No brand can ignore the reality of the digital revolution, according to “The State of Digital Advertising: APAC,” a new report by Adobe Digital Insights (ADI).
Based on analysis of aggregated and anonymous data from across the region, the report projects greater competition among companies vying for consumer attention online. Some of the highlighted trends include sharp increases in digital advertising costs and a lag in uptake of personalisation and programmatic ad spend.
Ad Costs Skyrocket
Digital advertising costs are still rising, as are search costs, which have risen at twice the level of inflation over the past two years, the report found. ADI lead analyst Anthony Power said search typically takes up a large proportion of an advertiser’s budget, and garnering online attention is costing brands more.
“Since Q4 of 2013, APAC inflation has increased by 6%, while desktop costs, CPC, increased at almost twice that rate to 11%. More expensive still is the 16% cost increase for mobile,” Power stated, adding that rising search costs are putting more pressure on marketers because it’s likely that “the advertising budget itself isn’t growing that fast.”
Still, the report points to search as a tried-and-true channel for acquiring site traffic. Contrary to trends in the U.S., search traffic continues to outgrow spend in Asia.
“Advertisers have increased spend on search by 6% over the past two years, and site visits driven by search have increased by 30%, indicating more bang for their buck,” the report states.
It does note, however, that website traffic, despite being on the rise, was on a trajectory to flatline similar to trends seen in the U.S. and Europe.
“Digital makes it easier to ‘shop around,’ and with organic growth slowing, competition to gain and keep customers is fierce,” the report stated.
Digital Disconnect Deepens
The disconnect between brand and consumer may actually be widening, the report reveals, because marketers might be overstating their capability to deliver relevant and engaging advertising to consumers. “Less than half of consumers surveyed think advertisers are doing better than they were two years ago,” the report states.
ADI also found that advertisers in India and Australia disagreed with consumers regarding how well they’re performing. Some 51% of Australian advertisers said they think they’re doing better in giving consumers what they want, while only 38% of consumers agreed. In India, the disparity is greater still, with 63% of marketers patting themselves on the back, while only 48% of consumers think they deserve it.
ADI’s Power pointed out that demand for personalisation exists from the consumer’s perspective, but marketers aren’t meeting most of their expectations–particularly when it comes to delivery and privacy. For example, the report found that over half of Asian consumers prefer personalisation, yet one-third of those between 18 and 34 years old and one-fifth of those 35 or older don’t believe it’s good enough.
“Everything suggests that there’s room for improvement across the board,” Power said.
Regional branding heads do have opportunities, though, given that APAC consumers are more willing to share data and trust marketers than their U.S. counterparts.
Beyond personalisation, marketers can appeal to consumers’ hearts and minds by marketing more creatively and strategically.
“When we asked consumers what type of ads most draw their attention, product benefit was No. 1, followed closely by humour and entertainment,” Power said. In addition to making them laugh, consumers also prefer brands with less frequent advertising, the report states.
Getting With The Program
Advertising is still very much a manual process in Asia. Less than one in five advertisers said they spend more than 51% of their budget programmatically, compared with one in three in the U.S.
APAC marketers, 75% of whom indicated they had underinvested in smartphone advertising, might want to follow the lead of their colleagues across the Pacific.
“There’s an opportunity for regional marketers to learn from early adopters in the U.S. about what works and what doesn’t when increasing programmatic ad spend,” Power said.