Increased digitization across Asia–Pacific (APAC) and the rest of the world is driving significant growth in digital marketing. This, along with the popularity of social media, has led to the development of new business models and social commerce. What is it and how does it work? Let’s figure it out.
What is digital marketing?
Digital marketing usually refers to marketing campaigns that appear on the Internet. It can take many forms, including online video, display ads, search engine marketing, paid social ads, as well as social media posts.
Omnichannel or marketing penetration
In recent years, digital marketing has experienced phenomenal growth and has now become a necessity in the daily lives of many consumers and businesses. If we look at the 2021 statistics, global digital marketing sales stood at around $4.9 trillion, making it one of the highest-grossing industries in the world.
What makes APAC, as well as China, stand out from the rest is that due to its high take-up of online services and large remote populations these countries nowadays contain four of the ten largest digital markets. And most importantly, the number is expected to continue growing steadily going further.
Mobile apps are the key channel for digital marketing in APAC, with the survey conducted by checkout.com showing that about 63% of respondents use mobile apps as their main way for online shopping. It’s also believed that this number will only grow and the smartphone penetration in Asia will grow up to 78% by 2025.
Peculiarities of digital marketing in Asia
The digital marketing industry in Asia brings various benefits to the economy:
- It supports small businesses by reducing the time to market compared to traditional Bricks-and-Mortar stores and reducing the cost of setting up a business.
- Thanks to its high accessibility, smaller players have an opportunity to compete with larger businesses that have substantially more capital.
- It provides an extended geographical reach which allows sellers to serve customers in rural areas a lot easier than ever before.
- The boom in digital marketing supported growth in the logistics industry, increasing the digital marketing industry’s ability to serve rural customers.
The increasing popularity of online content and social media platforms, such as Instagram, TikTok, Pinterest, and Facebook, has led to the appearance of new business models, known as social commerce. With its help, nowadays the entire shopping experience from product discovery and research to checkout takes place right on social media.
Social commerce helps make shopping more of a social experience as the center of such marketing is turned towards the person rather than the product. It’s also highly beneficial to small businesses, providing a cost-effective and direct route to reach their customers.
It's important to notice here, that though people in APAC do use the most popular worldwide social media, like Facebook and Instagram, there is also a variety of platforms used most exclusively by these regions. The biggest ones of them:
- WeChat: the most well-known platform in Asia with around 1.2 billion active users
- LINE: though it’s mostly popular in Japan, this social media still has around 89 million active users each month
- Kakaotalk: by statistics this platform is used by 80,1% of South Koreans
That’s why businesses that target Asian regions should look more into those platforms to create more efficient campaigns.
Digital marketing takes the customers on a certain purchasing journey that can be broken down into 3 main stages and their subcategories:
The Pre-Purchase phase is the first stage of the user flow. Here, the customer first becomes attracted to products. It can be further broken down into discovery and product-browsing stages.
The discovery stage is the beginning of a customer’s journey which can take several
forms and which often doesn’t result in a purchase. Digital marketing platforms have traditionally offered discovery features such as platform recommendations and trending items. Or, if we talk about social media and online content platforms, discovery typically comes from social media influencers, live-streaming, and advertisements.
Following their desires in the discovery phase, the customer moves to the second stage of the Pre-Purchase phase, where they browse products or branded pages. It’s the essential part of the research where the customer is informed of their purchasing decisions. Here, one can look at images of the product, pricing, description, or reviews.
The Purchase phase is the next step in the purchasing journey after the customer has been exposed to the product and has started to research product features and pricing. Usually, payment service is integrated into the platform to enable transactions, but the transaction may also occur in person or on a seller’s website.
- Product selection
After browsing for and researching products, the customer now needs to select a product in order to begin the transaction. This typically occurs on a digital marketing platform within the purchasing journey. In product selection, the customer can also see whether an item is available, and select product features as well as the number of items they wish to purchase.
- Targeted action
At this point, the customer makes a purchase through a payment service or in person. A payment service provider processes a transaction between a customer and seller by authorizing payment via credit/debit card or another form of digital payment.
The final step in a customer’s purchasing journey is the Post-Purchase phase. This involves the fulfillment of a customer’s purchase.
Now let's have a look at digital marketing and social commerce businesses in APAC classification and outline four distinct business models that customers can potentially interact with in their discovery and purchasing journey.
Traditionally digital marketing is characterized by the type of seller and buyer involved in the transaction:
- Business-to-Business (B2B)
- Business-to-Customer (B2C)
- Customer-to-Customer (C2C)
However, the APAC industry has evolved considerably and today has introduced to market new commerce features, offering the ability to simultaneously serve the majority of seller and buyer types without having to focus on a particular form of transaction. This resulted in complexity on the boundaries between traditional player classifications — meaning that understanding how these different business models work is now more important than ever.
Models penetration by key players in APAC:
Digital marketing and social commerce are growing steadily in Asia-Pacific and China, and these countries remain major contributors to gross domestic product (GDP) today. Digital marketing offers a number of advantages that make it easier for small businesses to sustain and compete with the big established names. In addition, it has opened a window of opportunity to step up the ability to serve rural customers like never before.
Though digest marketing and social commerce are spreading globally, it's quite different in Asian countries. There are several reasons for this.
First of all, APAC is geographically diverse and each country also encompasses a variety of subcultures and subregions, where one region can have different languages and views. So each of them requires its own approach.
What’s more, unlike the most of the world APAC audience writing in ideogram, perceiving ideas through signs and symbols. Advertisements there most often consist of symbolic meaning, visual metaphors, it’s emotional and highly creative which sometimes might look unusual for other countries.
Sometimes even tone of voice can be different for this audiance. Some tone that’s considered friendly in Europe won’t be taken so in APAC.
And of course, people there use alternative channels and visuals for their advertising and products.
Digital marketing has now become an essential part of our daily lives, so it's especially important to understand it now. And H1 Marketing can help you do just that!