How Southeast Asia Leapfrogged Web 1.0 and Why Your Western Marketing Strategy Won’t Work Here

Southeast Asia has a very unique digital media landscape - here's a look at how it came to be and why it is so different.

When the Internet started taking off in Southeast Asia (excluding Singapore), the market here was already at the very tail end of the Web 2.0 wave. Users in these markets never went through Web 1.0 or really even 2.0.

By the time people finally got online, social media platforms like Facebook or Instagram already dominated the market, whereas Internet in the U.S. and most of Western Europe took off during the late ’90s and the early 2000s – these markets went through the Web 1.0/dotcom boom and bust.

Sites like Geocities and Excite provided everyone with an easy way to establish their own presence on the Web via “homepages.” Then in the mid-2000s, these markets experienced the Web 2.0 wave that provided platforms like Blogger, MySpace, and later Facebook, to create their own presence.

Back in the early 2000s, I helped pay for college by making money off affiliate ads on sites I built.

But there’s a big difference between the early personal homepages and platforms like Blogger or WordPress versus Facebook and Instagram. The latter are closed ecosystems that don’t allow users to monetize their content by putting up their own ads. Instead, Facebook and Instagram make millions of dollars leveraging user-generated content.

From Long Tail to Wrong Tail

The resulting marketing and commerce ecosystem is not the one that Chris Anderson described in his well-known 2006 book called The Long Tail: Why the Future of Business Is Selling Less of More. Instead, the shape of the ecosystem in Southeast Asia has a big head and hardly a tail at all.

The “big head” sites, such as local forums and portals Pantip and Sanook in Thailand and Kaskus in Indonesia, command the majority of ad impression volume. These sites reluctantly share the market with global players like Facebook, Instagram, and to a lesser extent Twitter.

Whereas in the U.S. there are a plethora of sites that make up the long tail such as niche sites, personal blogs, and homepages, the few that do go through the hassle of creating their own sites do so for purely financial reasons.

Most of these sites are so-called “Made for Adsense” or MFA sites that exist for the sole purpose of gaming Google into sending them traffic so they can make money off Adsense. These are hardly the sites that premium advertisers would like their ads show up on.

When I ran Google Display Network ads at LivingSocial back in 2011, I noticed that many of our ads would show up on sites with domain names similar to very popular and highly searched for brands like AirAsia or Cebu Air. These were MFA, content farm sites that were leveraging SEO to piggyback off popular search terms.

In my growing experience as the chief marketing officer for a Bangkok based e-commerce enabler, the history of the Internet and how it has embedded itself in emerging markets have had serious implications for where the advertising, marketing, and e-commerce market in Southeast Asia stands today and how marketers, such as myself, spend our brands’ budgets.

Below are the four ways that marketing in Southeast Asia has come to differ from the West.

1. The Non-Facebook Display Advertising Market Lags Behind Other Markets

In the U.S. demand-side platforms (DSPs) are a booming business but here in Southeast Asia there are virtually none available. In order for DSPs to thrive, they need ad exchanges to plug into, which in turn needs to tap into a huge ad inventory offered by publishers. There are hardly any long-tail publishers in this market due to historical reasons. Also, the “big head” sites sell direct instead of via ad exchanges due to the premium pricing they can command.

2. Affiliate Marketing Is Still in Its Very Nascent Stage

In order for a vibrant affiliate marketing ecosystem to exist, there needs to be an ample supply of both publishers and advertisers. There’s a lack of supply of publishers due to historical reasons and while the e-commerce market is taking off with rocket Internet companies such as Lazada and Zalora paving the way, the total number of e-commerce and lead generation companies whom often rely on affiliate marketing still pales in comparison to the U.S. market.

3. Performance Marketing Will Boom 

Lack of tools in the marketing toolbox forces marketers in Southeast Asia to be more efficient and creative in how they build brands and acquire customers. In display, due to the lack of DSPs, marketers here resort to dynamic retargeting platforms such as Criteo or Sociomantic to get the most out of their display campaigns. Regular Google Display Network ads or other ad network display ads make up less than 1 percent of our total spend across our clients. Instead, we opt for dynamic retargeting through Criteo or Google, which bring in better ROIs for our clients.

In addition, marketers here need to go beyond the traditional channels and look into “onsite” or “activation” marketing tactics such as automated trigger emails and onsite personalization a la Amazon.

Also, mobile messaging platforms such as Line and WeChat are way more advanced than WhatsApp and have been used by brands and retailers as one of their key marketing channels.

We’ve seen cost per order numbers as low as US$3 per order generated via Line in Thailand. Compare this to US$30 per order for some of the major e-commerce sites in the same country.

4. Lack of Online Advertising Opportunities Will Drive Publishers and Start-Ups to Look Into E-Commerce as a Means to Monetize Their Properties and Products

Because of reason number one, brand advertisers are less likely to move their advertising from offline to digital. In a mature market like the U.S. where a lot of quality display impressions are available online, brand advertisers are more compelled to start spending on digital. Due to the lack of ad money floating around online in Southeast Asia, most publishers are forced to look into other means to monetize online.

Also, start-ups are more driven toward non-advertising as primary monetization vehicle. This is exactly what happened in China, where a similar socio-technical structure resulted in companies such as Tencent and WeChat, which get more than 80 percent of its revenues from value added services (VAS) such as digital goods as well as e-commerce and m-commerce.

In Thailand, we see the exact thing happening with Line, the popular messaging app with more than 60 million users across Southeast Asia. Line’s main sources of income are selling digital stickers and brand pages. The company is also actively testing e-commerce via products such as Line Flash Sale, Line Hot Deal, and Line Shop, their mobile C2C marketplace.

Final Words

In the digital and tech space, people tend to always be forward looking, whether it’s the latest gadget or a new hot tech start-up. Rarely do we take a step back, connect the dots and evaluate what brought us here today.

However, I hope a brief glimpse at history will explain why Western marketing models are not a copy paste function exportable into other markets (as many brands believe) and will better help position your brand for its marketing growth in Southeast Asia.

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