Digital is at the very cusp of enormous, sustained economic growth in Vietnam, according to Joe Nguyen, senior VP Asia-Pacific, comScore and Nghia Vo, CEO Mekong Media.
While Vietnam is one of the less mentioned markets in Southeast Asia when it comes to digital, this 90+ million consumer market is coming of age. The telecommunications infrastructure that was laid down years ago ensures digital subscriber line services are accessible in smaller towns and cities up and down the 3,260-kilometre coastline. This means that cafés, restaurants and hostels can provide their guests with free Wi-Fi, and have done so for years. Consumers are online and more recently on smartphones more and more. So this market is set to boom. Here are some trends that we see happening in the Vietnam market:
Increase in disposable income
A decade ago, the average Vietnamese consumer saved up his/her salary for years in order to buy a scooter. The purchase took the main share of his/her disposable income. According to Euromonitor, the annual disposable income in Vietnam grew by 35 per cent from 2011 to 2014, with consumer expenditure growing at the same rate and consumers are buying new smartphones and gadgets. They are also traveling a lot more, with the Vietnamese language now frequently heard in cities and airports from Singapore and Japan to the US. However, key consumer categories like healthcare, beauty care and luxury will lead market spending in the coming years.
High smartphone penetration
With the infrastructure already built and relatively cheap data plans, smartphone penetration in Vietnam has picked up significantly over the last few years. Consumers are not just after generic android phones, they want the latest big name brands. According to comScore Device Essentials in May 2015, 33 per cent of page views consumed in Vietnam were on mobile phones, while in terms of mobile operating systems, android devices had 60 per cent of the traffic, Windows 17 per cent and Apple 16 per cent. For any company that is serious about digital, mobile is no longer an optional strategy in Vietnam.
E-commerce on the rise
As Vietnamese consumers increase their use of the internet they become more comfortable with making transactions online. With the rise in the number of Vietnamese willing to holiday overseas, travel is a category that has seen huge growth. Based on comScore MMX data, 39 per cent of the online population visited a travel site in the month of May 2015, more than double the number of visitors compared to just one year ago. Longtime local e-commerce player Vatgia.com is seeing competition from regional players like Lazada and local startups like Haravan. The top e-commerce entity in May 2015 was Lazada Sites, with a 32 per cent reach of the internet population on desktop computers, according to comScore MMX. Vietnamese consumers are now realising the power of digital more than ever before.
Social media has had significant impact on Vietnam, and there have been many crises and success stories for brands on Facebook in the market. Social media also remains a strong influence with consumers, and brands should have a proper strategy for social in Vietnam—from monitoring to engaging and converting fans into customers.Two years ago, Vietnam lifted its informal blockage of social media sites like Facebook. According to comScore MMX, the social networking category reached nearly 90 per cent of the internet population on desktop computers in May 2013 before dropping to a stable reach with an average of 78 per cent from January to May this year. This does not mean that they are spending less time on social networking – they are just going mobile. Data from Statista shows that the average daily usage of social media channels in Vietnam was 3.1 hours as of the fourth quarter of 2014.
Government policies create demand
In 2016 the tariff for importing products from ASEAN countries into Vietnam will be adjusted to 0 per cent. There will be more competition for Vietnamese companies, especially government-owned holdings, when foreign players bring their products to the market. In order to prepare for tough competition ahead Vietnamese companies have started various activities to strengthen their capabilities in production, distribution and branding. There will be a demand for brand consultancy, marketing and media services focused on strengthening local brands. This year the government announced two major changes in the real estate industry in Vietnam: 100 per cent foreign-owned companies can now operate in Vietnam; and foreigners can now buy an apartment in Vietnam. These changes will attract a new wave of investment in the market. Again, there will be a demand for marketing and media services focused on attracting people to invest in Vietnam real estate.
All of these trends point to a huge expansion in the advertising and digital advertising industry in particular. Brands will begin advertising and marketing new products. Advertising agencies and marketing companies will start to see growth beyond television spend. Solutions which help to increase the ability to plan, execute and track digital performance and conversion are already in high demand.
Nghia Vo (right) is CEO of Mekong Media