According to the findings of the 2008 Heidrick & Struggles’ Asia Digital Marketing Survey conducted by Aha! Research (report publicly released by H&S), there is no shortage of interest and intent to explore digital advertising options. Yet, spending – so far – has failed to keep pace with plan. For instance, while marketers in the U.S. and Europe placed upwards of 20-25% of their total advertising budgets on digital channels in 2007-2008, Asia wallowed closer to 10-12%. And while our survey respondents say they plan to increase digital ad spend to as much as 28% in 2009, evidence of this is spotty at best.
Add to this the uncertainty of the current global economic climate, and the debate heats up as to whether it is best to “go digital” or remain conservatively attached to the more traditional TV, newspaper and outdoor advertising options. In late October, when our survey results were coming in and the scale of the financial crises was dawning, 47% of respondents anticipated that world events would “moderately” impact their 2009 marketing budgets, whereas 27% expected that it would “significantly” affect them.Funding is not the only thing that has – or could – limit digital ad spend in coming months. Marketers throughout Asia confess only limited comprehension of digital marketing and its inherent benefits. Others say that media planning or creative agencies remain poorly equipped to handle their digital marketing and advertising needs. In other words, 2009 is lining up to be a pivotal year for digital marketing in Asia, where marketers will either get onboard the digital bandwagon and spend in new, innovative, and cost-effective ways, or retreat to the safe – albeit less interactive – TV, radio and print mediums.
Survey Objectives
The objectives of our survey were:
- To explore regional marketing dynamics across all sectors as it relates “digital”
- To seek an explanation as to why “digital” spend is low relative to total marketing spend in a region where web and mobile penetration is ubiquitous
- To collect insights as to how regional “digital” marketing will evolve in coming years specific to investment, tools and key focus areas
- To understand the linkage between expected trends in digital marketing and the skills/people required to drive its development
We asked high-ranking marketers around the Asia-Pacific region how they felt about digital media, where their ad spend was flowing, and what – if anything – was holding back investment in digital ad campaigns. While our findings reveal key issues, they have also raised a number of questions, which we hope to unfold for you in the weeks and months ahead.
Survey Results
Heidrick & Struggles and Aha! Research surveyed 92 different firms across a spread of industries. The majority of respondents were employed in the FMCG sector and worked for multinationals with large marketing departments of 50 or more staff in their marketing teams (47%). About one-third (30%) of the sample had a marketing budget exceeding US$40 million a year. The survey sample enjoys very strong geographical or business links to mainland China. With the most Internet users in the world and a burgeoning middle class, China is tipped to continue to be a driver of world growth, even during the current downturn.
In its 2008 Annual Yearbook, the Asia Digital Marketing Association (ADMA) reported that 87 percent of its pan-Asian membership had a marketing budget for digital media. About 15 percent of total ad spend was devoted to digital. It is important to note here that ADMA’s membership represents that portion of the Asia marketing community already sold on digital’s attributes. A more general slice of the marketing community shows that overall knowledge of digital marketing is much lower.
Even so, the proportion of budget devoted to digital is increasing. In 2007, our survey found that 11 percent spent more than a third of their budget online, mainly on display advertising and EDM (Electronic Direct Mail). In 2008, 75 percent of our respondents said their digital budgets would increase. 28 percent of respondents said they would devote a third or more to digital marketing this year.
Overall, digital ad spend was closely linked to prior experience with new media. The more experience our respondents had, the more likely they were to employ digital media in the execution of their ad campaigns.
Prospects For Digital Ad Spend
While the trend line for digital ad spend is on the rise, the current economic distress lends a cautionary note. In times like these, overall marketing budgets tend to shrink. It is difficult to say what impact this will have on digital. If presented as a lower-cost and more accountable channel, there is a chance that digital could trump traditional TV, radio and print as marketers allocate this year’s budgets.
Still, our survey findings suggest that beyond funding, three key issues linger and threaten to hold back widespread digital spend:
Survey Results
Heidrick & Struggles and Aha! Research surveyed 92 different firms across a spread of industries. The majority of respondents were employed in the FMCG sector and worked for multinationals with large marketing departments of 50 or more staff in their marketing teams (47%). About one-third (30%) of the sample had a marketing budget exceeding US$40 million a year. The survey sample enjoys very strong geographical or business links to mainland China. With the most Internet users in the world and a burgeoning middle class, China is tipped to continue to be a driver of world growth, even during the current downturn.
In its 2008 Annual Yearbook, the Asia Digital Marketing Association (ADMA) reported that 87 percent of its pan-Asian membership had a marketing budget for digital media. About 15 percent of total ad spend was devoted to digital. It is important to note here that ADMA’s membership represents that portion of the Asia marketing community already sold on digital’s attributes. A more general slice of the marketing community shows that overall knowledge of digital marketing is much lower.
Even so, the proportion of budget devoted to digital is increasing. In 2007, our survey found that 11 percent spent more than a third of their budget online, mainly on display advertising and EDM (Electronic Direct Mail). In 2008, 75 percent of our respondents said their digital budgets would increase. 28 percent of respondents said they would devote a third or more to digital marketing this year.
Overall, digital ad spend was closely linked to prior experience with new media. The more experience our respondents had, the more likely they were to employ digital media in the execution of their ad campaigns.
Prospects For Digital Ad Spend
While the trend line for digital ad spend is on the rise, the current economic distress lends a cautionary note. In times like these, overall marketing budgets tend to shrink. It is difficult to say what impact this will have on digital. If presented as a lower-cost and more accountable channel, there is a chance that digital could trump traditional TV, radio and print as marketers allocate this year’s budgets.
Still, our survey findings suggest that beyond funding, three key issues linger and threaten to hold back widespread digital spend:
- A lack of knowledge is preventing marketers from spending on digital. It is our assertion that top-line managers and CEOs fail to grasp the medium’s relevance
- The metrics used to measure ROI are convoluted and can be difficult to compare across different campaigns. Ironically, the proven matrix for TV and print are even less reliable than digital given the “non-interactive” nature of these traditional mediums
- Large marketing departments lack the in-house talent to deliver and measure a digital campaign. Specialist agencies are the drivers of digital media, and generally provide a standard of work that is well received by their in-house project managers
In The Digital World, Knowledge Is Power
Central to our research is the finding that a company’s leadership is more likely to be involved in digital marketing if they understand how digital media works. The Internet is still a relatively new channel for connecting to consumers, so we understand why some CEOs may not have fully grasped its power. Even so, those leaders, who take the time to understand how it all works, stand to reap the rewards.
The survey revealed three expertise groups among marketing decision makers; The Experienced, The Inexperienced, and The Naïve. About 22 percent of the survey sample said they had either a good or very good understanding of digital marketing. About one third said they enjoyed a “good” level of experience. By far the biggest group was ‘The Naïve’ – a whopping 44 percent of respondents.
When asked why they had not to date spent more on digital marketing, Asia Pacific marketers claimed that budgetary constraints were holding them back. When pressed further, they confessed that without sufficient knowledge and the right skills in place within their organizations, they remained reluctant to take the digital plunge; a situation further compounded by the fact that most marketers felt that agencies – upon whom they depended – also lacked the appropriate digital skills and execution know-how.
So it remains that finding the right people – either internally or externally – is a major hurdle. Digital is at the cutting-edge of marketing. Trying to understand a unique and diverse marketing channel such as digital requires time and commitment. Our findings show that those who have had a uniform positive experience tend to direct more of their budgets towards digital. To back that finding, smaller, younger companies (we define them as firms with less than 50 employees) are significantly more likely to use digital compared to medium or large firms. There is a generational gap at play here as well. The fact remains that a new generation of consumers – the ‘Y Gen’ and the ‘Millennials’ – do not use media in the same way that their parents did, and a new, younger generation of marketers know this. The MySpace generation watches YouTube, not cable TV. They chat on Instant Messenger, not email. If brand managers want to interact with them – and interact is the key word here because you cannot broadcast a message to this generation of consumers – then digital is a key component. On the other end of the spectrum are large, multinational organizations. Our survey suggests – perhaps not surprisingly – that larger budgets and in-house resource breed greater marketing experimentation – particularly in all areas digital. We found that companies in Asia with more than 50 marketing professionals (47% of the survey sample) are more likely to experiment with digital, while those with medium-size budgets and limited autonomy are less inclined to innovate and more inclined to stay in line with status quo marketing mediums.
Marketing In Cyberspace: Mitigating The Risks
Big dreams, hot money, Internet start-up, Internet boom and Internet bust. This is an industry that promises to deliver much but has a chequered past. No wonder many organizations are reluctant to invest.
The survey asks decision-makers why they had not devoted a bigger slice of their ad spend to digital. Many said they doubted the reliability of statistics and measurement metrics used by digital marketers, and questioned the effectiveness of digital marketing over traditional advertising media. Indeed, the metrics used in digital marketing are far from complete. A McKinsey & Company study from June 2008 found a trio of reasons to explain the problem of metrics on the Web; constantly evolving technologies, inconsistent ways of measuring share, and an industry reliance on media models that just do not apply to the Internet. They also found that marketers who effectively plan and understand what it is they are trying to do, and who
target a specific demographic, appears to be highly satisfied with the results of their campaigns. Experience, it seems, rules the day. Is it that seasoned “old media” marketers failed to understand that a range of metrics can be used to measure outcomes online? Is it possible that mature marketers failed to grasp that a TV-style ratings system does not apply online? And if there is a generational divide in Asia’s marketing community, do younger marketers feel that digital is more accountable, and ultimately more effective? In fact, our survey reveals a strong correlation between digitally well-versed marketers and their propensity to depend on Web and mobile channels.
Despite evidence to the contrary, old school marketers hold fast to the idea that traditional marketing offers a better brand impression or returnon- investment. This group holds to the belief that “consumers ignore online advertising”. When we consider that by some estimates, consumers are bombarded with between 245 to 3,000 commercial messages each day, such a position might seem reasonable. In reality, heavy users of Internet, email, mobile phones and other forms of interactive mediums are quite amendable to online advertising. Interactive messages, they say, can be intimate, relevant, and even entertaining. If well-conceived, an engaged consumer remains open to “brand” messages, and that means a higher probability of retention or conversion
Digital Talent In Short Supply
When asked why some marketers resisted the draw to digital, a range of reasons was given. “Most marketers are not equipped with the right skills,” said some. “Finding a good B2B digital agency,” was noted as cause for concern. Still others said: “Getting the right people” and “finding the right expert marketers” remained barriers to new digital investment.
Across the board, one of the greatest weaknesses the survey uncovered was the lack of creative digital skills in the market. Among the survey’s Experienced group, respondents agreed that creative talent was in short supply. They felt that the digital talent required was unlikely to be found within the Asia Pacific marketing community. In its absence, regional marketing organizations say they will continue to look to creative agencies and media buying organizations to provide them with the digital skills and know-how that they require. Indeed, our survey findings suggest a strong correlation between the strength of these vendor-marketer relationships and the subsequent degree to which marketers are inclined to invest in digital media, suggesting once again, that knowledge and trust in this emerging media leads to greater
investment and digital ad spend.
Summary
Make no mistake, digital marketing is on the rise. Even so, Asia Pacific marketers are holding back, largely due to:
- A general lack of understanding that prevents decision-makers from investing more
- Unease with metrics used to measure today’s digital campaigns
- A shortage of skills or lack of confidence sufficient to create successful digital marketing campaigns.
The key to all these problems is education. Marketers owe it to themselves and their brands to explore the diverse opportunities that digital provides. Research also shows that without support and patronage from an organization’s senior-most executives, digital investment lags.
The point is, like all things, consumer tastes, preferences, and advertising tolerance have changed. A new generation of consumers who gather news and entertainment via laptops and mobile phones, are less inclined toward TV ads that broadcast a myopic message, and are more inclined toward brands that seek consumer input and participation across a diverse array of mediums. For those who seize the challenges of interactive marketing, innovation and experimentation will remain the hallmarks of change. For laggards, the end of your marketing days may be at hand.
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