Outlook 2020: The APAC POV
How the Outlook 2020 trends are manifesting in the Asia-Pacific markets
One of the biggest platform phenomena to emerge from APAC in recent years has to be the super app. What is a super app? It is many apps within an umbrella app; or perhaps it is actually not really an app as much as an operating system for smartphones. Now, mention the word ‘super app’ and WeChat immediately comes to mind. While some might argue that the super app concept already existed before WeChat did, there is no denying that this super app reigns as king, particularly in China.
WeChat now counts over a billion users with more than two-thirds of the Chinese population using it for an average of several hours a day, and more than a hundred million Chinese citizens using the app outside of the country’s borders. Its usage ranges from media sharing to social media posting, movie bookings, taxi-hailing, payments, video calls, commerce and more. And when WeChat launched their mini program a few years ago, it further stretched the functions of the platform since the last big addition of WeChat Pay in 2013, which sparked China’s cashless revolution then.
China is clearly the region’s leader in platform development and many of the Chinese technology companies like Baidu, Alibaba, Tencent and Bytedance have not only been advancing their platforms but also going beyond, building out ecosystems of connected communities, seamless services and new tech-powered interfaces. Alibaba as we all know has completely reinvented China’s retail sector, by integrating their ecommerce platform, Tmall, to their offline supermarket, Hema, and tapping into their logistics company, Cainiao, and food delivery unit, Ele.me, for fulfillment. Today, Alibaba continues to support the evolution of their ecosystem by harnessing the power of cloud computing and artificial intelligence to enable businesses, whilst also penetrating into the connected home and connected car markets through their voice tech, Tmall Genie.
Many others in the region have also jumped onto the bandwagon. Much like WeChat in China, LINE, the mobile platform ubiquitous in Japan, Korea, and Thailand, has also grown from a messaging app into a lifestyle ecosystem with features such as service bots, games, payment, group video, hardware digital assistants, taxi and delivery services. Last year, LINE announced the launch of its ecommerce platform, LINE Shopping, that provides a wide assortment of items from 15 online marketplaces. Other notable platforms that have emerged from the region has been Indonesia’s Go-Jek and Singapore’s Grab, two of South East Asia’s biggest startups, both having developed their own services and packaging all of them into a single super app. Initially starting as ride-hailing apps, they now offer a broad spectrum of services — Go-Send, Go-Massage and Go-Pay for Go-Jek; Grab Food, Grab Pet and Grab Pay for Grab. In fact, Go-Jek has recently launched Go-Play, a video streaming service, further extending their multi-service technology platform.
With APAC consumers primarily accessing the internet through their smartphones, it is of no surprise that they have easily accustomed themselves to doing multiple, often seemingly unrelated functions, with just a single app. Our smartphones have literally become an extension of our body and it is inconceivable to think that this device could one day be displaced. At the same time, we see the adoption of new technology in the APAC region continually surpass other regions. According to Global Web Index, there are roughly 313 million people in APAC who own wearables — either a smartwatch or a smart wristband. In a report released by idstats in 2018, it was found that close to two thirds of APAC consumers have used or are using voice technology. And as compared to other regions that have not experienced the same uptake, APAC’s AR and VR markets are on the contrary expected to grow at 38.4% CAGR during 2019–2026. The deployment and adoption of 5G in markets like China and Korea have been rapid too with the latter already reporting 3.98 million subscribers to their 5G networks as of October 2019.
Certainly, the jury is out as to whether we will see a true platform revolution or mobile will just continue to be supercharged. Or perhaps it could be that the next revolution may not manifest itself in a single platform but in combination as an ecosystem powered by artificial intelligence and data. And who — be it a market or a company — will be the front runner in this global race? What we do know is that the evolution will continue to play out differently in each market based on how deeply existing platforms and ecosystems have taken hold and ingrained themselves in consumers’ lives. As APAC consumers start to become more aware of their value in giving out data to these platforms and ecosystems, they would expect to trade up on their current lifestyle needs and wants, balancing these with privacy and security as well as trust in the platforms and ecosystems.
We have looked at the following ways in which globally, platform development and priorities will shape how we connect with our consumers as this race accelerates, and identified the APAC nuances to which technology, media and culture will shift and change over the next decade.
Democratized Creativity
Social media has redefined the boundaries of connection and community, and with more than 1.73 billion people in APAC using social networks in 2019 as reported by eMarketer, the meaning of social interactions for young people in this region has been stretched, segmented and reinvented. In this new world of infinite connections, the quantity of social connections has become an important indicator of how young Asians seek to define themselves, not only by what they own or what they do, but by their ability to connect, share and broadcast.
In the race to accumulate more social connections than anyone else, creativity in self-expression has become a key selling point, and in many ways, this is a generation who also defines themselves via their creativity. After all, they are the first generation in history to have mass democratic access to the tools of creativity: mobile cameras, cheap editing software, design programs and blogging platforms.
At the very core of the selfie phenomenon, one of the defining shifts in today’s social culture, is a form of self-presentation and expression, where a person conveys an image about oneself to connect with another individual. According to a study by Time magazine, APAC leads the world in selfie-taking and 4 of the top 10 “selfiest” cities are in this region, a find hardly surprising given that over half of the world’s social media users reside here. The selfie culture has become so dominant that selfie apps or beauty apps like Meitu, Faceu and Pitu have become incredibly massive here.
With 455 million active users (MAUs) using it to post more than 6 billion photos every month, Meitu is China’s biggest selfie app, becoming also a big hit among Western users. In addition to its flagship app, the company has also developed a series of beauty camera apps such as Beauty Plus, Poster Labs and Meipai, each specializing in facial feature enhancement, video editing and many other features. The platform also inherently lends itself to the beauty and skincare category and the tech company has since a couple of years ago, launched MeituGenius, an augmented reality (AR) and artificial intelligence (AI) powered smart mirror, collaborating with travel retail giant DFS in its rollout across APAC.
TikTok, the video app where users create vertical videos that typically run 15 seconds before looping to restart, has been seeing incredible growth since its launch three years ago. With young people’s deftness at using digital tools for self-expression, TikTok is one of several apps that gives them a canvas to be creative. It inspires users to not only watch, like and comment on videos but to also create them. With digestible and entertaining content from comedy skits and dance routines to lip-syncing and pranks, TikTok continues to spread like wildfire especially amongst the Gen Z demographic. And behind what is trending on the platform are growing subcultures and communities driven by user-generated content around hashtag challenges, duets, cosplay and more. So influential are these microcultures and content creators that they can even turn unknown songs into the biggest hits of the year. In India for example, ‘Teri Pyari Pyari Do Akhiyan (Sajjna)’, a song from a few years ago, has made a massive comeback thanks to a viral dance challenge on TikTok.
In the APAC region, the prevalent value of loyalty towards family, company and the nation tend to support a more authoritarian culture, but in this new era of increasingly democratic self-expression and content creation, consumers are turning to peer influencers and key opinion leaders (KOLs) both for validation of their own thoughts and actions as well as for an alternative outlook. Influencers and influencer marketing in APAC have exploded off the back of youthful demographics, high smartphone penetration and the proliferation of social media. There has also been a shift away from traditional celebrity endorsements to consumers’ increasingly preferred outputs of professional bloggers, video content creators and micro-influencers, who communicate directly and transparently with fans instead of simply talking at them as many celebrities do.
A more seamless integration of social media, ecommerce and online payment systems in APAC has also fueled the rise of influencers used to directly drive product sales. A company that has been pushing the boundaries of the influencer economy has been Alibaba-backed Chinese influencer incubator, Ruhan. In partnership with fashion model and influencer Zhang Dayi, Ruhan flipped the traditional influencer marketing model on its head. Instead of creating an ecommerce store and hiring bloggers to promote it, they first helped Zhang grow a massive, loyal following on Weibo, one of China’s top social media platforms. Once they had this large customer base and marketing channel in place, they created fashion products specifically designed to suit the taste of her audience. Within a year, it was one of the top-selling stores on Taobao and continues to rank as one of the top women’s fashion stores.
It is clear that the consumers of today do not just want to consume and engage, they want to participate, create and remix. This opens up a myriad of creative ways in which brands can connect with both consumer and culture, building greater authenticity, credibility and trust in their brands.
Ambient Computing
From smart cities to connected homes to connected cars. Across APAC, statistics reflect promising returns for tech companies and a range of industries already making a beeline for the region. IHS predicts there will be at least 88 smart cities worldwide by 2025, and APAC will account for 32 of them or more than 30% share. According to forecast, the APAC smart home market will grow to USD26 billion in 2022 and surge to USD115 billion by 2030, accounting for more than 30% of global share. The global connected car market is estimated to reach USD96 billion by 2022, at a CAGR of 20.1% in the period 2016–2022, with the APAC region recording a CAGR of 25% or more during the same period. And with 5G being a precursor to creating greater demand for internet of things (IoT) services, industry reports are also projecting adoption in APAC to reach 1.14 billion subscribers by 2024, accounting for 65% of global 5G subscriptions.
In this decade, we could certainly expect the world that we live in to be more predictive and personalized, as well as more pre-emptive to our needs, with a wide range of products and services being integrated into key interfaces and delivered to consumers as experiences powered by ambient computing.
Samsung is South Korea’s largest consumer electronics and technology giant, and remains number one in the smartphone space, accounting for 23% of the global market. In contrast to Apple’s strategy in the peak of the smartphone age that is internally driven, selling iPhone users other devices like iPads, AirPods and Apple Watches as well as getting them to subscribe to content services, Samsung’s approach for success will focus on the continued development and growth of the mobile market. Thanks also to their robust portfolio of consumer electronics products including TVs and home appliances, their investment in voice tech and their leadership in 5G connectivity, Samsung is well positioned to deliver an IoT ecosystem, making all of their products IoT ready within the next year or so. The plan is to also unite all of its IoT applications into SmartThings, Samsung’s primary app that lets users connect and control any SmartThings-enabled device directly from their phone, TV or car. Additionally, an integral part of Samsung’s vision is to not only connect their devices but to make them intelligent too through the application of Bixby, their voice technology system. For instance, Samsung Smart TVs and Family Hub Refrigerators will have voice control via Bixby to make everyday tasks easier. With devices and services working together and infused with intelligence, in-home activities become more intuitive and attuned to consumers’ lifestyles.
After the home, the car is seen as the next ambient computing environment to champion. In China, Alibaba has extended its Tmall Genie into this space with a new in-car smart speaker partnership with automakers Audi, Honda and Renault, that will soon be available to Chinese drivers. In a similar fashion, Japanese automaker Toyota and mobile app platform LINE Corp, have struck a partnership to offer an AI platform featuring voice commands for navigation services in Toyota cars in Japan using LINE’s Clova Auto system. Through voice commands inside cars, users can also turn off their lights at home, check the weather at their destination, send and receive messages, and make calls via the LINE app. For voice assistant providers, the car is a major opportunity because it is a setting where touch-based devices such as smartphones are not optimal. AI-enabled voice technology, which enables devices to hear and respond, was pioneered for the home, and the car is the logical extension of that experience as it is often the first environment consumers enter when leaving home and the last environment they experience before returning. Similar to the home, it is also centered around the consumer and controlled by the consumer, and therefore viewed by many as comparable in importance to the smartphone.
In the next couple of years, the retail industry too will be more extensively empowered by AI, as the adoption rate by the industry is estimated at 54%, surpassing that of the banking, manufacturing and healthcare sectors. Unsurprisingly, China would be the top country, thanks to their massive investment, presence of large tech firms such as Tencent and Alibaba, supportive government policies and a huge amount of data based on its large population. Already in Alibaba’s Hema, facial recognition payment, app-enabled self-checkout, digitalized inventories and order fulfillment, are part of the supermarket chain’s core infrastructure. Alibaba’s main ecommerce competitor, JD.com, has also since launched 7Fresh, their grocery store that is underpinned by the new retail concept. For instance, the store utilizes the “magic mirror” technology to showcase product information when a customer picks it up and also has facial recognition payment systems.
Today, companies like Samsung, Alibaba and JD, are not just a consumer electronics company or an online commerce company, they have become a community of products, services and consumers, interacting with one another and the environment comprising the online platform, our mobile devices and the larger offline physical elements, all coordinated in a data-driven and networked manner. To capitalize on these rapidly evolving ecosystems, marketers need to gain an inherent understanding of consumers through the lens of data as well as the technology that powers them.
Algorithmic Culture
Google’s success originated in one simple insight from its founders who realized that the sprawling, chaotic mass of material that was cascading onto the world wide web could be tamed by ranking search results according to their popularity. They have not looked back since, making millions from online advertising off the back of the algorithms that power their search engine, even as they direct and nudge how consumers interact with the world. The use of algorithms in search is just the tip of the iceberg today. Many other platforms are already using machine learning (ML) algorithms to enable AI-based outcomes, fueling the virtuous cycle of meeting consumer needs and shifting consumer behaviors.
Take for example Bytedance’s flagship products, TikTok (known as Douyin in China) and Toutiao. TikTok uses AI in various ways, from facial recognition for their filters through to the recommendation engine in the “For You” feed. The platform is capable of understanding and analyzing text, images and videos using natural language processing and computer vision technology, enabling them to serve users with the content that they find most interesting, and empower creators to share moments that matter in everyday life to a global audience. Similarly, for Toutiao, which acts as a one-stop shop for aggregated Chinese news, its unique selling point is gathering stories from thousands of outlets and using AI to personalize content according to the individual user’s interests and preferences, and in so doing, increase user engagement and time spent on the platform.
The use of predictive algorithms for content recommendation and content discovery based on a user’s viewing history and patterns is also one of the tricks used by over the top (OTT) content providers to foster loyalty and increase content consumption. In a region with a highly fragmented OTT landscape, that is a result of differing content preferences, a myriad of providers and distributors and the rise of many innovative video streaming apps, it is no longer a nice-to-have feature but a must-have for any successful OTT platform. The algorithms used will play a very important role in driving all data analysis, predictions and trends for OTT businesses.
For iQiyi, one of China’s largest online streaming platforms, it was the use of big data and algorithms that led to the decision to back ‘The Story of Yanxi Palace’, one of the biggest blockbusters a couple of years back. The algorithms helped conclude that the show, set in the court of Emperor Qianlong during the eighteenth century, would likely be a winner, based on analysis of past viewership patterns of similarly themed shows. Big data analysis was also deployed to determine the optimal time and pace of releasing new episodes to build up viewer anticipation. In spite of the absence of A-listers in the cast, the drama series about back-stabbing concubines garnered more than 13 billion views by the end of its run on the platform, becoming also a hit in Hong Kong and the South East Asian region. Though mostly fictional, together with several other popular imperial period dramas, the show ignited much interest in Chinese history and culture with a global audience.
From global giants like Amazon to local online retailers like Snapdeal and Flipkart, and startups like Zomato, the ubiquitous algorithm would likely be one of the most important tools of the trade in a market as diverse as India. For an online business like Snapdeal, one of India’s largest online marketplace, 35%-40% of sales on the platform are driven by its algorithms, as reported in an article by The Economic Times. No two people logging onto the shopping portal will see the same home page; instead, what they see will be determined by algorithms in the back-end processing data on what they like, things they plan to buy, what their friends or even people with similar profiles might have bought. The primary goal is to understand every consumer’s unique buying behavior and psyche, and surreptitiously nudge them to click on that ‘add to cart’ button. Even though current ecommerce penetration in India only stands at 28% according to a report by Statista, it holds out a huge promise of a major shift in consumer shopping behaviors guided by the use of algorithms to help navigate the market’s diversity in geography, culture, language and traditions.
With every major tech company and even smaller start-ups in this region investing in and building the future of their businesses on artificial intelligence, even going beyond their platforms and getting involved in smart city infrastructures as well as connected homes and cars, a culture driven by algorithms seems to be an inevitable near future. To embrace them, brands need to be armed with a wide variety of content for consumers to discover, engage, remix and re-engage with. Content also needs to play to the different strengths and opportunities that each platform offers as they evolve. And whilst algorithms help ingest and analyze huge amounts of data and in real time, they are ultimately built on a set of rules to be followed, and if used as a crutch by marketers, will instead impede true creativity and innovations.
The Age of Anxiety
The term ‘Fear of Missing Out’ (FOMO) entered the global lexicon around 10 years ago. In the age of continual digitalization and disruption today, this fear of missing out has in fact intensified, especially for the younger generation. On social media, staying connected with the network of friends that they have amassed, and keeping them continuously interested in their life through the self-expression and creativity that they feel define who they are, can result in emotional anxiety. Youths fear being ‘out of circulation’, as it was referred to by Malaysian youths in McCann’s study, because they worry that the lack of presence, even temporarily, can impact their social status. The need for approval is tangible and young people have described themselves sitting in front of the laptop continuously hitting refresh, waiting for someone somewhere to ‘comment’ on a post or ‘like’ a video that they have carefully crafted.
As we shift more and more into a digitalized and algorithmic culture, APAC consumers who previously did not show the same “tech-lash” as it had happened in the West, are now more cognizant of privacy and data security. 2020 could be the year of data privacy for APAC, with regulators across the region putting into effect policies that safeguard consumer data, ensuring that data is not being exploited in ways that are unbeknownst to users. Recently, it was reported that China removed 100 apps that were illegally collecting and using personal information. Many banks, retailers and weather forecasting apps were involved, which were found to have leaky privacy agreements that either misinformed users or failed to notify users of the risks of divulging personal data. India, on the other hand, received mixed reviews for the proposed rules by its government to regulate the way companies handle customers’ personal data, with some businesses praising it as necessary to protect privacy and others complaining that it will adversely impact their operations. As governments step up on their data protection and security measures, so too will consumers start paying closer heed to news about data security and privacy breaches in countries both within and outside the region. In a number of reports that looked at key trends in APAC around smart home devices, for instance, one of the primary consumer demands mentioned was for smart home brands to prioritize data privacy with more than half of the consumers stating that privacy concerns were stopping them from buying.
Alongside rising concerns about data privacy and security, there have also been fears over many platforms’ lack of control over objectionable content or the spread of propaganda and false information. It has been more than two months since the COVID-19 emerged in Wuhan, China, and proceeded to spread to many more countries. In the wake of the outbreak, panic has continued to disseminate throughout social media, forcing tech platforms to grapple with what the World Health Organization is calling an “infodemic”. As everyone anxiously searches online for information about the outbreak, they have encountered a barrage of misleading information, with much of this misinformation potentially causing stigmatization and discrimination. In recent weeks, the movement and slogan “I am not a virus” has been making its rounds not just in APAC but in other parts of the world too. In the face of ongoing disinformation, Facebook, Twitter, YouTube and TikTok have all been working to promote factual content with some deprioritizing misinformation on their platforms.
With so much on healthcare being made available on the internet these days, consumers in APAC are increasingly inclined to consult online experts and other digital sources for health and wellness advice. Digital app Pingan Good Doctor is one of China’s most popular and trusted healthcare platform at 10.45 million monthly active users and comprises a 12,000 strong panel of healthcare service providers that provides real-time medical consultations, online appointment booking and hosts a health-related discussion forum. Even in a country like Indonesia where internet penetration is still under 50%, the market has a burgeoning digital healthcare scene. Alodokter currently has about 20 million MAUs on its platform with the app used to chat with doctors, book appointments, discover personalized content and manage health insurance. The app also works with a trusted network of 20,000 doctors and 1,000 hospitals and clinics. Amidst the COVID-19 outbreak, many of these digital healthcare platforms have been mobilized to help the public stay informed and safe during the epidemic, creating a counterbalance to the heightened anxiety caused by misinformation. Ping An Good Doctor, for instance, has seen visits to its platform hit 1.11 billion, newly registered users grow 10 times, average daily consultations reaching 9 times more than usual, and anti-epidemic videos attracting over 98 million views.
In this age of data, technology and information overload, brands and platforms alike need to double down on improving security and safeguarding trust. Investing in the technology to do so will no doubt better endure them with consumers. For example, Samsung is now incorporating its trusted Knox technology into its connected devices, which has a hardware security system and firmware updates to help ensure that devices are protected. In addition, brands can also alleviate this prevalent sense of digitally induced anxiety by ensuring that the content they produce and promote is honest, authentic, respectful, and importantly, true to brand values.
