Claudio Murri, Asia advisor to EIF, reports on mobile advertising and cross-border e-commerce in Asia

23 April 2015 Author: Claudio Murri, Asia Advisor to EIF

Mobile broadband adoption has been consistently rising in Asia Pacific as consumers upgrade to better phones, Wi-Fi is rolled out on a large scale and carriers move to 3G and 4G networks. In 2015, the number of broadband connections in Asia is expected to reach 1.1 billion.

Smartphone adoption rates across the region have also spiked from 48% to reach 60% in 2014, according to data gathered from users of Opera Mini, a microbrowser designed primarily for mobile phones, smartphones and personal digital assistants. 

Thanks to this impressive growth trends, Asia is becoming one of the largest markets in terms of digital advertising and particularly of mobile ad impressions. Spending in Asia-Pacific is expected to rise 30.3% to total $46.59 billion this year, according to the latest estimates provided by eMarketer, a leading analyst of digital markets worldwide. The region will boast the second-biggest share of digital ad spending worldwide, trailing only North America, at 31.8% vs. 37.3%. This trend will continue through 2016. 

In 2017, Asia-Pacific is expected to pass North America in total digital ad spending share worldwide, at 36.9% vs. 35.7%. 

China, with investments in online and mobile advertising totaling $23.70 billion this year, will maintain the largest share of the region’s digital ad market, at 50.9%—a trend that will continue through 2018. China will also see digital ad spending growth of 45.0% this year, which will be mainly driven by phenomenal gains in the country’s mobile ad market. Japan and Australia will rank second and third, with respective digital ad spending totals of $9.07 billion and $4.52 billion this year, eMarketer estimates. Indonesia will be the leading country for digital ad spending growth by a long shot, at a whopping 98.0% this year. Indonesia sits at the bottom when it comes to digital ad spending, as brands there still heavily invest in traditional media like TV and print. However, as internet and smartphone adoption continue to grow rapidly, marketers will continue to switch ad spend to digital channels. 

Big retailers and e-commerce sites across the region are therefore strengthening their focus in m-commerce as consumers get more comfortable making purchases on their mobile devices. Huge opportunities are created particularly by mobile video adoption and, in turn, mobile-video advertising. Surfing behavior among Asia Pacific users revealed that social, entertainment, and video sites continue to drive the majority of mobile internet traffic. In India, ad impressions from social sites and apps is 31.1%, followed by 21.4% from the Music, Video & Media category. In Indonesia, ad impressions from social sites and apps is 61%, followed by 17.6% from Music, Video & Media sites and apps.

Cross-border e-commerce seen as a must in Asia too

An increasing number of Asian companies are emerging on the world stage as they strive to establish their brands outside their own country. A growing number of them are choosing to use online platforms that reach new customers more efficiently at a much lower cost compared to traditional distribution channels. 

AliEpress, the online marketplace of Alibaba Group Holding Ltd that specializes in the sale of Chinese-made goods directly to consumers all over the world, believes that, compared with the traditional business-to-business trade, the golden era for cross-border business-to-customer e-commerce is yet to come. The volume of online cross-border trade is still relatively small compared with traditional trading, but it is growing quickly. This is particularly true in emerging economies. Statistics from AliExpress showed that the overall transactions of the world's cross-border e-commerce market are estimated to triple from the levels seen in 2013 to about $300 billion in 2018. Chinese exporters and shoppers are expected to contribute more than half of the transactions during the same period.

China is a particularly interesting case study. As economic growth slows down and domestic e-commerce market becomes more mature, online platforms cannot rely on Chinese consumers alone. They need to expand their customer base. However, cross-border e-commerce still faces significant challenges in the areas of international payments, logistics and customs clearance. Export logistics have bottlenecked the booming cross-border e-commerce market, as consumers are increasingly picky in terms of having a seamless shopping experience.  In particular, establishing overseas warehouse facilities seems to be becoming mandatory as more online consumers are quite demanding on delivery timings. Especially in developed markets such as the United States, the United Kingdom, Australia and Germany, consumers expect to have their online purchase delivered to their doorsteps within three days after placing orders online.

According to global e-commerce platform eBay Inc, about one-third of all the Chinese firms whose annual gross merchandise volumes exceeded $100,000 had set up overseas warehouses by the fourth quarter of last year. Overseas warehouses allow companies to store some goods in their target markets in advance, a strategy that can significantly reduce delivery time, package damage rates and loss rates during transportation. Although it will not solve all problems related to cross-border e-commerce, this strategy can contribute to elevate foreign sellers' service standards to match those of local retailers.

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