Attention, stodgy Hong Kong advertisers: Stop 'experimenting' with digital

The time has come, and if you are not seeing with 20/20 vision, it is best to start now. Digital advertising has finally risen to the challenge in this small but vibrant, connected and important city of Hong Kong. The perfect storm is forming, and all signs point toward digital being the dominant platform for advertisers by 2020, with mobile and video advertising leading the way forward.

For the last decade, advertisers have been late to the party, preferring to sit on the sidelines and watch what happens, only investing small amounts of their budgets toward digital advertising. However, things are about to change rapidly, and as they say, don't get caught with your pants down. Brands who are not ready for so-called “new media” will be left behind, because “new media” after a decade is no longer “new”. But if you must put a label on it, let’s call it the “new normal”.

AdMango’s 2014 report reveals that digital (both online and mobile) accounted for approximately 10 per cent of total ad spend in Hong Kong, but is growing at a rapid pace. Online and mobile are showing a growth rate of 12 per cent and 105 per cent, respectively, while traditional forms of media saw only single-digit growth or in most cases (e.g. print media), a decline.

An earlier Hong Kong Advertiser’s Association (HK2A) ad spend report indicated that the top three “hottest” trends for advertisers were social, mobile and online video, which were the same trends for three years running. Unfortunately, the trends remain just that, with advertisers indicating that a whopping 69 per cent of their total ad spend is invested in offline advertising, led by television.

The trends, however, will soon become a reality, and advertisers who are not yet ready, will face greater challenges marketing their products to the connected generation. With the growth of online and the phenomenal uptake in mobile, we are approaching a tipping point where a version of Moore’s Law (the doubling of computing power every 18 months) will take place in advertiser attitudes towards digital media.

Should that happen, digital will exceed 40 per cent of total ad spend (greater than television) by 2018. And by 2020, digital will be the single largest platform for advertising. This may seem drastic, but the relevance of traditional media continues to slide downwards with each new generation of consumers.

There’s no better place to watch this in effect than in Hong Kong. The “fragrant harbour” is one of the most connected cities in the world, with internet penetration of over 76 per cent and mobile penetration of more than 230 per cent. Consumers in Hong Kong are among the most digitally connected worldwide, often using more than one device to access the internet. A recent GlobalWebIndex report states that 71 per cent of Hong Kong users access the internet via mobile, surpassing that of the global average of 66 per cent, and are increasingly buying items online via desktops and mobile phones. Food, clothes, cosmetics and consumer electronics tend to be most popular amongst digital shoppers.

The relatively small geographic footprint of Hong Kong, combined with fast internet connectivity, savvy consumers and a slew of digital natives, means Hong Kong is a teeming Petri dish when it comes to digital advertising.

As evident by the current growth rate, mobile advertising will continue to remain a rising star in the digital advertising domain. However, for Hong Kong at least, the “mobile-first” or “mobile-only” advertising strategy is just a myth. Here in Hong Kong, mobile users are also desktop users, tablet users and set-top box users. The truth is that most consumers in Hong Kong are multi-platform users, hopping from mobile to desktop to other devices throughout the course of their day.

As with the rise of Netflix and Hulu in the United States and even HKTV and 千寻影视 (Qian Xun Ying Shi) in Greater China, the rise of digital video here means that a whole new generation of consumers will not understand the concept of “primetime” as our parents did. The “golden hour” will soon be as extinct as the dodo. Commuters watch the latest Korean dramas on their phones and tablets while on the way to work. Office workers watch the news on their desktops during lunch. And news outlet apps are increasingly bundling video content into their previously text-heavy digital news streams.

With consumers being increasingly divided across platforms, the concept of multi-screen advertising will increase in importance. Advertisers will have to strive to reach users and deliver their brand messages relevantly, on more than one screen. This concept will soon expand beyond desktops and mobiles to include wearables, connected TVs, augmented-reality devices and more.

Tellingly, WhatsApp has recently introduced a web application accessible on desktops, transforming what was once a single-screen activity (texting) to a multi-screen one. This is following the trend of allowing users to consume their favourite content on the device(s) of their choice.

Advertisers who have traditionally resisted spending on digital have started to experiment rather than risk missing out on a whole new generation of consumers. That risk of losing customers is one that even stodgy old brands cannot afford to take.

Advances in ad tech have enabled brands to better track their digital ROI, enabling advertisers to better measure and account for their spend. Digital measurements have grown far beyond the impression and the click, with new technologies reaching beyond even the screen, to the POS and CRM, enabling advertisers to fully comprehend customer behaviour and purchasing lifecycle. 

Advertisers need to look ahead to the future with 20/20 vision to see that almost every form of media we consume will be digital and that the “experiments” of the past decade must now be increased to investment grade.

Kevin Huang is CEO of Pixels