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Is Online Marketing in Malaysia Dead Before It Even Started?

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By Jereme Wong on May 14th, 2012

COO, clickTRUE. Husband, father, entrepreneur. Passionate in all things digital, from latest gadgets to the hottest startup in Asia. Always sharing what he learns in life and have deep appreciation in good user experiences. Follow him @jeremewong.

in Online Marketing | 11 Comments

Me:

‘Hi, how could I help you promote your brand online?’

Client#1:

‘I don’t think the Malaysian market is ready for online marketing.’

Me:

‘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.’

Client#2:

‘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.


Some figures of the Malaysia market

Other Stats:

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.

3. Why?

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?

According to Tony,

“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.

6. Conclusion

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.

………………………………………………………….

Me:

‘So, after our lengthy discussion, do you now see how powerful online marketing can be if used right?’

Client#1:

‘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.

Client#2

‘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?’

Me:

‘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.’

 

Denial

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11 Responses to “Is Online Marketing in Malaysia Dead Before It Even Started?”

  1. Caleb says:

    Wow! This is a very good post that you have posted. Love especially the case studies that you’ve done on AirAsia.

    But was wondering, could it be due to greater political reasons as to why people are fearful to start purchasing online?

    As a young entrepreneur in singapore, i can say that it is due to ppc and seo that allows my business to have a lower operating cost and a high roi.

  2. Jereme Wong says:

    Hi Caleb, glad you enjoyed the read.

    I believe generally the consumers at large in Malaysia is beginning to embrace online. Look at the number of Groupons sites sprouting out in Malaysia, and again AirAsia is another great example. They are pushing their customers to adopt the online workflow right down to checking in your flights. And if they can live up to their tagline of “Everybody CAN fly” and making that happen, I’m sure most people have crossed the fear barrier.

    On the political front, citing the recent Bersih 3.0, with almost 300K of people rallying together for a common cause (and very much thanks to the Internet), I’m almost certain politics is not the reason. It really boils down to individuals who wish to step up and defy the status quo and once that happens, the digital industry will flourish.

  3. Jereme Wong says:

    And I’m almost certain that many successful businesses are like yourself, having discovered the beauty on leveraging Internet as an effective marketing medium!

    I can only hope that more people will be enlightened!
    Good luck to your business!

  4. Daryl Lau says:

    Very well researched and well said indeed.

    As a Digital Marketing Agency in Malaysia, we too feel the reluctance to embrace the online realm of marketing from a large number of our prospects. I agree with you that those that bravely venture into it with the right strategy today will hold a huge advantage in the years ahead.

  5. Caleb says:

    But overall i think in the SEA market, in terms of digital marketing, there’s a lot more things to do to reach the western standard now…

    Just look at sites like SEland, SEOMOZ, really feel that, we need to improve as a whole in this region.

  6. Jereme Wong says:

    Yeah, long way to go. Keep the faith. We will reach a tipping point where things will explode. ;)

  7. Chris Michael says:

    I think it’s us, the digital professionals that need the paradigm shift. We constantly ask why this brand or that company is hesitant, reluctant or plain against moving online. Every time a new technology is adopted by the public, there are brands that fail to embrace it and die off and there are other brands that ride the wave and become the next Coca-Cola or Nike. Why are we looking to the existing brands to follow us into the future, why aren’t we looking for the next Air Asia? Why aren’t we asking who the next big thing will be, a small company that radically changes the way business is done because of the availability of new mediums and becomes a big company. That’s where the action is and that’s where the money will be. There’s still no government in Asia that uses digital media to connect with its people, not just disseminate information but really connect. There’s still no automotive brand that uses online channels as communication tools. There’s still no computer hardware retailer that’s built a successful online community. If we find the fledgling versions of these, that’s where we’ll make the biggest difference and the best bucks. Come on digital folks, stop living in the past, if you want to work with a big brand, help make one!

  8. Jereme Wong says:

    Hi Chris, that’s a great point ideally, but in reality, the closest fit to those small companies that you described would probably be start-ups that believe in digital. While they are definitely leveraging on the Internet as a marketing medium, they may not have the resources compared with the bigger boys.

  9. Caleb says:

    Yeah! Agree with you Jereme… When i started my business a year ago, i started with no cash but a van given by my dad.

    It was through ppc and seo that i really leverage to help me through my business operation… Luckily the industry that i’m in the bids of PPC are relatively low, which really allows me to optimize it so that i can get a high adrank and a low cpc in the long run.

    If i were to go into those industry in which it’s CPC are relatively high, i think i’ll be booted out of the industry as i will not have the funds to play with them…

  10. Jackie says:

    Even though you can’t beat the big players for PPC if you are late or have less deep pocket, Google system is pretty fair and will allow people who have clear content strategy and good intention to help users find solutions to problems be rank high in their natural search results.

    In short, one has to be passionate and knowledge in his/her own trade/profession and generate good content on a regular basis and help people find solutions.

    This is actually a lot better than short term PPC only solution.

  11. Caleb says:

    True i agree with you… But can i say that in general most business who puts an initial investment into something new expects the returns to be fast…

    This is especially so with business owners who completely do not know anything about the web. E.g. Plumber or appliance repair business. Thus optimizing for SEO will not be an ideal short-term gain. But PPC would be…

    To add-on to it, when i started my business, my budget is only available for me to play around with PPC and not other traditional marketing effort, such as flyers or advertising in newspaper.

    Currently it’s one year from the start of my business, most of my clients are coming from both PPC and SEO which i’m grateful for.

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