It is once again that time of the year where you sit down and plan for the next year. As you do so, it is certain that e-commerce will pop-up several times during both internal and external discussions.
And why not? It is going to be a vital step for businesses going forward.
According to statistics from a recent White Paper produced by MasterCard and R3, Asia Pacific is the largest e-commerce region in the world, turning over US$567 billion in transactions in 2014.
The study added the biggest e-commerce markets in APAC today are China, Japan and South Korea. Nearly 90% of consumers have bought online with a mobile phone. India’s spend is expected to match that of China in a decade, and Singapore and Malaysia are spending nearly US$4 billion online today. Indonesia, Philippines, Vietnam and Thailand are all also reporting double-digit growth.
The study stated the future of companies and e-commerce business lay in cutting the path to purchase down dramatically. And as this happens, advertising and marketing agencies need to reinvent their current service models and do so, within the next three years, explained ShuFen Goh, principal and co-founder of global consultancy.
“Agencies that are supporting brands and merchants in e-commerce, need to quickly optimise their structures to enable a more seamless ability to strategise, and execute in a more agile and consistent way,” she added.
Traditionally e-commerce was used as a sales channel with most companies leaving it to their sales team. Now with brick and mortar retailers setting up digital store fronts and consumers leveraging social to browse and rate products and services and recommend them to their social circle, e-commerce needs to be better integrated with overall marketing and communications briefs. It can no longer be a standalone effort by the sales and IT teams.
“This integration needs to be reflected in how marketers structure their teams and how agencies respond to marketing briefs. Agencies need to now think about the business overall. If a marketing activity does not move the needle on business, its ROI will come under scrutiny,” added Seema Punwani, principal consultant at R3.
This also means agencies need to look at digital beyond just website development, mobile app creation, Facebook pages and online banner advertising. There needs to be a conscious effort to start with the business problem and then consider how digital will help solve it. Thus, e-commerce should no longer be looked as yet another agency offering but rather an integral part of digital strategising and business solution.
Punwani added agencies need to gain the confidence of their clients as well when it comes to e-commerce. Today, too few clients actually involve agencies at the onset of the projects.
“The brief provided is a communications brief and not a business brief, which means agency’s response is restricted to communications. The gap on the agency side is talent as the planners and creative are trained to think of communication solutions and not business ones,” said Punwani.
She added that e-commerce is a business requirement, so until agencies have the talent that can put on business hats, this will continue to being a challenge.
Nonetheless, change is happening. Goh explained that already some transformations are underway and brands are slowly, but surely, starting to “demand more sophisticated capabilities from agencies.”
Agencies on their e-commerce struggles
Tuomas Peltoniemi, president of TBWA’s Digital Arts Network (DAN) said currently a lot of agencies focus on brand and communications in it’s various shapes and forms. While this is of course relevant for e-commerce, the marketing focus should be about driving sales results more directly.
This calls for performance marketing capabilities that link business insights around e-commerce to targeting at scale.
“Nurturing leads at different stages of the e-commerce purchase cycle, and then providing each customer the right content, at the right time, and in the right channel, is something many agencies are not used to. It takes a different process, different tools, and different capabilities than many other forms of marketing,” said Peltoniemi.
And no doubt, the process of education takes time.
“The challenge that clients (and hence, agencies) face is really convincing the client management team that there are several phases to building a robust e-commerce channel,” Jacqui Lim, managing director of Havas Media said.
While many clients do recognise the need to have a e-commerce channels, they are often surprised when they see the multiple aspects of a successful e-commerce solution.
“Areas such as consumer decision journey studies, user experience analysis, strategising for launch versus performance-driven media, analytics and optimisation and even performance-driven models to remunerate agencies have to be thoroughly considered,” she added.
Lim admitted that it is a struggle to get clients to view their agencies as e-commerce partners and loosen their purse strings to provide enough budget to support successful e-commerce initiatives.
This then ties back to the issue of finding the right talent and retaining it. The whole process remains cyclical.
Neeraj Gulati, managing director at Ingenuity, IPG Mediabrands said organisations have built great success using the offline sales channels but as they embrace the online platforms the lines between sales, product, marketing and after sales blur.
Thus delivery of a valuable brand experience needs a seamless and integrated back-end which is even more critical than the online front-end.
“The struggle is bringing together this integration is moving at a slower pace than what the customers demand,” Gulati said.
Marie Gruy, regional director of Carat Asia Pacific said the agency has now recognised the need for a specialist e-commerce support beyond digital or performance optimisation experience. Carat is setting up a dedicated e-commerce division in China to invest in a significant and separate e-commerce study in APAC amongst frequent e-commerce shoppers.
“E-commerce is growing almost exponentially in this region, particularly in India and China. The rate of innovation and willingness for adoption has also meant that key markets such as Indonesia and Thailand are leapfrogging more established markets such as Australia and the US with rapid penetration and preference for mobile usage and social media platforms for e-commerce,” she said.