Why tech-platform dominance will push APAC towards regional digital-investment models

Around 40 million people in six countries across APAC came online for the first time in 2020, pushing the total number of internet users in Southeast Asian countries to nearly 70% of the population.

As connectivity continues to soar, APAC has quickly developed to become the second-largest programmatic region in the world in terms of digital investment. It is also forecast to be the world’s fastest-growing region in terms of real GDP growth.

While this paints an impressive macro picture and provides a very real opportunity for brand marketers, these figures belie the importance of fine-tuning creative advertising to local markets across the different areas within the region.  

National identities and local cultures have never been more important, especially in a region with as many unique quirks and nuances as APAC. Across Northeast Asia (NEA), Southeast Asia (SEA), China and Australia / New Zealand (ANZ), brands should approach each area individually as cultural differences and technology behaviours have a significant impact on the effectiveness of both brand strategies and the campaigns they inform.

But as digital media increasingly dominates brand-marketing investment and the structure of the digital channel ecosystem is weighted towards tech giants, brands face a media dichotomy.

While local optimisation of programmatic investment has never been more important, investment in technology channels is increasingly being decided at a pan-national, regional, or even global level. This has resulted in an inherent and growing pressure to regionalise digital investment management which will influence brands within APAC.

Using local insight to centralise programmatic investment

According to the 2020 e-Conomy SEA report by Google, one in three consumers started using a new digital service for the first time during the pandemic, with 94% confirming they will continue to use it in the future.

As uptake skyrockets, we will eventually see deals with tech giants—Google, Amazon and Facebook—begin to dominate investment strategies, as we do in the US and EMEA, as these platforms continue to exponentially grow across the region.

One of the biggest shifts in digital habits we’re seeing is the reliance on carrying out multiple tasks online within a single app. Dubbed ‘super apps’, these are the gateway to consumers across key areas such as digital banking, ecommerce, ridesharing and food delivery. For example, Grab, used widely across SEA, originally started as a transport app, and has since branched out into food, fintech payments, groceries and more.

As these platforms continue to grow in popularity and expand the services they offer, they’ll likely gain bigger investment from global brands and encourage greater investment connectivity. This is important, as both large regional brands and global ones are now shifting toward regional investment models.

This regional model will see agency operations suck local data learnings into regional technology, which in turn will build region-wide insights and tailor regional campaigns to markets across APAC in a much more efficient way.

With greater centralised data processing, a localised approach doesn’t work for programmatic.

Allowing in-market teams to be guided by local insights and nuances in how they execute strategy can create deeper customer insight, but not necessarily enough to make investment really efficient. Too much freedom in decision-making can mean a well-thought-out global strategy is seriously weakened—to the point where it can be detrimental to a brand.

Talent may also be difficult to find if you need strategic and technical expertise in smaller markets, especially in APAC where the culture is highly diverse. This ultimately puts individual markets at risk of lagging behind as other larger markets continue to mature.

However, whilst programmatic strategy should almost always be centralised, the balance between regional and local control depends on the markets a brand is active in. For example, highly regulated markets like China mean you will need to allow for local expertise much more than you would in more open markets.

Taken as a whole though, the direction of travel in digital media raises questions about the future viability of local network agencies.

Brands taking back control

There are other forces at work too. Agencies in APAC will increasingly be judged on their ability to interface with in-house teams. Although they are separate concepts, centralisation and in-housing are so closely linked by their joint quest for control that they regularly become two chapters of the same story—often with a focus on helping a central team to standardise strategy for local teams to execute.

As we see the US and EMEA move further toward this hybrid model—with certain elements of the programmatic mix brought in-house and others involving best-in-class suppliers—there are signs that APAC will also follow suit.

Although many countries still hold firm to their traditional values, western culture continues to gain influence, and other socioeconomic factors, such as the pandemic, mean audience needs are shifting like never before.

As APAC becomes increasingly interconnected, the way regional and global brands invest in digital will continue to evolve at pace, providing a truly exciting opportunity for those that move away from a local approach to media management and towards one that is centralised.

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Jasmine Ong is client operations director at Kepler in Singapore.