Digital advertising lags in tech savvy Singapore: PwC survey

Singapore

IN today's digitally connected world, Singapore exhibits an interesting dichotomy that is perhaps unique. At 85 per cent, the country has the world's highest level of smartphone penetration and its population is among the most tech savvy in the world. Yet in online advertising, which should thrive in such an environment, the Republic ranks well below international averages.

Singaporeans spend an average of 40 per cent of their time on online media each day, the highest rate of digital consumption in the world. This makes the low digital spend - one of the lowest proportions among developed countries - all the more surprising.

Greg Unsworth, technology, media and telecommunications industry leader for PwC Singapore, notes that although the proportion of advertising budgets allocated to online has grown rapidly, climbing from just 7 per cent in 2011 to 15 per cent this year, with a compound annual growth rate of 35 per cent, Singapore is still far behind the UK, China, Australia, United Arab Emirates (UAE), USA and Japan in terms of digital advertising spend.

The data comes from a PwC survey which looks at digital advertising in Singapore. PwC surveyed top marketing and media agency executives via interviews.

Mr Unsworth notes that there is a potential for a surge in adoption of digital advertising in Singapore, given industry changes, evolving technology, and the government promoting its Smart Nation initiatives. "Increasingly, all companies are taking steps to becoming more digitally-enabled. Bridging the media gap with consumers can potentially allow companies to unlock efficiencies and increase their competitive advantage."

He says there are four hurdles that have potentially stifled the advertising industry in Singapore from developing a more aggressive digital presence. One of them is a poor understanding of measurement metrics with 68 per cent of respondents citing this reason. Mr Unsworth adds that digital marketing has the advantage of measuring data; however this may lead to information overload. Marketers struggle to filter the plethora of data into a "killer business metric", making it too difficult for senior management to interpret. "The industry will need time to get used to measuring online data and integrating it with traditional media metrics."

A limited supply of "digital talent" is the next major issue, with 64 per cent of respondents mentioning this point. The report notes that digital advertising requires both analytical and creative skills. "There is a shortage of citizens with this depth of talent in Singapore and as a result marketing teams, agencies and tech companies are competing for talent. The dilemma of upskilling versus importing proven talent is an ongoing challenge," says Mr Unsworth.

The willingness to learn and having a different way of managing communication is key to digital marketing. In the survey, 59 per cent of the respondents point to a slow mindset shift in education as a big hurdle. Mr Unsworth notes that the industry is moving away from traditional campaign "bursts" to "always-on" strategies - ongoing processes of engagement, analysis and refinement. "The board and other stakeholders have to be bought-in to this fundamentally new way of connecting with consumers for the shift to happen."

The relative ease of using traditional media comes across as the fourth major challenge (45 per cent). Singapore stands out among its international peers for its highly consolidated traditional media landscape, notes Mr Unsworth.

Thus, the industry tends to use traditional media as its default avenue, with simpler relationship and pricing structures. By comparison, online media is seen to be more complicated requiring multiple relationships, greater effort, and more risk venturing into the unknown, he adds.

Mr Unsworth notes that digital media owners need to make it easier for advertisers to include their solutions in the media mix, equipping media planners with the tools and training to integrate digital into campaigns and budget planning.

"These could be in the form of new media planning platforms and tools or industry and audience benchmarks. It is also the responsibility of the advertisers to demand more of their agencies to develop a robust media mix model for their business," he observes.

The PwC official adds that although Singapore is lagging behind its peers in digital advertising, the industry is aware of this and the gap is closing.

"More must be done to counter the four key inhibitors as the nation heads towards becoming a Smart Nation enabled by technology. The increasing importance of mastering digital will become more apparent and companies that lag behind will risk losing their market share. At current growth rates by 2017, digital advertising could represent 34 per cent of total media advertising spend in Singapore."