with each user averaging 11 page views.
Ogilvy & Mather Malaysia group managing director Zayn Khan says digital advertising is not something new. It has been deployed since the dotcom boom in 1998.
"Digital revolution has occurred and everything has become digital whether it is online or offline" TAN KIEN ENG LEO BURNETT/ARC WORLDWIDE MALAYSIA MD
However, it is only in the last two years that it has experienced accelerated uptrend or growth in South-East Asia, he says.
G2 Direct Interactive general manager Sam Chan says digital advertising has become more advanced and digital is as important as offline media.
“Marketers in general want to increase spending. Digital spending comprises mainly e-mail marketing, search, in-game advertising, digital out-of-home and social media,” he says.
Chan says in developed markets like Japan, Singapore and South Korea, the focus is on rich media and a wide array of content. All categories of brands can market online because of the mass audience covered.
“In developed markets, digital advertising is used for brand building and e-CRM (electronic customer relationship management) activities rather that just promotional campaigns,” he says.
In less developed markets, meanwhile, the focus is still on increasing penetration, especially for broadband – “the delivery of content rather than the content itself,” Chan says.
“And online is used to target urbanites, youth or white collars who have ‘always-on’ Internet connection in the office.”
Paradigm shift in communications
Tan Kien Eng, who heads marketing agencies Leo Burnett and Arc Worldwide Malaysia, says a digital revolution has occurred and everything has become “digital” whether it is online or offline.
"All categories of brands can market online because of the mass audience covered" SAM CHAN G2 DIRECT INTERACTIVE GM
“Offline can be interactive boards, kiosks or games, while online are those that exist in the Internet world. Digital advertising is the future and it is the present. If you don’t have a digital strategy, you probably aren’t aware of what is happening around the world,” he says.
Kien Eng says consumer “touch points” would evolve as a lot of marketers are already using this kind of media, such as blogs and Facebook, to reach consumers.
Like advertising agencies, public relations firms also need to move towards digital.
Public relations, which is traditionally used to influence non-paid, uncontrolled media (as opposed to advertising, which traditionally utilises paid media), can play a major role in digital space such as blogs and forums.
Ku Kok Peng, senior vice-president & partner and general manager of public relations consultancy FH Communications Sdn Bhd, says the means of communications have changed with the advancement of digital platforms.
“It has changed as people connect and communicate in new ways across a multitude of new and uncontrolled channels,” he says.
Rather than being just spectators, consumers become participants in whatever happens around them and they can become experts, broadcasters, reviewers and publishers in the digital space.
"It is only in the last two years that digital advertising has experienced accelerated uptrend in South- East Asia" ZAYN KHAN OGILVY & MATHER M’SIA MD
“Their comments on certain brands are impactful, and this digital evolution changes the whole communication landscape as they are acting like the media,” he says.
Ku notes that the inherent power of word of mouth has been amplified by the digital channels and information has been democratised, creating a dramatic shift in the balance of influence.
“It is much less about what you (the company) say; it is much more about what they say about you. What they say will shape your brand, mould your reputation and impact your business,” he says.
Ku says PR firms have to identify which blogs suit their clients’ needs and engage with the bloggers on a personal basis to establish a relationship.
“We need to know the blogger’s interest and create content that benefits the two parties,” he says.
Ku says it’s important to appoint PR agencies to design strategies for sending the company’s message to consumers through digital platforms and engaging with bloggers.
“You need to understand where they are coming from as the channels like YouTube, blogs, Facebook and Twitter have their own characteristics,” he says.
Ku says a blogger who is rational and analytical and suits the needs of the blog’s followers will gain popularity.
Benefits of going online
More companies have been shifting or re-distributing their advertising budgets into digital advertising. During the economic downturn, digital advertising is seen as one of the more effective ways for companies to communicate with their audience.
Prashant of Universal McCann says placing adverts online can be undertaken more quickly and it has great cost advantages.
Companies can also monitor click rates, lead generation, number of references or even registrations.
Digital media offers better accountability for companies wanting to track the value received for the money spent on ads, a notable attribute especially in an economic downturn.
Online advertising also allows ‘behavioural targeting,’ whereby a website would track a particular Internet user’s surfing habits and deploy ads that cater to his surfing preferences.
Further, online advertising is opening up a lot of opportunities for small businesses with cash-flow issues.
G2’s Chan says the effectiveness of the online channel depends heavily on the relevance, good understanding of the audience’s behaviours and the integration of the total communication package.
“This is no different from any form of brand communication, be it out-of-home, mainstream or shopper marketing. The fundamentals need not be over-analysed, as they are the same,” he says.
Chan says some marketers over-analyse the medium because the medium is still alien to them.
“The only difference is that with online media, messages or offers can be delivered in a more engaging, personalised, richer and measurable way, if done correctly,” he explains.
Digital-related issues
Prashant feels that the level of digital advertising in Malaysia is commendable. “I think there have been some good innovations. However, the quality of broadband is an issue, and this affects some of the innovations,” he says.
According to reports, the local broadband penetration rate was at 21% in 2008.
In terms of Internet usage behaviour, Malaysians are quite evolved. Malaysians are way ahead than many other countries with higher penetration levels, he says.
Since a lot of Malaysian consumers prefer to go to international websites, there is a need for more “powerful, engaging content,” Prashant says.
“The local options are fewer. Also, a lot of local sites are struggling with commercial viability.”
On mobile marketing, he believes Malaysia has “a far way to go.
“Because of the low penetration rate of 3G handsets, there is an insufficient amount of local mobile content.”
Tan of MediaCompete says the nation has a fairly sophisticated digital market, concentrated in highly connected urban areas such as the Klang Valley, but it is still weak in reaching rural consumers.
“Until the Internet-access (broadband) becomes more easily available to our rural population, advertisers will continue to be concerned that they are not reaching all of their audiences,” she says.
Other than the rural consumers, the older generation has also shown indifference towards the Internet, preferring the conventional media instead, she says.
With the increasing use of the digital space as a marketing channel, there are concerns on invasion of privacy as Internet marketers ride on behavioural tracking technologies to tailor messages towards specific groups of consumers.
G2’s Chan says that the nation should have a regulatory system to strictly monitor user’s data privacy.
The Government is in the process of introducing the Personal Data Protection Act, which aims to protect and regulate the use of private data.
Chan says the Act will not affect the mainstream and online advertising much, but marketing activities involving personal data collection like e-mail/SMS marketing and online contests.
He says companies that want to mail promotional messages to consumers who fill up contest forms should seek the consumers’ permission by creating a box in the contest form for the latter to tick.
Chan says there are guidelines imposed by the Malaysian Communication and Multimedia Commission (SKMM) regarding digital advertising, and the guidelines are quite similar to the do’s and don’ts of communication overall.
“There are no comprehensive regulations imposed simply because by the time one comes out, a new trend springs online,” he says.
He says beyond regulations, parties such as marketers, agencies and SKMM should have measurement standard guidelines to qualify and quantify the success of a digital campaign/activation.
“Otherwise, we should leave the Internet from being over-regulated, letting it be an open and free medium like it has always been, because that is one space where there are no boundaries of race, gender, borders and topics.
“It satisfies our need to connect, share, be in the know, be in control and be ourselves,” he says.
While most industry players concur that digital advertising is the way of the future, the same holds true for the belief that mainstream media are here to stay.
“It (Digital) will be part substitution, part complementary. Mainstream advertising will lose its dominance but it will always have a purpose,” says Prashant.
Radio did not kill the newspaper
Some have argued that digital advertising could eventually ‘kill’ mainstream media, but Prashant believes differently.
“If you look at the history of media, new media have never killed old media. Radio did not kill the newspaper. When radio made its debut, some evangelists would surely have said ‘Why read newspapers when you can hear it on radio? It’s so much more alive!’
“But when radio came, radio fit into people’s lives in one way and newspapers fit in another way. Both mediums found their place,” he says.
Radio still exists today, years after television came into the picture, Prashant adds.
“They have both co-existed. Both mediums fit into society quite well. Similarly, the Internet will find its own positioning in people’s lives,” he says. Many would agree that there just some things derived from mainstream media that cannot be replaced via the Web.
“Surfing the Web is an active thing. When I get home, tired from work, I would rather just relax, sit back and passively enjoy television,” Prashant says.
Ku from FH Communications does not see the evolution of digital will be at the expense of newspapers.
“We need a combination of the traditional and digital media, but traditional media has to change,” he says, adding that traditional media like print have to provide more in-depth analyses to add value to the content.

http://biz.thestar.com.my/news/story.asp?file=/2009/9/19/business/4725153&sec=business