Is Online Marketing in Malaysia Dead Before It Even Started?
|‘Hi, how could I help you promote your brand online?’|
|‘I don’t think the Malaysian market is ready for online marketing.’|
|‘How so? There has been a paradigm shift in media consumption patterns today, with a large number of eyeballs migrating from traditional media to online media via devices with Internet capability.’|
|‘I still don’t feel the Malaysian market is matured enough for online advertising and purchases…’|
Having begun operations in Malaysia for a while now, we have discovered that companies in Malaysia are still not receptive to online marketing, which is surprising. Digital media in Malaysia is poised for explosive growth and has begun to gain prominence as a digital media hub within Asia. Online marketing represents the next frontier and companies neglecting it risk being left behind.
For those who have been actively harnessing the powers of online marketing, they have reaped the rewards, in terms of increased sales, ROI, and brand awareness. Case in point: AirAsia (will explore in further depth at the end).
Let’s us now look at some figures of the Malaysia market to set the context for this article.
- 12.13 million Facebook users, representing 46.37% of population, which makes it the 17 largest in the world (2011)
- 1.13 million Twitter users, representing 4.32% of the population (2010)
1. Industry Analysis – Trends
1.1 Increase in Internet Users as Percentage of Population
The increase in Internet users as percentage of Malaysia’s population can be attributed to increased access to broadband networks, a proliferation of WIFI sites, and a burgeoning household ownership of mobile devices with Internet capability, as can be seen from the image below.
Based on the Nielsen’s Southeast Asia Digital Consumer Report 2011.
This has engendered a reshaping of the media landscape with the surge in digital media consumption, which is now surpassing traditional media such as TV, radio and print.
1.2 Digital Media Consumption
Users utilise digital media for a variety of reasons, and one key trend we have picked out is the influence of web advertising on consumers.
According to Nielsen, South East Asian (SEA) consumers are highly influenced by online advertising.
- 73% of SEA consumers said they were “highly” or “somewhat” influenced by web site advertisements on social media
- That number rises to 80% when ads have a social context, such as indicating which of a consumer’s friends have liked or followed the advertised brand
- 74% saying they found ads based on previous purchases or other web sites visited “made their lives easier”,
- 69% SEA consumers have “liked” or followed a brand or company on social media
Based on these stats alone, it may seem that online advertising in Malaysia is ineffective, as 36% of Malaysian consumers are “not at all influenced” by web advertising, 2nd highest in the region, behind Singapore.
However, going beyond the surface, we can actually infer that digital maturity in Malaysia is catching up with Singapore, the most wired nation in the region.
This is because as consumers use the web more, they are exposed to more online ads and as such, become desensitized to them overtime. This implies that more Malaysians are going online and using the digital space more.
2. Current Situation
However, many Malaysian companies today are surprisingly not riding the wave of digital media consumption.
According to McKinsey & Co, businesses in Malaysia allocate only 1% of their advertising budget for digital media. “There is a disproportionate share between businesses’ advertising budget in a particular media and the time that consumers spend on a particular media”, as Google’s Malaysia country head Sajith Sivanandan sums up this dire situation.
Juxtaposed against the UK market, we witness a stark difference as businesses there spend about 25-30% of their advertising budgets on digital media.
Realising that such a huge disconnect could cost businesses dearly, the Malaysian government has introduced initiatives such as the “Get Malaysian Business Online” programme by the Malaysian Communications and Multimedia Commission and Google Malaysia to enhance the development of the online ecosystem.
So why are Malaysian companies unreceptive to online marketing? Below is a list of plausible reasons we have identified from discussions with clients.
3.1 Clients Believe That the Malaysia Market is Not Mature Enough for Online Marketing
This is a common refrain, which still maintains that consumers want to “touch and feel” products before they buy, and do not feel safe entering credit card details online.
This statement is not exactly devoid of credit; however, the trends aforementioned clearly portray the burgeoning influence of digital media on purchase decisions, with the need for “touch and feel” shifting towards a “hassle free” shopping experience online.
According to Paypal’s “Online and Mobile Shopping Insights” , there are 1.1 million Malaysians shopping online, spending RM1.8 billion in 2010 and is set to reach RM5 billion in 2014. Although the study concluded that E-commerce in Malaysia is in its early stages, it has strong growth potential. (For more detailed Malaysia online buying behaviour, refer to this article.)
This, is precisely the best time for a company to get stuck in and establish its online presence early, which can be a key competitive advantage against competitors who do not delve into the online space.
Vast majorities of consumers from Malaysia (report from Nielsen) also indicate that they read product reviews online, and they participate in active discussions about brands and products on both social media and forums, reflecting the influence of digital media on purchase decisions.
3.2 Businesses Shirk their Marketing Responsibilities
Through our discussions with clients, it is clear that businesses prefer to focus on their operations, and leave marketing strategies and implementation wholly upon traditional media agencies they have partnered with for convenience sake. This leads to the next problem.
3.3. Traditional Media Agencies are Not Proficient in Online Marketing
As businesses pass on marketing responsibilities to traditional media agencies, it is little wonder why these agencies would prefer sticking to advertising in traditional media.
Furthermore, it takes time to be proficient in online marketing – a rough estimate of 2-3 years of learning and consolidating extensive online marketing knowledge, and another 2-3 years of running active online marketing campaigns.
Hence, for traditional media agencies which proclaim to engage in online marketing, their lack of knowledge and experience may prove to be a major stumbling block towards implementing successful online marketing campaigns.
4. Implications on Businesses
Having discussed at lengths how consumers are increasingly engaged with digital media, companies that do not engage in online marketing lose out on brand promotion and the chance to build better customer relations, as online marketing offers two way communications and a plethora of other features.
Another key implication is that businesses miss out on the ability to track and measure the performance of their ads. With online advertising, everything can be tracked, such as the click through rate (how many visitors clicked on your ad) of your ad.
More significantly, when results are measurable, improvements can be made immediately. This is done by the split testing of ads (rotating ads), and choosing the ads with the highest click through rate, with ineffective ads culled as soon as possible.
Businesses will hence be able to enjoy higher sales, and progressively increase the value of every advertising dollar. Not to mention, online advertising budgets are already markedly lower than traditional advertising budgets.
5. Case Study – AirAsia
So how did AirAsia founder, Tony Fernandes, turn AirAsia from 2 planes in 2002 to a fleet of 86 aircraft flying 30 million people today?
“New media and social networking have become integral parts of AirAsia’s growth. They help in our initiatives to socialize with key stakeholders and correspond with them in real time. These are definitely areas we’ll be getting much more aggressive in. We’re aware of the huge influence social networking wields on today’s consumers, whose use of the internet for information gathering, transactions and interactions is expanding,”
Online marketing has allowed AirAsia to overcome conventional limitations of direct push marketing for its branding, marketing and communication purposes and become the de facto leader in the budget airline industry.
5.1 AirAsia’s Strong Online Presence
- Airasia.com attracts 20 million unique visitors each month
- Blog.airasia.com is ranked as the world’s second most popular blog site by an airline
- Tonyfernandesblog.com is the most popular blog in Malaysia by a corporate leader
- 1.4 million fans on Facebook, with localised versions for each country
- 376,000 followers on Twitter with localised versions for each country
AirAsia also maintains a presence on other sites such as YouTube, Sina, Renren, etc. For a full list, click here.
5.2 How AirAsia Utilises Online Marketing
Firstly, AirAsia uses the online space as a two way communication tool to obtain feedback, attend to queries and acknowledge complaints. This allows AirAsia to conduct market research easily, make continuous improvements and stay relevant to customers, hence cementing their place as the market leader.
Such a communication tool can also be used for PR or as an emergency response policy, as AirAsia took to Twitter when dealing with the news of its runway mishap in 2011.
Next, AirAsia uses online marketing tools expertly to execute viral marketing campaigns.
For instance, its “one million free seats” campaign set an international sales record with almost 900,000 seats being booked 48 hours after launch. Another interesting campaign was the “So You Wanna be a Pilot” campaign, which ran from March to mid-April 2009 and called for those interested in becoming pilot trainees to post their applications by blogging on AirAsia’s blog site.
You can achieve extremely powerful results online, with creativity your only limiting factor.
In short, AirAsia invites participation from the public and engages them via online tools, and this creates an extension for them to be passionate and connected to the AirAsia brand.
The impacts of online marketing can be felt in any industry and used by anyone today, from Obama’s political campaigns to even uprisings in far flung places such as Egypt. We can no longer overlook the influence of the online space.
The message that I want to bring across is that digital media represents the next frontier of human communications. However, I am not advocating that every company must engage in online marketing. What is more important is recognising how the trend will affect the respective industries and markets today and in the future. How you react today will determine your company’s position in the future.
|‘So, after our lengthy discussion, do you now see how powerful online marketing can be if used right?’|
|‘Very valid points raised, and I now see strong growth potential in the online market. What is even more attractive is I see how I can potentially cut advertising costs sharply and yet dramatically increase my sales and ROI, and it’s all within control.’|
|‘Hmm, until I see a really concrete shift towards online spending, I will maintain status quo and not engage the online medium. Who knows, maybe it is just a passing fad?’|
|‘Well, for all the skeptics out there on whether the Malaysian market is ready for online marketing, I only have this to say. The time has never been more apt to hop onto the online bandwagon. You are simply short changing your brand by keeping things status quo. Time to get out of the foxhole.’|
|Ready To Market Online? Connect with our friendly consultants and get your customers online NOW!|