PWC - Mind the Gap - Singapore - DeC2014

8/10/2019 PWC - Mind the Gap - Singapore - DeC2014

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Digital advertisingin Singapore

Mind the gap

PwC Strategy


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1. There is a signicant media gap in Singapore today Singapore has one of the most digitally connected populations (with the

highest smart phone penetration in the world), yet levels of online advertisingare well below international benchmarks. What explains this media gap andhow should businesses respond?

2. There are four key inhibitors which are responsible for this Four common challenges are facing the industry that stie marketers from

embracing more online advertising: difculties of measurement, limitedaccess to talent, a slow mindset shift, and the relative ease of advertising with

traditional media

3. The industry can play a role in closing the gap There is much that marketers in Singapore can do to close the gap. We feature

some thought starters to overcome each inhibitor

4. Conclusion Singapore is behind its peers in the way it embraces online advertising today

but the industry is aware and the gap is closing. By 2017 online advertisingcould reach 34% of total advertising spend (up from 15% today)

Key messages

2 PwC2 PwC

In order to understand the media gap in Singapore, GoogleAsia Pacic commissioned PwC to prepare this independent

report. The results have been discussed with Googleexecutives, but PwC is responsible for the analysis andconclusions.

We have interviewed top marketing and media agencyexecutives in Singapore from June to August 2014. Interviewtopics included advertising mix by media type, onlineadvertising mix, inhibitors of digital spend and growthopportunities for online advertising.

We have focused on online advertising spend in thetelecommunications, retail, and nancial services industriesfor the purpose of this study.

Both Google Asia Pacic and PwC are pleased to presentthese ndings in order to provide a better understanding ofthe media gap in Singapore.

About our study


3/12Digital advertising in Singapore: Mind the gap 3

There is a media gapin SingaporeSingapore has one of the highest rates of digital consumption in the world with 40% ofmedia time each day spent online1. Singapore has recently overtaken Japan and SouthKorea to have the highest smart phone penetration in the world at 85% 2and boasts anationwide broadband network [see Figure 1].

With Singaporeans adopting digital at suchpace, it is surprising that Singapore has oneof the lowest proportions of digital mediaspend amongst developed countries in the

world [see Figure 2].

Whilst, the proportion of advertisingbudgets allocated to online has grownrapidly in Singapore over the last few

years, climbing from just 7% in 2011 to15% in 2014 with a CAGR of 35%, this datastill puts Singapore far behind the UnitedKingdom, China, Australia, United ArabEmirates, USA and Japan [see Figure 3].

In our assessment, more could be done tobridge this media gap with consumersto unlock efciencies and competitiveadvantage [see Figure 4]. In this report,

we have interviewed a spectrum ofadvertisers and agencies to understand

what is holding them back. We will exploresome of the specics to Singapore and willprovide some thoughts on how the industryas a whole can address those inhibitorsto enable Singapore to achieve its digitalpotential.

1

We get a lot of clients thatreally should spend more on

digital advertising but choose tostay in their comfort zones

Media agency

In all countries we seea lag from shift in mediaconsumption to ad spendonline. But Singapore seems to

be the slowest! Media agency

There will always be a rolefor press and magazines inobtaining reach and creatingawareness.

Telco

_____________________________________________________________________________________________________________________________________________________________________

1 Statista. Daily Time Spent with Select Media in Singapore from 2007 to 20132 TNS. Global Consumer Barometer Research 2014


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50%

0%

UAE UK China Australia USA Japan Singapore Hong Kong

Source: PwC Entertainment & Media Outlook, PwC interviews (Singapore)

Figure 2: Online advertising as a proportion of total advertising spend, 2011 , 2014and 2017 (%)

53%

30%

40%

31% 33%

40%

46%

27%29%

25%22%

19%15%

7%

Growth rate of online advertising spend p.a. 20112017

n2011 n2014 n2017F

n% media time spent per day n% advertising spend

Internet TV Radio Print

Figure 4: Time spent with media per day vs. advertising market in Singapore, 2014 (%)

15%

39%

2025%29%

>5%

23%

4045%

10%

Source: PwC interviews (Singapore), Statista

nHong Kong nSingapore nUAE nUK nUSA nAustralia nJapan nChina

200%

100%

0%

Fixed broadband Mobile internet Smartphone

Source: PwC Entertainment & Media outlook

Figure 1: Broadband and smart phone penetration rates, 2014 (%)

Figure 3: Advertising spend by format, 2014 (%)

Source: PwC Entertainment & Media Outlook, PwC interviews (Singapore)

nOthersnOut of homenRadionMagazinesnNewspapernTVnOnline

100%90%80%70%60%50%40%30%20%10%

0%

60%

50%

40%

30%

20%

10%

0%

18%

34%

24%

6%10%11%11%

47%

41%

21%

49% 14% 29% 19% 14% 7% 35% 25%

UK China Australia UAE USA Japan Singapore Hong Kong



Source: PwC interviews

measurement metrics

Limited supply of digital talent

Slow mindset shift in education

Relative dominance of traditional media

68%

64%

59%

45%

Inhibitors of onlineadvertising2

Poor understanding of

In our interviews [see Figure 5], we saw four common challenges facing the industrywhich stie marketers from taking the leap. 68% indicate poor understanding ofmeasurement metrics is one of the key barriers. Next, limited supply of digital talent ishighlighted by 64%, closely followed by mindset shift at 59%. Unique to the market is therelative dominance of traditional media registered by 45% of interviewees.

Lets explore these in more detail.

Figure 5: Why arent Singapore businesses spending more on online advertising? 2014(% of interviewees)


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MeasurementOne of the benets of online marketing is the

ability to measure data, but this can become adouble-edged sword and gives rise to informationoverload. For all but the most sophisticated onlineadvertiser, marketers struggle to lter the plethoraof data into a killer business metric, making itdifcult for senior management to interpret. Whilstmetrics showing the impact of traditional mediaare far from perfect (e.g. Gross Rating Points),the industry has worked with this for decades andonline needs a bridge.

Talent

Online advertising is seen to be more complicatedto manage than traditional, requiring bothanalytical and creative skills. As a new profession,there is a shortage of this depth of talent inSingapore. As a result, marketing teams plus theiragencies are frequently competing in a smallpool not only with each other but also with techcompanies for talent. The dilemma of upskilling

versus importing proven talent is an ongoingchallenge.

Mindset shift

Digital marketing requires a fundamental changein mindset and a willingness to learn. CEOs usedto seeing broadcast media need to understandthat not seeing an online advert is not necessarilya bad thing as they are unlikely to be the targetaudience themselves. Winning in digital requires adifferent mindset, and an altogether different wayof managing communication. Traditional campaignbursts are being replaced by always-onstrategies ongoing processes of hyper-targetedengagement, analysis and renement. The Boardand other stakeholders have to be bought-in tothis fundamentally new way of connecting withconsumers for the shift to happen.

Traditional media defaultSingapore stands out amongst its internationalpeers for its highly consolidated traditionalmedia landscape, led by print. This makes it alltoo easy to default to traditional media with asmall number of relationships, straightforward

visibility and simple pricing. By comparison, onlinemedia is seen to be more complicated requiringmultiple relationships, greater effort, and more risk

venturing into the unknown.

I was questioned by

my Board who were

worried about reachas they do not seeour advertisementsanymore. I told themthat this was a goodthing because theyare not young orfashionable enoughto be in our target

audience!

Financial services provider

Online is easiest to

track but we face theproblem of informationoverload. It is alsohard to integrate withtraditional mediametrics.

Financial services provider

I dont know whethera digital advertisingrecruit should be acreative type or ananalytic type.

Retailer

It is cozy and easy tobuy newspaper ads.

There is one key playerand I will not haveto spend on multiplenewspapers becauseI am certain that this

will reach a millionpeople Telco



Closing the gap3There is much that marketers in Singapore can do to close the gap. Here are some thoughtstarters to overcome each inhibitor.

Inhibitor 1: Measurement developing meaningful business metricsfor digital

Problem Solution

Knowingwhich KPIs

to track

With the volume of information, knowing which Key PerformanceIndicators (KPIs) to track is an important step. Bridging to the

business is the best place to start. One way to do this is to mapyour key business objectives and understand the digital leversassociated with each of these objectives in order to prioritizethe metrics that matter sales revenue, cost savings, customersatisfaction. For example, digital reach and web trafc canimpact store sales; cost reductions can be driven by increasingcustomer service queries answered online vs. call centers;customer satisfaction could be measured by sentiment analysis.

KPI goalsetting andtracking

With key objectives and online levers dened, marketersneed to establish baselines as a starting point and set goalsagainst each measure. For example, several metrics might be

indicators of revenue health: actual revenue, average revenueper transaction, or purchase intent for non-ecommerce tasks(such as brochure downloads, video views). For cost savings,

we might look at the number of tasks completed online vs.ofine and associated productivity gains. Customer satisfactionthrough advocacy or net promoter score. Marketers should avoidoperating in silos and also look to model digitals impact ofineusing studies such as econometrics to provide an Omni-channelperspective. This will help subject ofine spends to the samelevel of scrutiny as online spends and vice versa.

With KPIs set, putting standard tracking on all media and digital

assets is straightforward, the key being to establish a baselineand targets from the get-go. This can be done using paid orfree tools such as Omniture or Google Analytics alongsideproprietary business feeds such as sales data.

Publishing this information into an Executive scorecard orreport that is easily interpreted by management on a regularbasis helps educate and drive a common language across thebusiness with digital as a part.

Visibilityinto online

peerbenchmarks

Demand your media agencies, media owners and industrybodies such as the IAB (Interactive Advertising Bureau),

SiTF (Singapore Information Technology Federation) orSRA (Singapore Retail Association) to provide benchmarkson industry relevant KPIs. Digital spend levels and IndustryConversion Rates would be a useful starting point.


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Inhibitor 2: Talent strategies to integrate digital competency into

the workforceProblem Solution

Digitalleadership

For companies unsure of which talent to prioritize, an option,in the early days, is to consider putting a Chief DigitalOfcer (CDO) in place, mandated to drive the digital chargeacross digital media and digital customer experience for theorganization. This role should be an experienced digital leaderoften from outside the industry reporting to the Executive Teamand be held accountable for the strategy, approach to talentand success metrics. This change agent will be responsible forbuilding out digital capability as a whole.

Digital talentstrategy:upskilling

versusimportingtalent

In our assessment, the key factor to determine whether toupskill or import talent is speed of ambition and typically,a hybrid approach is best. For companies seeking a moreaccelerated approach to embracing digital, importing talentis by far the fastest way to drive change. Under the guidance ofa CDO, an organization can build up capabilities in parallel

with the day to day running of the business. In the early stages,companies will focus on highly specialized roles such as searchexperts, data analysts and social media managers.

Over time, these roles will evolve into media performance

experts, business managers and community managers. Creativefunctions will tend to sit outside the organization with thecreative agencies that develop assets and drive the contentstrategy.

For organizations, wanting to take a more evolutionaryapproach to talent development, there are a few ways to up-skill:

Secondments or job swaps:Import talent from eithermarketing partners or from more advanced digital marketsand embed them in the organizations network into clientmarketing departments to drive on the ground learning. This

can be on a 3, 6, 12 month basis. Internships:Immerse digital native undergrads or post-gradsfor a 3 month minimum onto live projects to kick start andinject know-how and fresh thinking into marketing teams. TheSingapore Government has offered support for Company LedTraining (CLT) programs in the past and is worth exploring

Industry training and certifcation:Develop programs eitheronline or face to face to equip marketers with condence,access to a community and meaningful qualications.Organizations like Hyper Island, SiTF or the IAB provide agood starting point.


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Advertisers, agencies,media owners, the

industry bodies andgovernment needto work together to

support the industry

We believe that advertisers, agencies, media owners and industry bodies have asignicant role to play to enhance the ecosystem. While advertisers will inevitablychange their mindset on digital platforms, media agencies need to support this changeby providing more robust digital solutions, with a scientic impact assessment. Themedia owners would have to make implementation easier by simplifying the options andusage terms. Industry bodies and government will need to continue to play their role incoordinating and consolidating efforts. More importantly, all stakeholders would need tocome together to help develop online advertising in Singapore.

Figure 6: Digital advertising stakeholders and suggested roles

Agencies Making digital advertising

easy by helping clientsovercome the complexityand fragmentation ofonline media

Encourage spend on digitaladvertising by advisingclients on using digitalsolutions in integratedadvertising strategies

Media owners There is an important role to

play in consultancy and talentdevelopment increase industryeducation & communication

Making the case for digitaladvertising by providing robustsuccess stories for SEA

Focus on a small number ofsimple, easy to use productsand tools

Industry bodies andGovernment

Provide access to moredigital talent Coordinate industry

efforts to set baselineindicators

Advertisers Alter advertising spend to be

more in line with Singaporepopulations media usage

Change mindset of boardmembers to focus onengagement with targetcustomers, not broadoutreach

Alter perception that digitaladvertising is a driverof only e-commerce, itcan have a broader role ofengagement & brandbuilding



Conclusion4Singapore is behind its peers in the way it embraces online advertising today but theindustry is aware and the gap is closing. We believe that the industry overall could bedoing more to address the four key barriers, particularly meaningful measurement, talentnurturing, developing a higher propensity for risk taking and experimentation in digital.With Singapore publicly stating its Smart Nation strategy, we expect that in the nearfuture, the importance of mastering digital will become even more important for marketersand laggards will be at risk. We also believe that the growth of e-commerce will forcetraditional companies to embrace digital faster for threat of losing share of wallet. Alreadythis is being spurred with a list of new entrants in the grocery, retail, tech and luxurysectors. If digital advertising in Singapore continues to grow at the historical rate of recent

years (35% per annum), that would imply reaching 34% of total media advertising spendby 2017, up from 15% today. This will bring it closer in line with international peers, butstill some way behind the most digitally advanced.

Digitaladvertisingspend

(US$m)

Figure 7: Illustrative forecast digital advertising spend in Singapore, 20092017 (US$m)

4% 5% 7% 8% 9% 15% 20% 26% 34%

Online advertising as a proportion of total advertising spend

2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F

700

600

500

400

300

200

100

52

77109

136162

270

364

492

665


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2014 PwC. All rights reserved.

About PwC

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Please see www.pwc.com/structure for further details. PricewaterhouseCoopers refers to the network of member rms ofPricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. In the context of

this report, unless otherwise indicated, PricewaterhouseCoopers LLP or PwC refers to the Singapore entity operating as

PricewaterhouseCoopers LLP.

Disclaimer

This report has been prepared using information provided to PricewaterhouseCoopers LLP and available at the time of preparation ofthis report. PricewaterhouseCoopers LLP does not accept any responsibility for any reliance placed on this report by any person andhereby disclaims any liability for any loss or damage caused by errors or omissions, whether such errors or omissions resulted from

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independence of the research and independence of the analysis contained in this report. Please notify PricewaterhouseCoopers LLPof any errors or omissions identied in this report.

www.pwc.com/sg

Key contacts

Greg Unsworth

Partner, PwC Technology, Media and

Telecommunications Leader Singapore

+65 6236 3738

[email protected]

Oliver WilkinsonDirector, PwC Strategy

+65 6236 3302

[email protected]

Documents

PWC - Mind the Gap - Singapore - DeC2014