 | Issue: | Asia-Pacific II 2013 |
| Article no.: | 10 | |
| Topic: | The connected consumer | |
| Author: | Paul Fisher | |
| Title: | Managing Director, Media, Asia Pacific, Middle East & Africa | |
| Organisation: | Nielsen | |
| PDF size: | 385KB |
About author
Paul Fisher is Managing Director of Nielsen’s Media business throughout the Asia Pacific, Middle East and Africa region. Prior to his present role with Nielsen, Mr Fisher was the Chief Executive Officer of the Interactive Advertising Bureau Australia. Mr Fisher joined the IAB, as its inaugural CEO, from News Digital Media where he held the positions of National Sales Director and Head of Integration. He was previously Group Sales and Business Development Manager with ninemsn; he previously has held several sales, management and executive roles in the radio, television and digital media industries.
Paul Fisher holds a Graduate Certificate in Change Management (GCCM) from the Australian Graduate School of Management (MBA Program). He is a Member of the Australian Institute of Company Directors.
Article abstract
Innovations in technology, growing connected device ownership, growing middle class populations and evolutions in the media landscape have paved the way for a rapidly growing and evolving technology landscape. These key trends, combined with forecasts of strong, continued, growth across Asia Pacific in coming years, indicate the likelihood of abundant opportunities for technology manufacturers, media owners and advertisers alike. Nevertheless the key to tapping into these opportunities, as always, is in understanding and addressing nascent consumer demand, especially today’s digital consumer.
Full Article
Across the Asia Pacific region, consumers’ use of technology is burgeoning. In particular, demand for connected devices has increased exponentially in recent years and is likely to continue its double-digit growth for a few more years to come.
Mobile ownership is now ubiquitous and up-take of smartphones and tablets has outstripped even the most optimistic predictions. Ever-expanding technology categories, the dramatic rise of middle class consumers in emerging Asia Pacific economies, improved services and coverage, and cheaper access costs to technology have all fuelled the availability of devices in an increasing number of shapes and sizes. Even penetration of emerging technologies such as Internet-enabled televisions, though still low, should follow a similar growth trajectory.
Technology ownership
In developed Asia Pacific markets such as Australia, Nielsen puts smartphone ownership at 65 per cent in 2012, while smartphone ownership has reached 67 per cent in South Korea, 66 per cent in China, and in Japan, 54 per cent report owning a smartphone. Developing markets in Asia Pacific such as Vietnam, Malaysia and Thailand are also showing strong penetration for smartphones – Vietnam records 30 per cent smartphone ownership, Malaysia 28 per cent and Thailand 27 per cent.
Meanwhile, amongst the major technology manufacturers, market stalwart Apple reported sales of more than 58 million iPads in 2012, and arch rival Samsung is estimated to have sold around 20 million tablets in 2012.
Notably, many smartphone users show a growing affinity towards tablets – in markets such as China, Thailand and Malaysia, around one third of smartphone users own a tablet (39 per cent, 32 per cent and 30 per cent respectively), highlighting a need to understand the interaction between the two devices and identify differences in content consumption among devices.
The middle class push
While a number of factors drive the growth witnessed in connected device ownership in Asia Pacific, such as increases in device innovation and improved services and coverage, certainly a significant proportion of the growth in device ownership can be attributed to Asia’s emerging middle class.
According to the International Monetary Fund, eight of the top 20 fastest growing global economies are in Asia. As regions such as Europe and the US continue to experience economic uncertainty, attention and investment, is turning to Asia markets, which have remained largely unaffected, to help sustain growth.
With so many markets in Asia enjoying relatively strong economic growth, an increasing proportion of their populations are joining the global middle class. Nielsen estimates China’s middle class population has seen growth of 111 per cent over the past decade, and predicts a further 50 per cent growth by 2020. In Southeast Asia, the middle class population grew by around 30 per cent between 2002 and 2010, and forecasts expect it to grow by an additional 103 per cent in the coming decade.
This growth translates to a significant up swing in consumer spending. In Southeast Asia alone, the increasing middle class population accounts for total disposable income that is now nearing US$430 billion. Cashed up and ready to spend, Asia’s emerging middle class displays growing demand in a number of industry sectors, in particular sectors such as technology. This demand is in turn driving innovation and investment.
Digital media soars
Broadly speaking, the media sector has enjoyed strong gains in Asia Pacific in recent years, but by far the fastest mover in the sector has been digital media. The uptake of connected devices has given rise to the creation of the ‘connected consumer’, a consumer with a multitude of devices which facilitate anywhere, anytime access to information, media content, mass communication platforms such as social media, and location-based / location-aware services such as maps and navigation.
In Japan, for example, close to nine in ten smartphone users (86 per cent) access the Internet via their mobile phone, as do 80 per cent of smartphone users in South Korea and 76 per cent in Hong Kong. According to forecasts by Morgan Stanley, by 2014 more consumers globally will access the Internet from a mobile device than from a ‘fixed’ or desktop device. This access tipping point has already been reached in China. According to the Beijing Institute of Technology, a quarter of China’s population now uses mobile phones, Internet services exceed fixed-line telephone services, and IP is generating more revenue than television.
Technological developments are driving changes in how, when, where and how frequently media content is consumed. Throughout the Asia Pacific region, consumers are demonstrating a love of all things digital, with time spent engaging with various forms of digital media seeing a rapid upswing. Technology is also enabling consumers to access multiple forms of media simultaneously, a phenomenon known as media multi-tasking or multi-screening.
This shift in media consumption trends is challenging and disrupting traditional media models of linear broadcast to mass audiences. Media owners are scrambling to understand the impact on content delivery, and are experimenting with packaging content for access via multiple platforms, including television, print, online, mobile and tablet.
Shifting ad spending
As the old advertising adage goes, the dollars follow the eyeballs, and the attention of advertisers is certainly turning to digital media platforms as changing media consumption trends provide new opportunities for advertisers to engage with target audiences. Despite the increased attention digital platforms are receiving in Asia Pacific, digital advertising still accounts for only a small proportion of total advertising spend across the region. With increasing consumption of digital media across Asia Pacific, allocation of marketing budgets needs to reflect the new reality, and strong growth in digital advertising expenditure is expected over the next few years. The PricewaterhouseCoopers Entertainment & Media Outlook report 2011-2015 forecasts total spending for entertainment and media in the Asia Pacific region will grow to over US$565 billion by 2015, at a compound annual growth rate (CAGR) of 6.7 per cent. However, Internet advertising alone, excluding mobile advertising, is forecast to grow at 13.7 per cent CAGR, reaching nearly US$34 billion by 2015. Much of this will be driven by increased online search advertising, and within the online-display advertising segment, online video advertising is forecast to grow faster than other display formats. Looking at mobile advertising, growth in advertising spending is set to outpace overall growth, with a CAGR of 21 per cent, reaching almost US$5 billion by 2015 in Asia Pacific.
Such is the bullish forecast for continued double-digit growth, the Asia Pacific Internet advertising share of global Internet advertising will grow from 25.8 per cent in 2012 to over 27.3 per cent of the forecast US$142 billion global Internet advertising market by 2015.
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Innovations in technology, growing connected device ownership, growing middle class populations and evolutions in the media landscape have paved the way for an ever-evolving technology landscape. These key trends, combined with continued growth across Asia Pacific in coming years, present abundant opportunities for technology manufacturers, media owners and advertisers alike but, as always, the key to tapping into these opportunities lies in understanding and addressing nascent consumer demand.
