Southeast Asia: Benefits & pitfalls of marketing to the region as a bloc

Rajesh Mahtani, executive director of strategy and analytics for Southeast Asia at Starcom, thinks that Southeast Asian countries have similar economic make-ups and media companies, and this has led to the area being treated as a bloc.

“Most Asean countries have a world-class capital city and their advertising is primarily restricted to urban areas,” he says. “They also have one or two strong national media companies, enabling marketers to reach consumers.”

Ken Mandel, vice-president and managing director of Yahoo in Southeast Asia, believes it is only in the past 18 months that the region has emerged as something akin to a unified market.

“All businesses are looking at Southeast Asia, so it’s natural for media owners and brands to move too. However, Southeast Asia is not a perfectly shaped bloc. The Philippines, Indonesia, Vietnam and Thailand tend to be more alike as they all have a huge population and a similar urban-rural split. But Singapore and Malaysia are no longer emerging markets.”

From a cost perspective, treating Southeast Asia as a single market can be beneficial. But Mandel says the primary advantage for advertisers of viewing the region as a single market is the large number of consumers that they can target.

However, he admits that while it is relatively easy to create a strategy for the entire region, the disparities in development levels and culture mean the execution has to be localised.

Matthew Fanshawe, CEO of Euro RSCG Singapore, argues that the global recession has reinforced the notion of Southeast Asia as a sub-region and as a market bloc for some businesses.

“We are increasingly seeking opportunities to work with clients across borders in Southeast Asia – growing business from local to sub-regional, such as with DBS and Carlsberg,” he says.

Southeast Asia’s economy is now bigger than the whole of India’s ($1.25 trillion), but it is still much smaller than China’s ($5.58 trillion). Fanshawe believes that although China wins in terms of size, Southeast Asia presents some unique opportunities for companies.

“You’ve got very established and saturated markets, like Singapore, very high growth market potential such as Vietnam and Indonesia, and exceptionally creative places like Thailand,” he says.

Mahtani also points to the huge untapped rural population.“If Southeast Asia gets its act together then it could be an alternative to China,” he says. “Some countries like Thailand, Malaysia and the Philippines have not lived up to their promise due to political turmoil.”

But if countries such as Indonesia do eventually reach their potential, will this mean that marketers and media owners will then begin treating them as standalone markets? Mandel suggests that it is only a matter of time.

He notes: “Eventually we will need to treat each market individually. Currently, the senior talent to manage these countries is either not established there or it’s too expensive to bring in, but eventually it will be there.”


Industry Comments:

“The biggest risk you run in approaching Southeast Asia as one market is forgetting the differences in the individual markets. Southeast Asia is so varied in culture, language, religion and history, and there are a lot of unique sensitivities and also opportunities that result out of that. It’s true that big ideas can cross borders, but they must be tweaked for local relevance”
Matthew Fanshawe
CEO, Euro RSCG Singapore

“Much as I would like to say that it is easy to treat Southeast Asia as a bloc, it is actually a big challenge. This is something that keeps me awake at night. The region has 300 ethnic groups, 10 religions, 700 dialects and many languages. The development levels of each market are very different. From a strategy point of view, it is easier to treat it as a bloc, but the execution always has to be local.”
Ken Mandel
VP & MD, Yahoo Southeast Asia

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This article was originally published in the 28 January 2010 issue of Media.