What’s Next for 2014Asia Pacific

Welcome to the What’s

Next Trend Report 2014 We hope that you enjoy reading this report and that it inspires you for the year ahead.

At What’s Next we’re passionate about the intersections between consumer culture, business practices, the never ending march of technology and media. We believe these intersections are what drives the future .

This report explores the trends that will be created in 2014 when developments in each of those areas collide.

Letter From The Editor

Contents

CONTENTS

EXECUTIVE SUMMARY

10 TRENDS FOR 2014

WHAT THIS MEANS FOR ADVERTISERS

CONTACT

EXECUTIVE SUMMARY Projections & Trends

STATUS CONTINUES TO BE A KEY DRIVER OF ASIAN CONSUMER BEHAVIOUR. HOWEVER, WITHIN THAT WE’RE SEEING A RANGE OF SUB-SET BEHAVIOURS THAT ARE CHANGING THE MEANING OF STATUS. As Asia’s tier 2 and tier 3 markets open up further the luxury market is breaking up into two, if not three tiers. While newcomers to the category scramble for status badge logos, the experienced Asian luxury consumer is becoming more sophisticated in his choices, valuing the experience of luxury as much as, if not more than, the product itself. At the other end of the spectrum though, there is a move towards trade-up and trade-in retail formats for those entering categories such as consumer electronics for the first time.

THE SMARTPHONE CONTINUES ITS DISRUPTIVE INFLUENCE, BUT AS THE INTERNET OF THINGS BECOMES EVER MORE PRESENT THE REACH OF ITS IMPACT GROWSMobile continues to be a game changer but its influence is evolving. As the region grows in affluence more people are connecting and they are doing it via mobile: this has a significant impact on their expectations of brands. As smartphone penetration hits and goes beyond critical mass across all of Asia –even in developing markets – ‘mobile natives’ are demanding short form content, and image first communications.

Executive Summary

SMARTPHONE PENETRATION COUPLED WITH THE INTERNET OF THINGS COMING OF AGE WILL CHANGE RETAIL FOREVER. For a long time, any discussion of the impact of digital on bricks

and mortar seemed to suggest the end of the traditional shopping

experience. However, the smartphone is really the pioneer of The

Internet of Things (IoT) and as businesses begin to harness these

two areas more effectively its beginning to change the bricks and

mortar game completely with heightened experiences for

consumers reinventing the retail space.

Furthermore, the impact of increased smartphone penetration

(and to a lesser extent wearable technologies) and the IoT is

empowering consumers in their daily lives. In 2014 we’ll see the IoT

become more visible as companies begin to commercialise

technologies that intuit what you need without needing to be told.

EXECUTIVE SUMMARY Projections & Trends

10 Trends for 2014

Image Powered Web

Monthly e-Retail Formats

The Need for Short Form Content

The Polarisation of Luxury

Disruptive Force of Emerging Markets

The Mobile Empowered Consumer: Intuitive Technology

Mobile Natives

Owning the Multi-screen Mix

Changing Retail Environment

Second Hand Status

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The Image Powered Social Web

Although predominantly text-based

apps such as Line and WeChat

have had enormous success of late,

it’s fair to say that over the last 5

years there’s been significant

change in the way that people use

the internet and social media. From

almost exclusively text based status

updates on Facebook and 140

character updates on Twitter we’ve

moved, thanks to smartphones, to a

more visually dominated form of

communication online. Pinterest,

Instagram and Snapchat have

paved the way to for the image

powered web.

These days it feels like hardly a meal

is eaten without it being

documented visually somewhere on

line. There are now over 40m+ users,

& one million daily active users on

Instagram in Australia alone and

more than 100,000 downloads of the

app in China daily.

Data to the right shows the sheer

rate of growth of image centric

apps, with 27% of images uploaded

now being done so through

SnapChat.

WHAT THIS MEANS FOR BRANDS

With an increasing focus on image

powered communications brands need

to think hard about how they create

and distribute content. With imagery

fuelling how we connect, its changing

the form and functionality of websites

and evolving how we discover. Most

significantly for brands, it’s evolving

what we think of as content and

advertising with native advertising

starting to take off. Instead of display

banners, this is about promoted posts on

Facebook, videos on The Vine and

photos on Instagram.

Source: Internet Trends DII Conference, KPCB, May 2013

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002THESE DAYS IT FEELS

LIKE HARDLY A MEAL

IS EATEN WITHOUT IT

BEING DOCUMENTED

VISUALLY

SOMEWHERE ON LINE.

Monthly e-Retail Formats

With the growth of smartphone

penetration across Asia in 2013

e-commerce, and in particular

m-commerce has been a hot

topic over the last 12 months.

However, hot on its heels as

retail trend du jour is that of

monthly e-retail formats.

From beauty and cosmetics to

candy we’re seeing retailers

and manufacturers start selling

on a monthly subscription or

‘subcom’ model. As well as pre-

ordered favourites, customers

frequently receive additional

‘surprise’ items to experience

making this a great avenue for

sampling.

WHAT THIS MEANS FOR BRANDSCurrently e/m-commerce has become a

relatively standardised experience across

companies and brands. Through the

subcom model some brands are finding

an avenue for differentiation and bringing

the ‘surprise and delight’ factor back into

the transaction process.

Korean beauty brand Memebox has seen

exceptional growth through the subcom

model and now has over 100,000

subscribers to its monthly service,

equating to $2m+ of revenue. Off the

back of this success it has expanded the

service into Japan, the USA and is coming

soon to Thailand.

Source: www.techinasia.com

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002FROM BEAUTY TO

CANDY WE’RE

SEEING RETAILERS

AND

MANUFACTURERS

START SELLING ON A

MONTHLY

SUBSCRIPTION OR

‘SUBCOM’ MODEL.

The Need for Short Form Content

Sources: nVision (2013), Trendwatching.com, eMarketer, Mintel and Warc

One Second Everyday prompts users

to capture a clip of their life each

day. Each clip is then saved to a

calendar. Clips then play in

chronological order to create a

short film.

With the overwhelming amount of

content and information we now

have access to, consumers have

an ongoing need for bite size and

engaging content. Consumers are

no longer just consuming media

but also creating and sharing it

themselves.

WHAT THIS MEANS FOR BRANDS

Brands should take advantage of this

creativity and provide consumers with

ingredients and content that they can

adapt, improve and share amongst

their networks.

Making use of the creativity of a brand’s

customer-base not only produces a

better output, it also builds a bond

between brand and customer. It is,

therefore, important to provide all

communications with content that can

engage people and make them want to

share it.

Content should generate interaction

with consumers and offer them social currency - something they want/need

to share with their social network rather

than an intrusive or commonplace sales

message.

Vine requires users to tell their

stories within a very short period of

time. Creators only

have seconds to get their point

across to viewers.

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002WITH THE

OVERWHELMING

AMOUNT OF

CONTENT AND

INFORMATION WE

NOW HAVE ACCESS

TO, CONSUMERS

HAVE AN ONGOING

NEED TO HAVE BITE

SIZE AND

ENGAGING

CONTENT.

The Polarisation of Luxury

With the coming of age of T2 and

T3 markets across the region ‘luxury’

in it’s broadest sense is becoming

increasingly democratised.

Arguably, some brands such as

Louis Vuitton may have fallen into

the realm of ‘expensive mass

brands’ rather than real luxury.

For the uber-rich or more

‘experienced’ shopper this has

opened up the market to include a new tier of luxury. More

sophisticated in its out look, this new

tier is notable for its emphasis on

experience, service, story and

discretion: it’s a move away from

obvious badges that say ‘I have

arrived’, although status seeking is

still the key purchase driver.

Those who are already purchasing

traditionally defined luxury goods

are beginning to speak of luxury in

experiential terms; it’s less about

showing off your purchase and

more about having exclusive

access to unique experiences to

brag about.

WHAT THIS MEANS FOR BRANDS

Brands have the opportunity to redefine

luxury further. Its application can extend

much further beyond expensive

products where brands infuse luxury into

unique experiences.

Further to this Point of Sale enjoys an

augmented role in which the story of

where and when I bought X is as

important as the purchase itself. Status

comes from the story more than the

object. Logos that demonstrate status

through expense are no longer going to

give an ‘easy win’ in Tier 1 markets in

which consumers are now looking for

something more from a luxury

experience..

Source: McKinsey & Company, Chinese Luxury Consumer Survey, December 2012

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002ARGUABLY, RANGES

FROM THE LIKES OF

LOUIS VUITTON MAY

HAVE FALLEN INTO

THE REALM OF

‘EXPENSIVE MASS

BRANDS’ RATHER

THAN REAL LUXURY.

Disruptive force of emerging markets

The rise of middle-class

consumers in emerging markets

is leading to radical shifts in

business models and NPD.

Global brands are now

producing innovative designs,

reducing manufacturing costs

and therefore offering cheaper

entry price points. The telecom

and automobile industries have

been the first to benefit from this

and balancing the affordable

with product functionalities will

be key focus for these

consumers.

With emerging markets

accounting for nearly 50% of the

world’s total consumption and

China and India accounting for

two-thirds of this expansion

alone, brands need to continue

to identify opportunities for

growth within these untapped

markets, especially as they are

up against aggressive local

players.

WHAT THIS MEANS FOR BRANDS

For global brands wishing to extend

further into these markets, providing a

strong value proposition will be key.

The needs of these emerging markets

have the potential to disrupt entire

industries by offering cheaper entry and

price points - brands should also look for

opportunities within NPD.

Mobile optimisation also needs to be

strong for global brands operating in

these regions as, quite often, access is

mainly through a tablet or mobile

device. A test and learn culture with

optimisation needs to be implemented

now rather than later, to ensure that

brands are ready for any immediate

growth in these markets.

Sources: nVision (2013),

Trendwatching.com and Warc

Chinese mobile brand Xiaomi has

achieved tremendous growth across

the region, destabilizing the leadership

positions of big name manufacturers

through competitively priced

products and innovative sales formats

like its recent flash sales on WeChat.

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002THE RISE OF MIDDLE-

CLASS CONSUMERS

IN EMERGING

MARKETS ARE

LEADING TO

RADICAL SHIFTS IN

BUSINESS MODELS

AND THE TYPES OF

PRODUCTS THEY

ARE PRODUCING

AND AT WHICH

PRICE POINTS.

The Mobile Empowered Consumer: Intuitive Technology

Consumers feel the need to be

connected anywhere and

everywhere and expect

information to accompany them.

Smartphones are almost becoming

an extension of the consumers

themselves - rarely leaving their

side. They, along with wearable

technology will become so

ingrained in people’s lives that we’ll

eventually scarcely even notice

them. Over the next 12 months

we’ll begin to see the smartphone

used as a ‘control’ device that

manages a multiplicity of

connected screens.

The Internet of Things will also mean

that everything will soon become

connected - not just people, but

objects and places. The digital

ecosystem will develop intuitively

across platforms and devices,

making everything work together

much more seamlessly. As

consumers become more

comfortable with handing over

their data, the more personalised

technology will become.

Future technology and

connectivity will become more

intuitive, passive, automated and

require less input from us.

WHAT THIS MEANS FOR BRANDS

Moving forward, brands will have plenty

of opportunities to blend into this

intuitive digital ecosystem.

The challenge for advertisers will be

how to sync with the consumer’s frame

of mind without interrupting their task.

Thinking should be shifted from how and

where brands can advertise on mobile

platforms, to how brands can blend

more seamlessly into consumers’ mobile

lifestyles. With consumers having the

power to filter out irrelevant messages, it

is essential that brands work harder in a

more human way in order to draw

attention to themselves.

Sources: nVision (2013), Trendwatching.com and

Warc

The Galaxy Gear launched in 2013,

selling 800,000+ units in its first two

months: significantly more than

expected in spite of the current

limitations of the product. Hundreds of

other watch based devices were

introduced at CES 2014.

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002WITH CONSUMERS

FEELING THE NEED TO

BE CONNECTED

ANYWHERE AND

EVERYWHERE, BRANDS

WILL HAVE PLENTY OF

OPPORTUNITIES TO

BLEND INTO THIS

INTUITIVE DIGITAL

ECOSYSTEM.

Owning the Multi-screen Mix

From smartphones and tablets to

laptops and televisions, 90% of all

media interactions today are screen-

based. Consumers now move among

screens to get stuff done:

simultaneously and sequentially.

Smartphones and tablets have

become the enablers of two dominant

forms of viewing multi-tasking,

(although multi-screening is about

more than just those two devices).

Simultaneous ways of consuming

media are growing, such as ‘media

meshing’ (multiple devices

simultaneously used to enhance a

media experience by communicating

or interacting with what they are

viewing) and ‘media stacking’ (using

multiple devices simultaneously to

conduct unrelated tasks while

watching TV). With each mobile

device having a different role, it is

important for us to understand how

consumers use those screens:

smartphones keep us connected,

tablets keep us entertained and

computers keep us productive. With

multi-screen behaviour moving more

mainstream, it is essential that brands

own the second screen.

WHAT THIS MEANS FOR

BRANDS

Brands need to engage with their

consumers with meaningful and

shareable content to provoke

conversation, interaction and an

emotional connection.

Media should increasingly be

thought of as a meeting point and

brands need to think less about

using media based on customer

journeys & purchase funnels and

more about choosing media based

on how they can build bespoke

personal relationships and friendship

funnels.

Sources: nVision (2013),

Trendwatching.com, iab Europe,

Global Web Index, Google Think

Insights and Warc

McDonald's, created a smartphone

app to engage Chinese consumers

during the 2012 Olympic Games.

The app adopted GPS and motion-

sensor technology to allow people

to virtually 'compete' with

Olympians via a mobile game as

they watched the Games live.

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002WITH 90% OF ALL

MEDIA

INTERACTIONS

BEING SCREEN-

BASED, CONSUMERS

ARE NOW MOVING

ACROSS SCREENS

SIMULTANEOUSLY TO

GET THINGS DONE.

Mobile Natives

Source: Social Bakers October 2012

WHAT THIS MEANS FOR BRANDS

Brands need to cater for this new group

of consumers who come to the digital

world from a mobile first perspective.

Analysts are predicting that by the end

of 2014 more consumers will consume

more content on mobile than on any

other device. Considering that 90% of all

media interactions are now screen

based that’s a significant step.

Most importantly advertisers need to

remember that mobile can no longer sit

on the periphery of campaign planning.

It needs to be at the heart of what we

do. With an entirely new ‘segment’

emerging that are used to the dialogue

afforded to them by being ‘mobile

native’, as advertisers we need to make

sure that we monopolise on the power

of now and recognise that awareness

media no longer has to be a one way

conversation.

Connectivity will continue to

blossom in 2014. With the middle

classes continuing to grow rapidly

across Asia, we’re seeing that the

first thing that people want to do

with their increased affluence is

to communicate, and to

participate.

Mobile penetration is surpassing

100% even in developing

markets, with that of feature

and/or smartphones not that far

behind.

With that a new type of

consumer is emerging: the

mobile native.

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002MOBILE

PENETRATION IS

SURPASSING 100%

EVEN IN

DEVELOPING

MARKETS, WITH THAT

OF FEATURE

AND/OR

SMARTPHONES NOT

THAT FAR BEHIND.

Changing retail environment

The retail landscape is

experiencing change. While we

have plentiful opportunities to

shop online, retailers are also

giving new reasons for shoppers

to spend time in their physical

spaces.

Mobile technologies are helping

to enhance and extend the shopping experience and lines

between online and offline

shopping experiences are

becoming blurred. With

technologies that have already

been implemented like

fingerprint scanning,

360˚scanners and OOH virtual

shopping walls, it has meant

that alongside mobile apps,

smartphones have and will

further become, indispensable

pocket shopping assistants.

WHAT THIS MEANS FOR BRANDS

At a time when retailers and brands are

struggling to entice reluctant, hard-

headed shoppers, brands need to ensure

that their channels work together

seamlessly to create the best, unique

online and offline retail experience. These

channels need to help arouse consumer

curiosity by creating buzz, delivering

unique experiences. Both the physical &

digital worlds need to be connected

through all-in-one experiences.

Sources: nVision (2013), Trendwatching.com, eMarketer, Mintel and Warc

MasterCard’s ShopThis

feature helps tablet

magazine readers

purchase product

directly in-app. This then

shortens and simplifies

the consumer journey to

purchase.

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002PROVIDING

CONSUMERS WITH A

CONSISTENT SHOPPING

EXPERIENCE ACROSS

CHANNELS, HAVING

CHANNELS WORK

TOGETHER AND

ALLOWING

CONSUMERS TO

ACCESS MULTIPLE

SHOPPING CHANNELS

SIMULTANEOUSLY

THROUGH AN ‘OMNI-

CHANNEL’ SHOPPING

APPROACH

BIG NAME BRANDS

ARE

COLLABORATING IN

ORDER EITHER TO

MAXIMISE THEIR

IMPACT ON THE

MARKET OR ENTER

MARKETS WHERE

THEY PREVIOUSLY

HAD NO PRESENCE.

As Asia’s population becomes

increasingly wealthy more

people are coming to

‘affluent’ categories more

quickly than ever before.

These consumers are

becoming exposed to an

increasing number of products

on the global market and are

eager to try aspirational

brands. However, this

aspiration is set against

traditionally price sensitive

mind sets and there finds a

curious tension which is finding

expression in ‘trade up and

trade in’ retail portals.

Discounted, pre-owned or pre-

used models are bringing an

uncomfortable – or even

impossible – financial stretch

within reach.

WHAT THIS MEANS FOR BRANDSConsumers are coming to high profile,

global brands for the first time in a way

that the brand has little ability to control.

With status still being the key driver for

ownership brands need to think about how

to make the experience of buying through

legitimate retail outlets and/or ‘unboxing’

a strong enough pull to be willing to go the

extra mile financially. Maintaining control

of the brand and product experience

needs to be a key consideration.

Source: Trendwatching.com

Second hand luxury is taking off in China

thanks to stores such as Milan Station. In

2013, over 300 new secondhand luxury

stores opened in China, with sales of

approximately CNY 3 billion (USD 4.94

billion).

Second Hand Status

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What this means for

ADVERTISERS

THE CONSUMER AND ADVERTISING LANDSCAPES EVOLVE QUICKLYAND OMG IS CONSTANTLY THINKING ABOUT HOW TO KEEP UP WITH THAT RATE OF CHANGE IN ORDER TO HELP BUILD BRANDS AND DELIVER GROWTH.

Advertising is becoming more complex, less

streamlined, and harder to execute and reach

audiences at scale. Today, digital media not

only presents multiple challenges, but also

multiple opportunities to extend content and

experiences beyond traditional media norms.

Omni-channel advertising has been gaining momentum. Brands need to use platforms less

as siloes, and more as a seamless approach to

engaging with their consumers in a meaningful

way and across multiple screens at the same

time.

The rise of the smartphone, tablet and Smart TV

penetration is presenting more and more

opportunities for advertisers. The increase of

smartphone ownership has also encouraged

the emergence of new behaviours.

What this means for advertisers

WHAT’S NEXTAt What’s Next we’re passionate about the intersections

between consumer culture, business practices, the

never ending march of technology and media.

For more information, contact Sarah Yems at

sarah.yems@omnicommediagroup.comFollow us on Twitter -

@OMG_WhatsNext