In Asia, digital marketing has had the most impressive percentage numbers so far, but not the most impressive absolute numbers, says David Ketchum, chairman of the Digital+Direct Marketing Association Asia cum president of Bite Global Marketing Services.
Adspend on digital may have grown 22 per cent, versus 6 per cent on TV, but the issue is that TV is still taking 45 per cent of media budgets in Asia. "It's still early days for digital, since nobody ever got fired for spending on TV commercials," he says.
Digital channels are cheaper, but cheap media only becomes efficient with smart data, so Ketchum sees a trend in the new year where CMOs will spend as much on data as they will on media. "In the past you want to buy newspaper ads on the front page, or closer to the top of the inside pages," he says. "But with programmatic trading now, marketers know that being deep down in the stack may constitute better reach. Besides, in China, most earned media can be bought."
But that doesn't mean an easy ride on the horse, as marketers are going to "ditch the fluffy stuff" and be very demanding about "social-media marketing that is going to show them the money", Ketchum predicts.
"Social media marketing for an airline before this was for a KOL [key opinion leader] to say 'I've landed in Thailand, and it's wonderful here'," he says. "But it will have to become more performance-oriented by looking at the back-end analytics like search keywords that are driving website traffic and sales conversion. Going from socialising to buying should be a frictionless funnel. It's about connecting content with commerce."
Stephanie Silvester, group marketing manager for Asia-Pacific at Verizon Enterprise Solutions, finds social media a problem. "Within the B2B sphere, social-media marketing is not really proven yet," she says. "Trying to translate that into how you drive revenue or even leads is complex, and incredibly difficult. Our company's attitude toward social media needs a little work this new year. Using whitepapers and emails, traditionally and fundamentally B2B tactics, has its place, but it won't work for short attention spans of C-suites, who don't sit there and troll websites. If I have less than two minutes, I'll go for video."
Most brands are not making money from their content now, says Ketchum. "The business model where you create content and try to monetise it, that's hard. Unless you're one of those YouTube stars where you get a cut of the ad revenue at apparently US$3,500 per million views."
China's new reality
Making money is no longer a foregone conclusion in China, points out Brian Swords, managing director of TBWA Shanghai.
"2013 has been a year in which the global developments of the last five years finally caught up with China, most notably in the second half of the year," he says. "We saw a significant slowdown in activity, especially exports, and the new Chinese government had to take a long-term look at how to reshape the economy, introduce reforms and set out new paths for the country. A corresponding, and equally significant, point of inflection has occurred in the marketing and advertising business in China. The underlying growth expectation with most clients’ businesses we see in China is in the range of 10 to 15 per cent next year."
The biggest shift Swords urges in 2014 is the need to switch to a mentality of brand management by both clients and agencies. For most brands in China, the historic formula for growth has been about a complete focus on supply-chain and distribution development. These two areas have been the main drivers in a market on a seemingly endless growth horizon. This model is not necessarily going to disappear in the near future either, as lower-tier cities continue to offer opportunities.
However, there are two important changes bubbling up to the surface. The first is the emergence of a much more sophisticated and brand-savvy consumer in China, as part of the new middle class. This consumer will not accept the old models of marketing, he says. Secondly, as distribution in tier-one cities starts to saturate, the supply-chain focus is no longer the winning business model. The ‘brand’, what it stands for and the accompanying advertising are fast becoming some of the biggest factors for success. So the new growth in the year of the horse will not just be about more customers, but the ability to deepen that relationship through the lever of branding.
This calls for brands to operate a two-tier business model: one that continues to focus on fast growth in new markets, while also operating a more sophisticated brand-driven approach in more developed markets, targeting the more savvy consumers. This means a big shift for agencies too. Agencies will have to start mirroring their clients’ two-tier model: on one hand remaining nimble to deliver work quickly for fast-growing markets; and on the other, spending time with their clients to answer the deeper, longer-term brand questions.
Ketchum agrees that the customer journey is getting fragmented and pixellated, and he believes marketers are behind their customers. "In the old days we used to be control freaks of that journey; we talk about it as if we control it," he observes. "Now you can Google something and buy it 30 seconds later, or not."
Silvester says her challenge is figuring out how to intercept the long B2B buying cycle in a valuable way. "I do think mobile has a big place, but we haven't figured it out yet," she says. "And interestingly, with the rush toward mobile apps like WhatsApp and WeChat, B2B marketers are going back to direct mail. Yes you heard it right. Good-old paper brochures that may become fashionable again. Why? Because we're aren't getting as much direct mail as before, and they stand out from the clutter."
Kate Scott, senior digital marketing manager at HK CSL Limited, says people have been talking for years about the potential of mobile, and in Hong Kong it's an extreme case where the city has mobile penetration around 200 per cent—65 per cent of which is smartphones.
The retail empire strikes back!
Argha Sen, director of omni-channel at Fung Retailing Group (the 'small brother' of Li & Fung), says the mobile phone has been the single biggest impact driver of the retail business now that everything is on demand. "But don't forget that pesky consumer behaviour called showrooming, where one looks for a cheaper version of a product they see in stores (while in the stores)," Sen says.
Online e-commerce grew a lot faster than purely offline retailers, with China being the biggest inspiring example. The theme this new year is how bricks-and-mortar retailers are going to strike back. "Alibaba or Amazon does not have physical real estate, where it is both a distribution point and a fulfilment point," Sen says. "Hence the much-hated buzzword will be omni-channel, where in China they call it O2O."
It's not only connecting the dots between offline and online, or vice versa, but also day through night. Thomas Nolsoee, chief strategy officer at MEC China, says when night falls, the country wakes. "As the pace of life gets faster and faster, a 24-hour day is no longer enough," he says. "Night consumption is prevailing. For example, the number of consumers who took into account extended business hours when choosing a supermarket tripled in three years. Taobao/Tmall also achieved RMB 6.7 billion in sales from 12 am to 1 am during the 11 November Double-Eleven Day. So brands can achieve incremental sales by making themselves available outside normal business hours."
This also applies to customer service outside business hours. Scott said in 2014 she wants to see customer service being handled with social media channels in a bigger way. "At the very basic level you need a team of people who are comfortable communicating on social media," she says. "Many people are comfortable doing so in a personal capacity, but when they do that on behalf of a company, it's worse than pulling teeth. They're terrified and reluctant."
Don't fear the data
Many marketers are terrified, or at least wary of big data. Sen says one cannot survive without it. "This new year will hopefully be the holy grail of man-machine collaboration," Sen says. "The ability to turn data into something actionable with human instinct is critical. How to turn social media into a money machine? None of it happens without data. An IBM friend of mine said data is going to be like what the steam engine was to the 18th century. Online retail players have always known that, but the bricks-and-mortar store is also a giant data generator. How do you now act on that? Not in the back-end, sending customers emails anymore, but leveraging that data in real-time at the point of sales in the new year."
"There was a time when retailers never used to offer free WiFi inside the stores, because of the risk of customers Googling competitors' offerings. But now WiFi allows retailers to track shoppers for personalisation and CRM purposes, not on the retailer's terms but on the customer's terms," he adds. "But the condition is knowing how to use big data, which is, well, a collection of little data."
That's truly locking step with the customer, with no horseshoe required for luck.
But still, we wish you lots of luck and good horse sense in the Year of the Horse!