What is driving the internet growth in the Philippines and how are platforms like social media and search marketing faring?
With all the news focusing on China's lucrative internet opportunities, it would benefit marketers to start analysing other countries in emerging markets. The Philippines for example, is a growing online market in Asia. According to an April 2007 study published by Yahoo!, out of 87 million Filipinos, 14 million are online -- representing a 16 percent penetration rate. Research firm International Data Corporation (IDC) also forecasts that internet usage in the Philippines will record a growth of 23 percent annually and reach 21.5 million by the end of 2008.
Along with internet penetration, it is imperative to note the main facets that contribute to the Philippines' leading digital growth opportunities: the importance of the internet as a social platform and blue chip brand advertisers starting to become aware of the impact online advertising could have on their brand.
Internet as a social platform
According to Donald Lim, CEO of Yehey Corporation (the country's local search engine and portal), and currently the founding president of the Internet and Mobile Marketing Association of the Philippines (IMMAP boasts a membership roster that includes big names like Yahoo and Google as well as top digital agencies), "Search marketing has not yet taken off much here in the country, and most Filipinos still use Google for Search. Yahoo! is primarily used for email and messenger. Blogs is still at its infancy, but I estimate there should be around 500+ full-time bloggers already. Not big, but we are getting there".
This strong sense of community online is also one of the reasons why IDC has predicted that the number of online gamers in the Philippines will reach 6.3 million by 2008. This represents a huge opportunity for online advertisers wishing to target the Filipino market: Advergaming. Advergames respond to the needs of younger, tech-savvy consumers who demand more interactivity and fun when introduced to online advertising campaigns.
According to the IDC report, aside from the availability of new online game titles and more broadband connections, "The communities of friends or families forming "clans" when playing online also perform as a driving sector in social aspect."
This explains Friendster's phenomenal popularity in the Philippines. The social networking site now has millions of users in the Philippines. That growth occurred with no promotional efforts on the company's part. According to David Jones, vice president of global marketing at Friendster. The Philippines has the world's highest number of Friendster users, with 10.7 million Filipinos accounting for the 58 million all over the world registered with this online social network. Filipinos make up 38.8 percent of Friendster's users worldwide.
Due to the fact that the percentage of Filipino households with internet access is much lower than in the United States, Friendster focused on mobile phones, as the use is more widespread. To take advantage of the viral marketing nature of the Philippines, Friendster rolled out a mobile-phone text-messaging service for its Filipino members which proved to be successful.
Big brands come online
Thanks to the IMMAP, which spearheads the battle cry for larger online marketing budgets through their various educational campaigns targeted towards marketing professionals, online advertising growth for big blue chip brands is around 90-150 percent year after year.
According to Lim, "Big brands like P&G, Unilever and Nestle are still focused on above the line, so 70 percent still goes to TV advertising, around 25 percent split between radio and print, and the rest going to billboards, events and online.
However, since we are servicing most FMCGs here for their online needs, we are seeing a strong commitment from them to increase their digital ad spend. Some brands are "forced" already to commit around three to five percent of their total campaign budget to digital. "The future looks very bright as we are seeing an aggressive shift to online marketing," Lim said.
This should come as good news to Friendster, which according to a January 2008 article in the Manila Times, hopes to "leverage its large number of users to generate online advertising, corporate sponsorship for its various sites and revenues from other marketing activities."
The decelerating broadband costs, growing uptake of online gaming and the viral/ social nature of Filipinos have all served as catalysts for online growth in the Philippines. When addressing this particular market, marketers must be aware of the nature and preferences of the Filipino online community.
It is evident that the Philippines has a very promising future -- both for online advertising opportunities as well as mobile marketing. Not only do the number of internet and mobile users increase daily, but the many initiatives that are taking place to penetrate this market are promising. With so much emphasis on China's lucrative internet opportunities, it would benefit marketers to start analysing other countries in APAC.
Elizabeth M. Lloyd is co-founder and chief revenue officer of 9Global Inc.