Outlook 2023: Southeast Asia POV
Southeast Asians are moving away from the legacy of global influences and are carving a more definitive path for themselves in response to significant shifts in digital adoption behaviors
Written by:
- Aditya Kilpady, Regional Strategy Director, UM APAC
- Cindy Eliza, Chief Digital Officer, Mediabrands Malaysia
- Elizabeth Shie, Senior Regional Strategist, UM APAC
- Abygayle Brani, Regional Marketing & Communications Strategist, UM APAC
History refers to interregnum as the intervening period between successive reigns, one that is marked by uncertainty whereby everyone knew the old world was ending but had little idea of what was to come. Southeast Asia (SEA) is experiencing a modern interregnum. Malaysia and Philippines held elections in 2022 and Thailand just did last month, while Indonesia builds up to 2024 elections. Amid the political interlude, Southeast Asia hinges crucially on global developments, given their reliance on international trade and investments. While the U.S.-China trade conflict benefited trade diversions from China to Vietnam, the Russia-Ukraine war spiked energy and commodity prices.
Nestled between India and China, geographically and in global attention, Southeast Asia is rising out of powerful shadows after absorbing the blows of recent years. With a total population greater than the European Union, the Southeast Asian economy is accelerating whilst still grappling with myriad global forces and navigating paradigms emerging at lightning speed. 100 million internet users came online in the last 3 years, and the digital economy grew 20% to $200 billion in gross merchandise value by the end of 2022, 3 years earlier than expected. Philippines and Malaysia are the top countries in ecommerce growth. Grab emerged to become one of many unicorns out of the SEA region. Tech startups grew 65% more than in USA. Southeast Asia accounts for 14% of global cryptocurrency transactions with Vietnam leading in grassroots cryptocurrency adoption. There is room for the economy to grow further in Cambodia and Thailand, with the recovery in foreign tourism. In fact, the International Monetary Fund projects a 4.8% growth in developing Asia in 2023, a rate higher than that of U.S. and the EU.
With digital and technology adoption as the driving force of economic growth, the SEA region is well-equipped to overcome whatever challenge that is thrown at them. With issues as wide-ranging as geopolitical movements and economic dependence, Southeast Asia is navigating the interregnum by challenging the entrenched monsters of incumbencies and legacy establishments and stepping into a new age of experimentation and innovation, powered by digital technology. Local players like Lazada and Shopee are giving Amazon a run for their money, Viu and iQIYI are challenging Netflix, while super-apps like Grab and AirAsia have cemented its utility in people’s lives.
Therefore, there is a need for brands to navigate the storm-clouds of a changing global order in media, culture, technology, and business. In media, the dominance of Meta and Google is threatened by challengers such as TikTok, LINE, and Zalo. In culture, a ‘kampung spirit’ of collectivism is morphing into a rise of individualism and self-expression. In technology, there is a stratospheric rise of generative AI with the new kid on the block, ChatGPT. In business, the era of micro-entrepreneurs and giggers are taking shape. How can brands navigate the interregnum? We unlock four trends which play out in the region, highlighting the opportunities that can propel businesses.
The End of the Digital Media Duopoly
Southeast Asia’s digital media market boasts a thriving ecosystem with a wide range of players, from global giants to local powerhouses. However, when discussing the market’s dominant players, Google and Meta are often the first names that come to mind. These two behemoths have an undeniable hold on the digital advertising space, with a combined market share of over 70%. While Google and Meta’s dominance is undeniable, there are other major players in the mix as well. Amazon, TikTok, and regional players like LINE, Zalo, and Xiaohongshu (RED), all hold significant market share in the region’s digital media landscape. In fact, their collective presence challenges the notion of a duopoly and paints a more accurate picture of an oligopoly.
With new and innovative technologies emerging at an unprecedented pace, disrupting the status quo, and opening new possibilities, Southeast Asia is seeing even more prominent shifts. One of the most significant changes is a gradual movement away from Google when it comes to search. As social media continues to grow in popularity, it is becoming increasingly clear that users are pivoting to platforms like Facebook, Twitter, and LinkedIn to search for information, particularly when seeking recommendations or advice from their trusted networks. It does not stop there. TikTok, the social media platform that has taken the world by storm, is also emerging as a powerful search engine. In fact, among those who rely on TikTok as a search engine, more than half (56%) of respondents surveyed by Milieu Insight found TikTok more useful than traditional search engines like Google when it comes to looking for information. Lastly, with the growth of ecommerce in the region, more users are taking advantage of the convenience and personalized experience that comes with searching for products via user reviews and purchase history.
According to Statista, social media has expanded beyond its original function as a communication tool and now serves as a central hub for inspiration, entertainment, news, business, and commerce. While Meta has recently joined the trend of social commerce, it is apps such as LINE, Shopee, and Lazada that have truly embraced this concept by incorporating features like livestreaming and social commerce functionalities. Now, we are seeing TikTok move increasingly in the direction of Douyin with the launch of TikTok Shops, which has taken countries like Indonesia by storm. While Shopee and Lazada still have a larger user base and offer a wider range of products, TikTok Shops has the potential to offer a more personalized and engaging shopping experience for users. Businesses and creators on TikTok can leverage the platform’s algorithm to target specific audiences and potentially reach more customers than they would on traditional ecommerce platforms.
Another significant development we are seeing is the rise of super-apps, which are becoming increasingly popular among users who are looking for a one-stop-shop app that can offer them everything they need in a single, seamless journey. With Google and Meta still lacking a mature marketplace in the SEA region, the growth and adoption of super-apps like AirAsia and Grab is on the rise, further fueled by the growth of fintech which has been spurred on by China’s influence. This trend is particularly appealing to users who are seeking a more personalized and engaging experience that combines entertainment, shopping, and payment capabilities.
As innovation and technology continue to advance at an exponential rate, the need for cybersecurity compliance becomes increasingly important. With the ever-increasing incidents of cybersecurity attacks, personal data leakages, and phishing scams, users in Southeast Asia are on the lookout for safer alternatives to popular messaging apps like WhatsApp. This has led to the rapid growth of apps that prioritize user security and privacy, such as Telegram, LINE, Zalo, and WeChat. In Malaysia, for example, Telegram has emerged as a top choice among users, offering end-to-end encryption, self-destructing messages, and group chats, all of which make it a highly secure and popular alternative to WhatsApp. With over 700 million monthly active users worldwide and a spot among the top 10 most downloaded apps in Malaysia, Telegram is meeting the needs of users who are looking for a more secure messaging platform.
Indeed, the future of Southeast Asia’s digital media market is bright and full of potential as we continue to solidify our digital footprints, and it will be exciting to see how it continues to evolve in the coming years. Brands and marketers will need to be mindful of their products and services and the platforms that can drive higher revenue while taking into consideration the safety of their consumers.
Twenty-Twenty Me
Southeast Asia is a predominantly collectivist society. Countries in this region score low on individualism on the Hofstede Model. In these cultures, harmony and interdependency are given high importance. People often gravitate to the ideals and values of the group, and being one with the community has been a pervasive mindset. In recent decades, however, this has been evolving with the accelerated adoption of technology. To be clear, Southeast Asia’s individualism is not a result of changes in digital behaviors; rather, it is the individualistic mindset that is influencing the shift in digital behaviors.
Southeast Asians are among the heaviest users of social media in Asia Pacific. According to GWI, they spend 3 hours on social platforms, almost an hour longer than the Asia Pacific average. Meanwhile, 7 out of 10 are already using music streaming, podcasts, and online TV, and 8 out of 10 are using international ecommerce apps. These expose them to global influences which enables them to see a plethora of options. As a result, they begin to embrace what resonates and works for them, and reconsider what does not. Ideals and values that differ from traditional thought are formed. This distinctiveness from the norm is strengthened by algorithms that constantly show content based on their preferences, creating a feedback loop that allows them to discover and fortify their sense of self. The region is now in a period of accepting the collective norms and claiming their own self-identity.
Southeast Asian Muslims are constantly exposed to new generation influencers who are showing how to claim their self-identity while still practicing their religion. On their screens, they receive curated content about modest fashion, hajibi-only hair salons, and stylish Abayas, changing what’s possible with creative implementation. This type of personalized content assists them in discovering their true identity independent of collective thinking. Brands that acknowledge the evolution of expression and the continuous need to be in touch with their faith are winning in the market. For example, to promote their hair mist, hijab haircare brand, Safi Shayla, worked with a YouTube-famous Malaysian hijabi acapella group Bahiyya Haneesa, to create an anthem encouraging hijab-wearing young women in Malaysia to be unapologetically themselves. The campaign was amplified across digital and social pages which resulted in the brand doubling its year-on-year sales and the product being a top contributor of the sales of the company.
As Southeast Asians discover more about themselves through digital channels, expressing their personal identities online becomes a natural trajectory. Moreover, creating content has become easier and more authentic with the adoption of TikTok and live streaming. According to GWI, TikTok has achieved record-high adoption rates in Southeast Asia, with up to 71% of the internet population using the platform. The ease of creating content and its potential rewards, whether in terms of money or products, have incentivized people to be part of the creator economy. Even with fewer than 500 followers or subscribers, one can already be tapped by brands to become a micro-influencer.
More than posting on social media, self-expression online is especially characterized by avatars in apps that are personalized by consumers. According to GWI, most individuals in Southeast Asia (73%) strive to portray their authentic selves in real life. However, there is also a significant portion (27%) that desires a different persona, possibly reflecting their aspirations to become the person they truly want to be. Bondee is a fast-rising app in Southeast Asia that allows users to dress up their avatars, decorate their own virtual rooms, and visit other people’s virtual places. Another example is the largest gaming app in the region, Mobile Legends Bang Bang. It is a multi-player game that allows individuals to create their own avatars. It now has close to USD 9 million in player spending, comprising sales of in-game items to make their avatars distinct from others.
In this time of interregnum wherein consumers are beginning to discover, evaluate, and claim their identity in their constant exposure to personalized digital content, it is vital to help them in their journey of self-discovery by offering products and services that are related to their individual leanings. Advertising to a homogeneous group without taking stock of their differences will not lead to effective results. Moreover, brands can be part of the evaluation process by providing content that is relevant based on their personal interests rather than what is trending worldwide. Lastly, allow them to claim what makes them unique by being an engine of self-expression by maximizing online platforms which allow them to manifest who they are and who they want to be.
The Rise of Synthetic Media
Conversations around synthetic media in Southeast Asia first started circa 2016 and have since evolved into a rapidly growing trend. Synthetic media refers to media or content that is created using artificial intelligence (AI) algorithms, such as deep learning, natural language processing, and computer vision, without human intervention. The trend truly started making waves in the SEA region with the launch of ChatGPT in November last year. This Microsoft-backed AI bot is being embraced worldwide, and Southeast Asia is no exception. Although the Asia-Pacific region is the fastest growing market in the world, with spending on AI systems expected to rise by approximately 80% from 2022 to 2025, it is difficult to provide a precise adoption rate for synthetic media in Southeast Asia, as the use of this technology is still relatively new.
Merely six months into ChatGPT’s emergence, we are already seeing glimpses of real-world applications of synthetic media through experimental deployments in sectors such as transportation, financial services, health care, and media, particularly in countries like Singapore and Indonesia, where the government places emphasis on promoting the development of the technology. For example, in Singapore, the government has been actively promoting the development of artificial intelligence and machine learning technologies, including synthetic media with funding of $370 million set aside in its Research, Innovation and Enterprise (RIE) 2025 Plan for AI-related activities. Meanwhile, Indonesian startup Kata.ai, specializes in developing chatbots and voice assistants using natural language processing. The company has created a platform that allows businesses in Indonesia to easily create and deploy their own AI-powered chatbots, which can be used to automate customer service and support.
Synthetic media has the potential to transform various sectors by enabling a myriad of advantages like enhanced performance in the workplace and dynamic outputs. However, it is also important to note that there are several limitations to its adoption and use in Southeast Asia. The lack of infrastructure in some parts of the region, such as access to robust cloud services, will make it difficult for businesses and individuals to tap into sophisticated AI tools. There are also regulatory challenges to consider as synthetic media raises important ethical questions around issues like data privacy, deep-fakes, intellectual property rights, and algorithmic bias. Industry regulators will need to develop new frameworks and guidelines to ensure that synthetic media is created and used responsibly. There are also cultural considerations at play. Southeast Asia is diverse with many different cultures, languages, and traditions. Developing synthetic media that resonates with local audiences and reflects their values and perspectives can be a complex challenge. For example, the March edition of Vogue Singapore featured AI-generated models on their cover spread. While some users applauded the use of tech to create a culturally diverse spread, others questioned the use of synthetic media versus human models that truly represent the cultural diversity of the region. Content creators must be mindful of cultural sensitivities and adapt their approaches accordingly.
Despite these limitations, synthetic media is still a rapidly evolving field in Southeast Asia. As the technology continues to advance and with more people jumping on the bandwagon, it is pertinent for brands and marketers to understand the implications of this trend to leverage the opportunities and mitigate the challenges that arise. The technology enables brands and marketers to experiment with new forms of content to help them stand out in a crowded marketplace. On the flip side, synthetic media has the potential to blur the lines between what is real and what is fake. Brands and marketers must be transparent about the use of the tech and approach with caution to ensure that it aligns with their overall marketing strategy and brand identity.
A Return to the Kitchen Table Internet
Entrepreneurship has historically been at the heart of Southeast Asia’s socio-economic landscape. The appetite for owning and running businesses is ingrained in our cultural fabric. In recent years, a convergence of factors, including technological advancement, increased government backing, and DIY experimentation, has led to a mushrooming of multiple tiny ‘garage band’ startups jamming together. APAC-native tech giants, such as Tencent, Samsung, and Alibaba, were all startups when they first started about two decades ago. Now, rising from Southeast Asia are companies like Grab, Sea Limited, and Bukalapak — yesterday’s unknown startups, today’s ‘little tech giants.” The surge in digital and tech startup success stories from Southeast Asia indicates that we are heading towards a golden age of the ‘kitchen table’ internet approach to innovation.
Singapore leads the way in supporting the ‘kitchen table’ entrepreneurship culture. The ‘Silicon Valley of Asia’ has a reputation for ease of doing business and an efficient tax regime that enabled an ecosystem valued at $21 billion. The Singapore Fintech Festival is one of the biggest annual fintech gatherings and a knowledge exchange platform for budding entrepreneurs. Indonesia is not far behind. Skyrocketing internet adoption and Government-backed ‘Making Indonesia 4.0’ is transforming the archipelago into a world-leading technology startup hub. There are 6,700 startups, eight of which are unicorns. When Indonesian President Joko Widodo appointed Nadiem Makarim as a cabinet minister, the decision surprised many. As a former founder of Gojek, the appointment highlighted that the Indonesian start-up ecosystem is not only serious business, but also wielding political influence.
Southeast Asia’s dynamic ecosystem reflects its cultural diversity. The challenges that need to be solved in Singapore differ from those in Vietnam or the Philippines. For this reason, rather than borrowing from old approaches from the West, founders in Southeast Asia recognize the cultural and operational differences unique to each market. “Glocalization” is the rule of the thumb. Local startups are solving critical social, financial, and environmental complexities within their home markets with emerging technology.
For example, Hachi, a Vietnamese agri-tech startup uses IoT sensors to build smart farms. CROWDE, a Philippines-based crowd-investing platform allows people to invest in farmers on profit-sharing. HelloGold, a Malaysian fintech produces Shariah-compliant cryptocurrency. Today, Southeast Asia’s startup ecosystem is home to over 40 unicorns (startups with over US$1 billion valuation), beating global giants in their own game. GoTo’s IPO in 2022 raised $1 billion and ambitions of several entrepreneurs to kick-start their startup dreams. The merger of Gojek’s delivery expertise with Tokopedia’s ecommerce platform (hence, GoTo) created a local Amazon-style business with its own e-payments subsidiary. GoTo’s successful debut came while companies globally were scrapping IPOs due to market volatility amid the Russia-Ukraine war.
Accelerating adoption of new technologies not only fueled garage-style technology startups, but also the gig workforce. For millions in Southeast Asia, work does not entail a 9-to-5 job. More than half of the workforce in most SEA countries are earning their living through the informal sector. Technology is helping informal workers find more earning opportunities online. You may have heard the term ‘Digital Nomad,’ as the pandemic and digital advances allowed people to work remotely with jobs not tied to a specific location, leveraging robust technological infrastructure. Thailand, Indonesia and recently, Malaysia, introduced special long-stay visas for foreigners, retirees, and skilled workers. Riding on the hybrid work culture, is HOMA Phuket Town, a 500-unit building in Thailand providing accommodation and co-working space with high-speed WiFi, individual pods, meeting rooms, a fitness center, a game room, and even visa application support.
Southeast Asia is proving to be a treasure trove of technology and innovation ‘garage-style’ startups. Many are making a global-scale impact, whether through business models such as ‘super-apps’, or by tackling environment challenges, such as Bantubumi, a startup that specializes in digitizing plastic recycling. For brands, this is an opportunity to support the new wave of tech entrepreneurship. A slew of startup funding reality shows is helping young entrepreneurs. Take, for example, The Final Pitch, which is billed as “ASEAN’s very own Shark Tank,” designed to back the region’s next unicorns. Incubator programs, such as Alibaba Cloud’s AsiaStar 10 x 10, recognize innovation achievements. Google for Startups Accelerator coaches diverse early-stage startups through its Women Founders Academy. Technology, innovation, and experimentation will continue to further inspire the Southeast Asian ‘kitchen table’ internet ecosystem in unprecedented ways.
Conclusion
Technology evolution in Southeast Asia has been incredibly multi-dimensional. Technology will continue to be the biggest driving force for the region as it seeks to resolve the interregnum and adapt to a rapidly changing landscape. In the meantime, we can bask in this period of uncertainty and imagine the possibilities that come from one of the most exciting regions of the world.
