Part 1: Five Areas Of Growth For Digital Marketing In ASEAN

in Digitalisation

By Gareth Davies, Nimal Manuel, Dilip Mistry and Andrew Roth, McKinsey & Company

With growth increasingly hard to achieve, Southeast Asian companies must make decisive moves in five areas of modern digital marketing to capture potential opportunities.

Over the past year, the COVID-19 pandemic has upended lives and livelihoods throughout Southeast Asia, with most countries experiencing some form of lockdown.

While vaccination drives are in rollout across the region, uncertainty looms, which has pushed consumers to shift their behavior drastically. Online purchases have increased substantially. Customers’ loyalty patterns have changed as consumer interaction with brands has become a multipronged journey.

Against this backdrop, the importance of digital marketing and how it can drive engagement and sales cannot be understated. In Malaysia specifically, companies’ digital-marketing strategies are lagging behind their ASEAN peers, while consumers are spending even more time online engaging and transacting with products, services, and brands. In a world where growth is increasingly hard to come by, digital marketing provides an opportunity to capture the next wave of growth. Capturing that value is critical for companies to achieve growth as the pandemic accelerates consumer behavior; companies will need to undertake bold and decisive moves in five areas of modern digital marketing to capture this upside.

The Pandemic Backdrop And Shifting Consumer Behavior In ASEAN Countries

As of June 2021, many ASEAN countries are still grappling with varying forms of lockdowns, with travel hindered and large-scale social restrictions still in place in some countries. The lockdowns in 2020 contributed to an expected contraction of 5.6 percent for the full year for Malaysia’s economy.1

With movement restricted, it’s no surprise that consumers were forced to change their behavior. McKinsey’s Global COVID-19 Digital Sentiment Insights Survey in 2020 shows that 71 percent of users (first-time and regular) plan to continue using digital channels to the same extent or more after the pandemic, with 25 percent of consumers saying they will increase long-term use of digital channels. As they adapt to remote working and studying, consumers’ consumption patterns will also change. In a similar manner, ASEAN surveys we conducted throughout the year found significantly more customers made a portion of their purchases online during—and after—the COVID-19 pandemic than before. In Indonesia, up to 60 percent of consumers reported an increase in intent to spend money online even after the pandemic.2

At the same time, our surveys showed that the pandemic has affected customer loyalty, with, for instance, 68 percent of Thai consumers and 80 percent of Filipino consumers trying out new brands.3 Such brand-switching makes company efforts to retain existing customers and acquire new ones increasingly critical (Exhibit 1).

Why 2021 And Beyond Will Remain Distinctly Digital For Consumers And Businesses

In response to accelerated digital trends caused by the pandemic, there is also a subsequent shift in advertising-budget spend as companies diversify their spend across paid and owned media. Customers are now spending more time and resources on owned-media channels such as websites, mobile apps, and customer-service channels. From a content perspective, there is also a noticeable increase in customer-conversion rates, with social and digital video channels driving the highest ROIs.

These structural shifts in consumer behavior vis-à-vis digital and online make digital marketing more important than ever. Effectively adopting digital marketing, however, requires a mindset shift in how organisations engage and communicate with customers, which is more science than art: it is driven by data and analytics; focused on personalisation rather than a one-size-fits-all approach; delivered via social media, as well as broadcast media; interactive and “always on” rather than static and periodic; and iterative rather than pumped out as a single campaign. On this last point, for example, our research suggests that up to 40 percent of consumers use their mobile phones to consult product reviews and prices while in a physical store. Such behavior is emblematic of the broader shifts going on within digital marketing today.

In this context, digital marketing is now a growth engine for many companies across a variety of sectors, with the ability to drive an increase of 5 to 8 percent in revenues over 12 to 18 months by capturing more online traffic and engaging with consumers more effectively. Furthermore, some financial institutions have seen up to a fivefold increase in digital sales, while telco companies can reduce absolute churn by 15 to 40 percent (Exhibit 2) and retailers can significantly increase sales. For example, Levi Strauss launched a Europe-wide digital-marketing campaign that used information gleaned from AI models.

Part 2: Five Areas Of Growth For Digital Marketing In ASEAN


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