While consumer use of social media in Asia is growing at a rapid rate, digital marketing has yet to gain ground in the region, analysts say, highlighting the vast discrepancies across the Asian digital markets, plus limited expertise and ad spend.
According to a Nielsen report in July, social media use is growing exponentially in Asia-Pacific.
The study also highlighted that social media has an increasingly influence on the purchasing decisions of consumers in Asia. It said that after family and friends, online product reviews are the third most trusted source of information for making purchase decisions.
But while the region is now leading in the use of social media, marketing through social media has been slower to take off in Asia than in other parts of the world, said Thomas Crampton, Asia-Pacific director of digital influence at Ogilvy.
Nonetheless, the adoption rate of digital marketing among Asian companies has been rising fast over the past year because "businesses realize there are now demographics that they cannot reach via traditional media", noted Crampton who also blogs about social media.
Benjamin Cavender, associate principle of China Market Research Group (CMR), pointed to China as an example. In an e-mail, he said that Chinese online consumers under the age of 35 are no longer viewing traditional media regularly, and are instead relying on the Internet for information.
Cavender added that Chinese businesses cannot afford to ignore the 18- to 35-year-old segment because they make up the bulk of heavy Internet users in the country and are responsible for driving China's retail growth.
Challenges in online advertising
Another analyst argued that one hurdle companies face in using digital marketing lies in convincing them of the effectiveness of the Internet and social media in the first place.
Phil Harpur, senior research manager, Frost & Sullivan, elaborated that it will take time for large advertising agencies to overcome their resistance to advertising via digital platforms, which is further exacerbated by the lack of industry measurement standards.
Harpur also noted that compared with the more developed Internet markets such as those in the United States or United Kingdom, the late maturity of most digital markets in Asia further hampers online advertising from taking off.
Ogilvy's Crampton said that as whole, "Asia's wildly different digital ecosystems pose a challenge for any company aiming at a regional strategy", bearing in mind that it is already a challenge keeping up with the complexities and swift pace of change.
CMR's Cavender noted that in the case of China, Internet use is still far behind other countries in the region. Despite having the world's biggest online population, China's broadband penetration rate is just 7.7 percent. In comparison, South Korea is at 33.8 percent, while Hong Kong is at 29.34 percent.
Nick Fawbert from the Interactive Advertising Bureau, SEA (IAB), pointed to another obstacle: the lack of expertise required to effectively utilize social media for digital advertising in Asia.
He said that within a growing market like Asia, there may not be sufficient expertise in place to help those new to the medium, especially when digital marketing carries such "enormous flexibility". Fawbert is the secretary of the leadership council at IAB Southeast Asia.
IAB SEA is an association which aims to promote investments in interactive and digital advertising and boost the profile the industry in the region, including Singapore.
Singapore's Media Development Authority (MDA) and the Interactive Digital Media Program Office (IDMPO) had earlier in September announced a three-year S$30 million (US$23 million) investment boost for the digital advertising sector. The goal is to increase expenditure in the area of online marketing from the current 5.3 percent of the total ad market to 20 percent by 2020.
In his e-mail, Fawbert noted that interactive expenditure in Singapore grew by almost 30 percent yearly in the last two years. This rate of expansion, he said, exceeds the single-digit growth rates in the U.S. and U.K.
Yet, while digital advertising expenditure in Singapore takes up only 5.3 percent of total ad spend, in the U.K., it attracts almost 25 percent, he added. "We still have a long way to go in developing our markets," Fawbert concluded.
One organization that has been increasing its budget and investment in online marketing campaigns and social media for marketing purposes is Royal Plaza on Scotts. Mohamed Yusof, its director of business strategies, told ZDNet Asia that 60 percent of its current investments is focused on online marketing, whereas 40 percent is spent on traditional media.
"As an independent hotel in Singapore, we believe strategic investment in social media will enhance our competitive advantage," he said.
Yusof pointed out that the positive results of the hotel's online marketing strategies are evident from the growing number of followers on two key social media platforms. Its Twitter account has 5,372 followers, while its Facebook page has 3,568 fans, he said.
Mobile the next big thing
Frost & Sullivan's Harpur noted that besides digital channels, "mobile channels will also be a huge driver of growth for advertising in Asia".
He attributed this to the rapid adoption of smartphones in Asia, and added that the region's high penetration of mobile users will see much higher growth than in other markets.
Ogilvy's Crampton echoed the same sentiments, stating that the upcoming trend in Asia will be "mobile engagement with consumers". He singled out markets like Japan and Korea, which are well along in this area, as well as Indonesia and India, which are certain to follow suit.
Crampton reasoned that the mobile trend is set to rise due to the increase use of the mobile Internet even as smartphone prices drop.
Eventually, he said, the mobile device will become the "first and main point of Internet access for a huge portion of Asia". Business eyeing the regional markets will need to follow the consumers there, he advised.