Are we ever going to catch up to Asia? It’s a refrain heard far more frequently on our shores in recent years.
Take automobiles. The Detroit versus Tokyo battle has resulted in more Toyotas sold here than GM, Ford or Chrysler. The topic of green energy often centers on what Washington is or isn’t doing juxtaposed against Beijing’s moves (or perceived indifference). Finally, what transpires in Seoul with Samsung is always contrasted with Apple’s moves in Silicon Valley.
The latest front in the East-West skirmish is in mobile marketing. Once again, the U.S. marketplace finds itself at a perceived disadvantage. So it’s fair to ask the question once again: Are we ever going to catch up to Asia?
Thanks to smartphones going mainstream in the U.S., the leader now wears red, white and blue—at least in terms of ad dollars. According to eMarketer’s December 2012 report, the U.S. surpassed Asia for the first time in mobile ad spending last year (including banners, video and rich media but not text) and by a fairly significant margin—$3.8 billion to $2.7 billion. By 2016, per eMarketer, the U.S. will exceed $20 billion, while Asia will reach $6 billion.
Indeed, America could be leaving Asia in the rear-view mirror when it comes to mobile ads, as promising mobile purveyors like SessionM, LeadBolt, MoPub, Greystripe and Millennial Media stockpile clients. Additionally, Facebook and Twitter’s iterations can’t be underestimated as brands warm up to social-mobile ads. But could the country that brought the world Jackson Pollock and the Jackson 5 still trail the land of math and science when it comes to mobile creativity? Absolutely, say those who have worked in digital marketing in both regions. The U.S. is still pretty much the bird dog chasing sky-high Asia when it comes to innovation, particularly in mobile commerce, they contend.
Three main reasons are at play. First, numerous Asian consumers use their cellphones—whether smartphones or Web-enabled feature phones—as their main computers, transacting purchases and playing games as actively as Americans do on their desktops and laptops. Second, the mobile infrastructure in most Asian countries—specifically South Korea and Japan—kills what’s seen in the U.S. And last but not least, Asians don’t hate mobile ads the way Americans do, according to some experts. “There is more acceptance of ads as a value-exchange mentality in Asia, particularly Japan,” says Andreas Bodczek, CEO of social gaming firm SponsorPay. “The whole mobile ecosystem is more vibrant.”
American marketers still have a lot of evolving to do, explains Xavier Facon, CTO of mobile ads firm Crisp Media. “What you are seeing here in the U.S. way too often is a media agency that just wants to check the mobile box and put something together badly on a short timeline,” he says. “Over there, they spend six months cultivating a mobile campaign, and what comes out is truly impressive. All of our showcase campaigns come out of Asia right now.”
Facon adds that Asian marketers have the luxury of lower-cost display ads, allowing brands to allocate funds towards innovative tools such as augmented reality. “[Cost-per-thousand] rates for publishers can be as little as $3 or $4 for Korea and Japan,” he says. “In the U.S., you might pay $10 to $15 for a premium brand campaign.”
Asia’s M-Commerce Tips
Contrary to eMarketer’s forecasts, Facon sees brands increasingly target the massive number of on-the-go shoppers in the region. “Coca-Cola and Häagen-Dazs have begun to invest in Asia mobile heavily,” he says.
Unilever and Procter & Gamble also are notable innovators in rich media and QR code marketing in Asia, while Kellogg, Kraft and Johnson & Johnson are reportedly hiking their mobile spends in the region. Campbell Soup has been testing augmented reality, mobile display, mobile video and mobile search in Asia. “One of the benefits of being a global brand is we can learn so much from other markets,” says Adam Kmiec, Campbell’s global digital marketing and social media director. “Asia has been ahead of the curve when it comes to mobile for nearly a decade. We view mobile in Asia not just as a great way to meaningfully connect with consumers, but also a way to see what the trends will be in Latin America, the U.S. and other emerging markets over the next few years.”
Doron Wesly, head of market strategy for Tremor Video, worked in digital advertising in Asia from 2008-10 and noted how U.S. marketers could learn from Asia’s ability to convert text-message campaigns into sales. “They are using mobile very much as one-to-one marketing, with SMS offers when people walk by near stores,” he explains. “They are combining mobile payments with mobile advertising—something that’s not really done here in the U.S.”
Underscoring Wesly’s point, brands still consider Asia to be the bellwether for mobile commerce. With consumers there consistently buying stuff on their cellphones, says Marc van der Chijs, CEO of Spil Games Asia, the region offers a wealth of knowledge for digital direct marketers. “Mobile commerce is much more advanced,” he says. “Companies like Taobao, which is the Chinese version of eBay, have very advanced mobile apps that are easy to use.”
Thomas Hong-tack Kim, executive creative director for Cheil Worldwide in Seoul, agrees, pointing out that stellar public bandwidth makes South Korea a peculiarly exotic playground for mobile commerce. His agency won a Cannes Lions Grand Prix for creating virtual subway stores for grocery giant Tesco’s Homeplus brand in Seoul, targeting mobile phone users who access the Web while commuting via the city’s underground public transportation. It’s a case study for what might be possible for American marketers down the road. Cheil crafted interactive, lifelike store aisles with a range of product images, enabling consumers to order products for home delivery by simply snapping photos with their phones. Homeplus sales jumped by some 130 percent after launch, while the interactive stores remain a fixture of subway stations in Seoul.
Could something like that take off here? “The U.S. does not have the infrastructure or assumptive culture in place,” warns Kim. “What the world generally considers to be ‘innovative’ are services directly connected to this infrastructure.” He adds, “Mobile video streaming, mobile payments and coupons are much more available and prevalent in Korea. It is much easier to build things in Korea, because everything is so geographically and culturally focused. Approximately half the population lives in Seoul. The U.S. is much more complicated. They key takeaway would be to start in urban areas. New York City, Boston and Chicago come to mind.”
When it comes to U.S. marketers catching up to their peers in South Korea and Japan in terms of mobile-commerce innovation, the infrastructure disadvantages would seem daunting, especially considering the U.S. economy and a government that won’t likely put tax dollars toward an upgrade in public data bandwidth anytime soon.
“It’s a big-picture hurdle,” says eMarketer vp, communications Clark Fredricksen. But market changes, specifically in merchandising scenarios, signal a future in which U.S. marketers may have to up their game to compete for smartphone-packing shoppers. “It’s going to have to be a first or high priority if they are going to be successful in a retail space dominated by mobile usage,” Fredricksen says. “That’s the trajectory we are on today.”
Mobile gaming in Asia represents another important area marketers in the U.S. would do well to study for winning tactics. Mobile games will become a $3 billion industry in the U.S. by 2016, according to eMarketer. The firm doesn’t report such data for Asia, but research firm Mind Commerce projects that mobile gaming will reach $17 billion in Asia by 2017, with the region representing 50 percent of the global market. Bandwidth-happy Japan will account for more of those dollars than any other Asian country, reaching $5 billion in five years, Mind Commerce reports.
“Gaming is heavily ingrained in their culture, and brands have done a great job inserting game-based experiences in a way that resonates with mobile users,” says Lars Albright, the SessionM CEO who helped Apple launch iAd in Japan in 2010. “Overall, their mobile consumers tend to engage in longer sessions, and advertisers are taking advantage of” these sessions. (Read more about Albright in “They Might Be Giants” on page 22.)As Mobilize founder and CEO Eric Bader puts it, “In Japan, they see mobile devices as heavy gaming devices. In the U.S., it’s more productivity and social. Gaming is secondary.”
At the same time, gaming is also an area that reveals pro-U.S. elements. Americans are buying tablets in robust numbers, while Asia lags behind. Because of their larger screens and touch-screen capabilities—vastly superior to cellphones—the ad opportunities via tablets are more advanced. “There are more options in the Western market than in Asia overall,” says Sho Masuda, vp of Gree, a Japanese mobile gaming platform. “For example, in the U.S., you have videos and various incentives—such as giving out gift cards in exchange for apps, etc.—which have allowed mobile app advertising to become a lot more widespread and creative. In Asia, in-game video ads are just recently picking up, whereas in the U.S. they have been popular for awhile now.”
Based in San Francisco, Masuda has been building Gree’s North American business during the last two years. He mentioned popular digital radio apps like Spotify and Pandora as other examples in which the U.S. leads in both mobile innovation and advertising formats. Conversely, Masuda echoes sentiments from other players about Asia’s advantages.
“As a marketer in Asia, you have greater return-on-investment per user, which lets companies do bigger things with their marketing dollars,” he says. “We need to catch up to Asia when it comes to payment systems and ease of payment overall. Carrier billing, for example, is very sophisticated in Asian countries. It’s a handicap for the U.S.”
Not everyone in the digital ad world has such Asian envy, however. Several executives warned against using metaphors like “catching up” to a market or region that is inherently different and hardly uniform. The U.S. mobile ad market may never match Asia, and that may be OK.
“I think we are making a mistake if we’re focusing on things like that,” explains Anna Bager, vp and gm for the Interactive Advertising Bureau’s Mobile Marketing Center of Excellence. “We should focus on what we have here. We are way more advanced when it comes to mobile ads. This is where it happens. This is the center of the world. This is where you’ll see the innovations in ad formats.”