Live Issue... Digital enjoys a year of consolidation

At first glance, it might seem a quiet year for the digital marketing industry. Whereas previous years have seen dramatic developments, such as the rise of social networking in the form of MySpace then Facebook and the growth of online video via YouTube, 2008 has not been marked by the rise of a single site or service. Yet in Asia it has still been a very significant year.

Digital was never far from the headlines thanks to the iPhone, which finally came to Asia, and news early in the year that the mainland had vaulted the US to become the world’s largest internet population. But the overall theme for 2008 has been consolidation. “Digital, in all its forms, continued its steady march this year towards wider acceptance as a central part of marketing,” says Kent Wertime, president of OgilvyOne Asia.

While there is still a ‘digital divide’ between the amount of time consumers spend online and the amount of budget devoted to it, there is a sense that digital is maturing as a channel. Part of that is marketers becoming more savvy about including digital within a broader marketing plan.

“The growing connection between online and offline has been a feature of this year,” says Jason Kuperman, vice-president for digital development at Omnicom Group Asia-Pacific.

“That’s not just significant from a creative point of view. It also means agency groups are having to work in a more integrated way with other agency groups.”

With maturity comes a shift in the way consumers interact with the internet. This has been perhaps most vividly seen in China, where social networking sites, such as Xiaonei and kaixin001.com, have emerged to complement the all-powerful bulletin boards. Elsewhere, Facebook is now more popular in Hong Kong than Yahoo. In South Korea, the number of people reading blogs has reached 92 per cent. “In 2008, we really started to see consumer groups in each market in Asia develop their own digital characteristics,” says David Ketchum, chairman of the Asia Digital Marketing Association.

From a purely creative perspective, the industry has grown too, according to Adam Good, the executive director of digital innovation at the Clemenger Group. “The sector has started to settle and the good, talented digital experts are producing some wonderful work for brands.”

A newly grown-up digital has attracted a more flexible attitude from media publishers, he says. They have become more flexible, open and collaborative in engaging consumers at high-trafficked sites. “It’s not about building sites, it’s about fishing where the fish are.”

On the negative side, the long-awaited ‘year of mobile’ again failed to show up, though the launch of the iPhone has at least provided a spur to the mobile internet - anecdotal evidence from several publishers in Asia suggests a spike in mobile-based traffic following the handset’s launch. The roll-outs of several mobile application stores by Apple, Google and BlackBerry also points the way to developments next year.

The dark cloud on the horizon is the global recession. Many expect digital to benefit, but the type of work commissioned may begin to change. “We have seen a shift in the type of work in the last two quarters,” says The Hyperfactory’s new business director Geoffrey Handley. “There are fewer big brand exercises and more ROI-focused work, be it sales promotion, lead generation or channel activation.”

In Asia, the big beneficiary is likely to be search, which has yet to claim the share of spend seen in Western markets. The phenomenal financial performance of Baidu this year is testament to the momentum in that market. And there may be scope for advertising and affiliate networks that rely on cost-per-action or cost-per-click - though the quality and transparency of online data remains an issue. Marketing firm DGM, already a major player in Australia and Europe, launched an affiliate offering in Southeast Asia and Hong Kong this year; it has already signed up Apple and British Airways.

“It will be interesting to see if digital flourishes as a measurable, fast, data-rich and inventive medium, or whether advertisers cut back,” says Wertime. “Our bet is that it will flourish.”