Southeast Asia’s (SEA) digital economy has grown from strength to strength these past few years. In fact, it’s expected to reach $200 billion in gross merchandise value in 20221 — three years ahead of the milestone mentioned in the e-Conomy SEA 2016 report.
While there has been impressive growth in the region, our new e-Conomy SEA 2022 report, developed in collaboration with Temasek and Bain & Company, identifies possible headwinds. Macroeconomic factors such as rising inflation and high energy and food costs, for instance, pose challenges for brands.
Yet there remains potential for growth, and your brand can navigate the sea of opportunity and the region’s dynamic digital economy by being laser-focused in your marketing strategies.
Drawing on the report’s industry insights, we’ve distilled three strategies to help your brand maximize business results in the days ahead: plan for your sector’s growth path, find the sweet spot for audience expansion, and stand out with sustainability initiatives.
How to plan for your sector’s growth trajectory
The SEA digital economy grew 20% year over year in 2022 as a whole, but this increase is not uniform across different sectors.2 Knowing the growth trajectory of your sector will enable you to develop an optimal strategy that drives business results. To help with this, we examined analysis and proprietary models from Bain & Company and identified three growth trajectories across the various sectors of SEA’s digital economy.
3 growth trajectories
S-shaped growth
Sectors such as e-commerce and digital financial services, which have thrived in the last few years, continue to see high adoption and steady growth. Even as people return to in-person activities, they’re sticking with certain habits they picked up during the pandemic, including spending more than two-thirds of their shopping time online.
Tips for marketers: Maximize the opportunity in sectors such as e-commerce by engaging online shoppers and driving sales through e-commerce campaigns, especially in the lead-up to the mega sale season when people are searching for deals.
Optimize your campaign performance by using marketing automation solutions such as Performance Max; it helped L'Oréal Vietnam drive four times higher return on ad spend for its 12.12 sale last year. Using Performance Max, it was able to automatically find new customers at scale across channels such as Search, Shopping, YouTube, and Gmail, and optimize performance in real time toward sales conversion.
Growth returns to trendline
For sectors such as food delivery and online media, which includes gaming and on-demand video and music, consumer demand will continue, but growth will return to pre-pandemic levels. This is due to people spending less time at home as they resume in-person activities such as dining out and attending events.
Tips for marketers: With people out and about, it’s important to catch their attention wherever they are. Mobile-first marketing strategies will help you reach people who are on the go.
For online media sectors such as mobile gaming, one way to retain and engage players is to have a rewards system that attracts players. Another way is to elevate the game design using player-based insights.
For example, Vietnam’s game publisher Game Studio 1 (GS1) customized its mobile game to match players’ preferences, including updating its game mechanics to improve game stickiness. It also partnered with creators from diverse backgrounds to produce varied and engaging gaming content to expand its audience base.
U-shaped growth
Sectors such as travel and transport have started to bounce back from the pandemic, but they will take some time to reach pre-pandemic growth levels. This is due in part to continuously evolving regulations on travel and social gatherings, and the new hybrid work model, which has tempered people’s need to commute to work and travel for business.
Nevertheless, these sectors are expected to rebound fully over the next few years on the back of pent-up demand.
Tips for marketers: When it comes to travel, it’s important to recalibrate your strategy to meet diverse and ever-changing traveler preferences. One way is to adopt an omnichannel approach to connect with consumers across various digital touchpoints, especially since more people are going online to research potential destinations and book flights and accommodation.
Travelers today are also planning in greater detail, so focus on finding creative ways to help them prepare for their trips and rediscover the joy of traveling again. For example, the Singapore Tourism Board used Google Cloud’s extended reality tools to help people learn about Singapore’s key attractions via augmented reality experiences on their digital devices. This gave them a fun and immersive way of gathering information about the attractions, and planning their visit to Singapore.
How to find the sweet spot for growing your audience
Besides having a strategy that maximizes the growth trajectory of your business sector, you can also drive results by engaging audiences who are savvy digital users. After all, about a quarter of SEA’s 460 million internet users started going online only in the last three years,3 and the degree of digital usage varies across different audience groups.
Our report analyzed and uncovered three audience groups with the highest digital adoption and growth potential. We’ve identified them as the “metro mainstream,” “young digital natives,” and “affluent users.”
Metro mainstream
This group of middle-income users, who are value-conscious and aged 30 and above, form a significant portion of SEA’s digital population. They live in metro areas and spend on family needs, which means they use online services such as food delivery frequently.4
Tips for marketers: Incentives, such as loyalty rewards, discounts, or cashback options can encourage this group of value-conscious consumers to spend with your brand. To drive further impact, use the preferences of this group to further optimize your sector’s growth trajectory.
For instance, Coca-Cola recently launched a multi-market “Treat Nights” campaign in partnership with Grab, a leader in the SEA food delivery and digital services sector. By tapping into Grab’s extensive base of food delivery users and cross-channel advertising, Coca-Cola was able to make it easier for Grab’s users to buy its beverages and have them delivered to their homes along with meals for their families.
Young digital natives
Shopping online, particularly via mobile apps, is second nature for this group of 18- to 29-year-old tech-savvy consumers who grew up in the digital age. They are also the highest adopters of gaming and music-on-demand services.5
Tips for marketers: To engage this group effectively, embrace the values that matter most to them, including gender equality, fun, and mental well-being, by making them a key part of your brand.
Another way to win over these digital users is to play to their love of music, which was what KitKat Thailand did with their Valentine’s Day 2022 campaign. The brand rolled out a series of music-themed YouTube video ads to promote its new packaging, which consumers could scan with their mobile camera to access a Valentine’s Day music playlist. The video ads, which showed music- and KitKat-sharing moments among youth, struck a chord and resulted in a 13% uplift in ad recall and a 5.3% increase in purchase intent.
Affluent users
What defines this group of higher-income consumers is their willingness to pay for high quality products and online services that complement their lifestyle, especially if the services are exclusive.6 They’re the biggest adopters of digital services among the different audience groups and they spend 2X more than others, particularly on transport and food delivery.7
Moreover, shopping for them is about the experience as much as it is about the purchase, and they want brands to engage them in more meaningful ways.
Tips for marketers: Staying top of mind among this group means thinking outside the box to meet their desire for exclusive and elevated experiences. Luxury brands such as Bulgari, for example, have started using immersive technology to allow shoppers to view products in 3D or try on items virtually through augmented reality.
How to stand out with sustainability initiatives
This year’s e-Conomy SEA report also spotlights the importance of sustainability to people in this region. To connect with consumers on this issue and unlock business growth through it, your brand should focus on marketing strategies that help people lead sustainable lifestyles.
Among people in Southeast Asia, environmental issues are now their second-most pressing concern after global pandemic worries, especially as the region is vulnerable to the effects of climate change.8 Many are striving to go green, with 73% of SEA consumers saying they are willing to choose a more sustainable product or service if given the option.9
There is, however, a gap between intention and action. This can be attributed to two main factors — insufficient product information and untrustworthy claims about the sustainability of a product or service. According to our research, awareness and trust are even more important to consumers than the price of such products.10
Critically, however, sustainable products and services need to be available. In Vietnam, for example, 41% of consumers would consider buying sustainable packaged foods,11 but the market share of such goods is only 3%.12
Tips for marketers: Help people bridge the intention-action gap by introducing eco-friendly offerings. Malaysian social enterprise Fugeelah created limited edition bags made from upcycled fabrics, and Filipino e-wallet provider GCash offered to plant physical trees in exchange for points earned when its users made cashless transactions or performed green activities.
The road to growth for SEA’s digital economy could face headwinds, but as our report and analysis show, its future remains bright. Your brand can make the most of today’s opportunities and drive results by developing a strategy that optimizes your sector’s growth trajectory, engages key audience segments, and unlocks business potential through sustainability.
Visit the e-Conomy SEA website or download the full report below to deep dive into this year’s findings.
