Nielsen’s new Southeast Asia Digital Consumer Report examined the digital media habits and attitudes of consumers in Singapore, Thailand, Indonesia, Malaysia, Vietnam and the Philippines. Singaporeans led the region in online usage, spending more than a day (25 hours) online each week, while Filipinos and Malaysians came close behind, spending 21.5 hours and 19.8 hours a week online, respectively. Indonesians trailed the region, spending an average of 14 hours per week.

“The increasing availability and uptake of Internet-capable mobile devices is driving the surge in digital media usage across the region and bringing about considerable changes in the way media is consumed,” said Melanie Ingrey, APMEA Region Research Director. “More and more, consumers are accessing multiple media platforms simultaneously, such as accessing the Internet while watching TV.”

While PCs continue to be the primary way to access the Internet, smartphones are on track to supplant them: in four of the six SEA countries, ownership of mobile devices equals or exceeds owner ship of PCs, either desktop or laptop. In Indonesia, for example, more than three-quarters (78%) of consumers owned Internet-capable mobile phones compared to just 29 percent who owned notebook computers or 31 percent with desktops. Tablets are just starting to make their mark in the region, but they are likely to show rapid growth in several countries in the region in the year ahead.

Reading and sending email was the most popular activity for netizens in Malaysia, Singapore, Philippines and Thailand, while reading news was the favourite digital activity in Vietnam and Indonesia. Accessing social networks ranked in the top five activities for all of the countries except in Vietnam, with Facebook dominating the landscape in Indonesia, where 90 percent said that they maintained an active profile on the site, which was also popular in the Philippines and Malaysia. Facebook does not enjoy the same penetration in Thailand or Vietnam, however, with competitors such as 4Shared and Zing having significant popularity. YouTube ranked as one of the top five most popular sites in all six countries.

As in other parts of the world, social networking sites have become an increasingly important way for consumers to connect with the brands they like. In the Philippines, nearly two-thirds (65%) of respondents said they interacted with brands, products or companies via social media, while 60 percent of Malaysians and 56 percent of Singaporeans did the same.

Online engagement with brands is particularly important for consumers in making purchase decisions, with vast majorities of consumers in four of the six countries (Malaysia, Philippines, Singapore and Thailand) indicating that they read product reviews online. Majorities in those countries also post their own reviews of products and services purchased.

“Social media platforms offer myriad opportunities for organizations to engage with consumers, and it is becoming an increasingly critical means of influencing consumer decision making,” noted Ingrey. “As Southeast Asian digital consumers are becoming more familiar and comfortable using social media, their level of participation is also increasing. A significant proportion of consumers visit online discussion forums at least monthly and many are now starting to take an active role in these online discussions.”

Online advertising is still in its infancy in the region, with Singapore leading the way in terms of proportion of total ad spend in the channel at 6.9 percent; in Malaysia and Thailand, the figure is less than one percent. Digital consumers in Vietnam indicated the highest positivity toward online ads, while those in Thailand were less receptive. As always, creating ads that are relevant to the needs and interests of individual consumers is critical to gaining their interest.

“Online activity is only going to increase in the years ahead as more consumers obtain smartphones, and 3G and broadband access become more common and affordable. Marketers would be well-advised to examine how they can fully leverage these trends through innovative, creative and most importantly, relevant ad executions,” said Ingrey.

For more information, download The Digital Media Habits and Attitudes of Southeast Asian Consumers.

Country by country, peak viewing times vary somewhat:

• South Korea has the latest viewing peak, with the highest proportion of viewers (26%) tuning in between 10pm and 11pm
• New Zealand and Australia have the highest proportion of viewers tuning in at any particular time – on average, 40 percent of New Zealanders and Australians watch television between the hours of 8pm and 9pm, closely followed by the Philippines with 39 percent
• New Zealand has the highest number of viewers outside of the 8pm to 9pm peak time – between 7pm and 8pm 39 percent of New Zealanders tune in to their televisions and the 6pm to 7pm time slot also enjoys around 35 percent of New Zealand viewers
• Malaysia has the largest proportion of late night viewers, with one quarter of Malaysians still watching television between the hours of 11pm and midnight
• Filipinos are the most likely to tune in to daytime television – more than one in five (22%) watch television between 12pm and 2pm.

Social media sites are some of the most heavily visited and used sites on the Internet. Users of social media are among the most coveted for advertisers,  yet online ads are still largely under-represented in terms of their percentage of total ad spend. As more and more proof of the effectiveness of online advertising comes to light, however, advertisers are beginning to take note. In Southeast Asia for example, recent Nielsen research indicates that consumers are highly influenced by online advertising — much higher than the global average. Nearly three-quarters (73%) of SE Asian consumers said they were “highly” or “somewhat” influenced by web site advertisements on social media (compared to 60% globally). That number rises to 80 percent when ads have a social context, such as indicating which of a consumer’s friends have liked or followed the advertised brand.

Online ads that are delivered to consumers based on previous purchases or other web sites visited also resonated with SE Asian consumers, with 74 percent saying they found this technique “made their lives easier”, compared to just 58 percent globally. Consumers in Philippines and Vietnam were most receptive to such ads (83% and 82%, respectively).

Nearly seven of 10 (69%) SE Asian consumers have “liked” or followed a brand or company on social media, significantly higher than the global average of 52 percent and higher again in countries such as Vietnam (79%) and Philippines (75%). Perhaps most importantly, consumer generated media (consumer opinions posted online) is now one of the most trusted forms of media among SE Asian digital consumers. More than half (54%) completely or somewhat trust consumer opinions posted online.

As consumers in the region become more familiar with social networking platforms, their levels of confidence and sophistication in using social media increase. They tend to value and trust online content as a source of information. Online advertising can offer a high return on investment in this region, provided companies know precisely how to reach consumers.

After a year of solid economic growth, Filipino consumers entered 2011 on a high note: GDP in 2010 grew at the fastest rate in 34 years, unemployment declined and inflation rates were under control. But that optimism was dampened by higher prices for fuel and food during the first quarter of the year. While consumer sentiment has started looking up again, consumers in the country are likely to take a closer look at how they spend their money.

With 85 percent of the Philippines’ households falling into the lower income bracket, rising costs for life’s basic necessities have hit hard. Meanwhile, external shocks such as the natural disasters in Japan also dented consumer confidence at the beginning of the year. Despite these concerns, Filipino consumers continued to spend, with sales of fast-moving consumer goods (FMCGs) posting a nine percent increase during the first two months of 2011 compared to the same period last year. While this growth is tempered compared to 2010, these figures are good news for the country as private consumption accounts for 70-80 percent of GDP.

Three Trends Driving Purchasing Behavior

Three emerging trends are playing a role in driving category growth:

• Consumers are gravitating toward “healthy” products
  Filipinos are increasingly trying to stay healthy. As part of this trend they are consuming products that are perceived to be good for you. Products perceived to be healthy are seeing sales grow because they have successfully created “need” states that help protect against such conditions as colon cancer or osteoporosis. High-quality, healthy products will appeal to a clear segment of the market.

• Sachets equal success
  With consumers increasingly focused on value, some FMCG makers have taken to packaging their products in low unit packs and sachets that require a lower cash outlay. The success of powdered beverages and fabric conditioners packaged in such sizes are testament to the popularity of products in sachet-sizes. Innovations in sachets such as multi-chamber sachets and upsized versions are likely to continue to drive the market as these enable cash-strapped consumers to continue enjoying their favorite brands at lower price points. Manufacturers should take caution, though, as offering sachets and low unit packs may result in a “downsize” in the value of the transactions. Manufacturers must also remember that consumers still expect the product to deliver on its brand promise, even at lower price points.

• Convenience is king: Workers, particularly those in the business process outsourcing industry in Philippines, can work odd hours and often have very little time to rest. As a result, ready-to-drink, all-in-one and multi-benefit products that are “instant” and “quick” continue to stir the market. All-in-one products make cooking easier for the time-stressed homemaker and these products have enjoyed solid growth. The strong sales of microwave and instant meals, as well as ready to eat/drink products, are also indications that the convenience trend is here to stay.

The Philippines continues to be a solid market for growth, although the path to success in 2011 may be slightly rockier as consumers take a closer look at where and how they spend their Pesos. Increasingly, marketers with a keen pulse on the evolving needs and innovations that deliver relevant benefits will increase their chances of success.

In the clearest sign yet that economic prospects are improving rapidly across the region, six of the ten most confident consumer markets globally are from Asia Pacific, with positive consumer confidence level increases in the Q1 2010 Nielsen Global Consumer Confidence Index.

Richard Basil-Jones, Managing Director, Nielsen Media Asia Pacific comments “The latest Nielsen findings are the sign that marketers, manufacturers and retailers have been eagerly waiting for, as consumers’ spending intentions are turning into actual spending reality. In Q1 2010 global consumer confidence rebounded to the highest level since Q3 2007, however the positive news for marketers in Asia Pacific is that consumers are already upbeat on how they will utilize their spare cash, including 41% on holidays / vacations, 35% new clothes, out of home entertainment 29% and new technology 30%.

These discretionary spending considerations showed significant growth over the same findings in Q1 2009 and this is not lost on most marketers who are now back in growth mode. This is translating into advertising activity rapidly returning to pre GFC levels; where we now see the second consecutive quarter of media advertising growth across all 12 markets in Asia Pacific (compared to the same period in 2009)”.

“Based on the most recent ad spending results, the outlook for main media advertising across the remainder of 2010 appears extremely positive in all 12 markets.

The challenge for marketers however, will be strengthening their brand awareness and positioning where visibility diminished during the downturn. Consumers are out there spending and intending to loosen up their purse strings, so the onus is now on marketers to ensure their products and services return to top of mind” Basil-Jones summarised.

Qtr 1 2010 compared to Qtr 1 2009

• Ad spending in main media* across the region lifted to US$31.16 billion, an overall increase of 18%
• For the first quarter since Q3 2008, all 12 markets across the region recorded strong to bullish ad spend growth.
• Signs of a strong advertising recovery with second consecutive quarter of growth for all 12 markets across the region.
• Double digit ad spend growth across 10 markets drove overall growth in Q1 2010; led by India, Indonesia, Hong Kong, Philippines, Malaysia and Taiwan.
• In a quarter of bullish revenue growth, China dominated with 69% share of all main media ad spending.

12 months to March 2010 & YOY

• Overall ad spending results showed a YOY increase of 15%, to US$132.38 billion.
• As the advertising recession faded, increases YOY were evident across 9 Asia Pacific markets, including double digit increases in 6 markets.
• Still absorbing the impact of advertising downturns of 2009, declines YOY were recorded across 2 markets – Australia and South Korea.
• Television was the main driver of growth (+16%), Newspapers (+14%) and Magazines increased by 4% YOY.

Value has become a main focus for Asian shoppers, partly driven by the economic situation and partly as a result of increased retailer activity focused around price and promotions. According to Nielsen’s Asia Pacific Retail and Shopper Trends 2009 Report, more than 70 percent of shoppers claim to have become more price sensitive compared to last year. The effect: shoppers are more inclined to buy only what they need, spending their money on essentials rather than on treats or what they now consider ‘nice-to-haves’. They’re also consciously trying to cut down on the quantity purchased and are actively seeking out products on promotion.

Over the course of 2008 in Asia, grocery markets continued to show volume growth, led by India (+9%), China (+9%) and Vietnam (+18%), with only Taiwan (-7%) experiencing a decline in sales. Value sales increased by double figures in many markets on the back of high inflation for key food categories. But with inflation falling in all markets, we have seen value growth drop sharply in 2009, although overall volume growth in many markets has held up reasonably well with shoppers not cutting back significantly on grocery categories.

Traditional trade continues to lose share

As expected, the traditional counter service trade continued to lose share in Asia, with overall share of trade dropping another percentage point to 47 percent in 2008. At the same time, the absolute number of traditional grocery stores in the region grew by one percent to over 12.3 million stores. In most developed countries, traditional store numbers fell by five percentage points or more. In Korea, where traditional store numbers dropped by nine percentage points, the share of trade decreased from 15.9 to 13.9 percent, while in Taiwan the traditional trade now accounts for just over six percent of sales, having lost 1.5 percent share in the last 12 months.

The retail landscape looks very different in Southeast and South Asia, however, where traditional store numbers actually grew year on year, and even though share of total grocery sales continues to decline slowly, the majority of shoppers in all markets continue to shop at this trade channel. The traditional channel continues to meets shoppers’ needs for everyday convenience, personal service and affordability – being able to buy the smallest sizes and quantities.

Growth of small modern trade outlets

Globally, many large retailers such as Wal-Mart, Tesco and Carrefour have embraced a multi-format strategy that includes the development of smaller neighborhood stores. Similar growth in small modern trade outlets is also being seen across Asia, with mini-markets/small supermarket store numbers increasing by 17 percent in 2008 to over 100,000 stores.

Indonesia has led the way over the last 10 years and in 2008 more than 1,500 new stores opened, taking the total to over 10,500. These stores now account for more than 16 percent of total packaged grocery sales. Shoppers in Indonesia are continuing to embrace the convenient location, relatively good service and acceptably low prices offered at mini-markets.

Retailers in China are also investing in this store format, with store numbers growing by 22 percent in 2008 to more than 70,000 stores, accounting for more than three-quarters of all modern self-service outlets.

In South Korea we are also seeing the leading Hypermarket operators expanding into small supermarket formats, or ‘Super Supermarkets’ as they are known in South Korea. Samsung Tesco is now operating over 150 SSM Homeplus Express stores and E-mart is planning to open 30 or 40 small, 300 square meter E-Mart Everyday stores. The expansion of these large chains into the small store arena has led to concerns regarding competition with small store owners, and the South Korean government is considering introducing a bill to regulate the opening of small supermarkets.

Toward the end of 2008, the global downturn was adversely impacting advertising spending throughout many key markets around the world, with Europe and the Americas struggling more than others.  The exception to this was Asia Pacific (APAC), which appeared to be relatively impervious to the worst of the downturn. Beginning in late 2008, and escalating as the first quarter of 2009 unfolded, the majority of APAC markets were finally succumbing to declining economic conditions with substantial declines in advertising activity. Hand-in-hand with consumer confidence declining further in the new year, most APAC countries witnessed substantial ad spend cutbacks; although still not resembling the severity of those experienced in some other regions.

“While the flow on effect of the financial meltdown on individual countries’ advertising was beginning to bite across several markets late in 2008, it is the sobering results for the first quarter of 2009 which present a clearer picture of how advertising expenditure across the region was faltering. Main media measured across all markets, defined by Nielsen as free to air TV, newspapers and magazines, stalled at 0 percent growth compared to the first quarter of 2008. Even China, the juggernaut of advertising growth globally over recent years, was not immune to the faltering economic outlook, recording just 2 percent growth over the same period in 2008 and recording 17 percent growth in the fourth quarter of 2008,” said Richard Basil-Jones, Managing Director for Asia Pacific, Nielsen Media International.

“Although six markets recorded declines in the fourth quarter of 2008, overall growth was 10%; however, with nine countries now in decline in 2009, the zero growth in ad spending was not unexpected. On a slightly more positive note, all “other media” tracked by Nielsen across various countries (radio, outdoor, pay TV, cinema and other combined) posted an overall 1.3 percent increase in Q1 2009,” he added.

 Nine countries recorded declines in Q1 ‘09 ad spend versus Q1 ‘08:

• Thailand        -1% 
• Malaysia        -3%
• New Zealand  -4%
• India             -6%
• Australia        -11%
• Singapore      -14%
• South Korea   -19%
• Taiwan          -22%
• Hong Kong     -5%

Just three countries showed growth in Q1 ‘09 ad spend versus Q1 ‘08:

• Indonesia (20%)
• China (2%)
• Philippines (8%)

Other key findings:

•  Across the twelve markets monitored, a total of US$23.5 billion was spent on advertising in Q1 ‘09
• A total of US$109.16 billion was spent on “Main Media” advertising in the 12 months to March ‘09 (+9%) YOY, with television comprising 71 percent of expenditures.
• FTA Television ad spending grew 9 percent YOY; with six countries posting double-digit growth as four countries recorded declines.
• Newspaper ad spending recorded a modest 2 percent growth YOY, even though the medium experienced declines in six countries.
• Magazine ad spending, despite declines in 7 countries, increased 2 percent YOY, with high double digit growth in 4 countries.
• Radio dominated the “all other media” tracked by Nielsen, with a 51 percent share of spend and a 5 percent increase YOY.

INDONESIA

Leading the group was Indonesia, where ad spending increased 19 percent in 2008 over the previous year, and all four quarter showed growth.

The top 10 ad spending categories combined represent 77 percent of all main media spending in Indonesia.  The office equipment/computers/communications category led spending in value terms and posted 53 percent growth on a year-to-year basis.   Medicines/pharmaceuticals and toiletries & cosmetics were laggards in the top 10, posting no growth in ad spend for the year. As in other Asian countries, telecom brands dominated the top 10 advertisers, with Excelcomindo – GSM Card leading the way.

MALAYSIA

Malaysia came in second, with ad spending up 12 percent for the year. The fourth quarter did experience a slow-down, with increases at just 2.4 percent versus the same period a year earlier.

All ten of the top ad spend categories – -which account for 64 percent of all Malaysia media activity – registered gains. Retail, the top category by value, recorded 24 percent growth, while pharmaceuticals posted 32 percent growth.  Financial ads posted the lowest growth of the top ten, eking out just a 2 percent increase.  The three largest advertisers, which represented 57 percent of the total top 10 activity, were telecoms, led by Celcom.

PHILIPPINES

Coming in third was the Philippines, which posted 11 percent growth across all media.  Ad spending remained solid over the year, showing a slight slow-down in the fourth quarter.

The top ten categories represent almost half of all main media advertising, and is led in value terms by hair shampoos/hairdressing products.  That category, however, showed a decline of 7 percent in ad spending compared to 2007.  The biggest growth – 61 percent – came in the proprietary drugs/other than vitamins and tonics category.  Of the top ten brands advertised in 2008, five were hair care and two were dental hygiene products, with Colgate Maximum Cavity Protection toothpaste leading the way.

SINGAPORE

Moving west to Singapore, ad spending finished 2008 with 7 percent growth, although spending actually declined in the fourth quarter after three previous quarters of consistent growth.

Entertainment, the top category in value terms, showed 18 percent growth for the year. Education showed the most improvement – 21 percent – while retail was the only declining category in the top ten (-1%).  The leading advertiser was Courts, a retailer, followed by Tiger Beer/Asia Pacific Breweries.

THAILAND

The only country in Southeast Asia to show a decline in ad spending in 2008 was Thailand, which was affected by the slowing economy and civil unrest.  Ad spending was down 3 percent compared to 2007.  Only the second quarter showed any growth, a relatively modest 4.6 percent.

Only two categories of the top ten showed any growth – motor vehicles and non-alcoholic beverages.  The top category in total spent was skin-care preparations, which recorded a 6 percent decline on a year-to-year basis.  Skin care, autos and communications products dominated the top ten brands advertised in the year, with Ponds Facial Skincare Product leading followed by PTT Public Co., a gas company and Toyota pickups.

Main media, defined by Nielsen as free to air TV, newspapers and magazines, increased 13 percent in 2008, while all other media (radio, outdoor, pay TV, cinema and other) posted an 8 percent increase for the year.

In 2008, three markets recorded declines in ad spend versus 2007, while another posted no growth:

• Taiwan (-11%)
• South Korea (-8%)
• Thailand (-4%)
• New Zealand (0%)

Meanwhile, five countries showed solid double-digit growth:

• India (29%)
• Indonesia (19%)
• China (17%)
• Malaysia (12%)
• Philippines (11%)

Other key findings from Nielsen’s research:

• A total of US$115.2 billion was spent on advertising in the twelve markets monitored.
• A total of US$108.4 billion was spent on “Main Media” advertising, with television comprising 70 percent of expenditures.
• Television ad spend grew 15 percent. Only three countries recorded declines in TV ad spend, while five countries posted solid double-digit growth in this category.
• Although Americans are being deluged with stories of newspapers closing, cutting back and filing for bankruptcy, the medium recorded 9 percent growth, with declines in four countries.
• Magazine ad spends, while still comparatively small, increased 10 percent, with India leading the way.
• Radio dominated “all other media” with a 47 percent share of spend and a 12 percent increase for the year.

Over the next few days, Nielsen Wire will dig deeper into the numbers for Australia and New Zealand, East Asia, Southeast Asia and India.

The primary benefit of taking vitamins and supplements, according to more than 60 percent of those surveyed, was to boost the immune system, a response most common in Asia.  In the U.S., 62 percent of respondents said they took vitamins and supplements to ensure a balanced diet, a response only matched by Japan with 60 percent.

Regions where vitamin and supplement usage was lowest was Europe (30%) and Latin America (28%), with France and Spain bringing up the bottom with only 17 percent and 13 percent of consumers saying that they take vitamins and supplements. The primary reason for not taking vitamins was that their diets were already balanced and saw no need to take them. Interestingly, consumers in Poland, Russia and the Baltic states felt that “it is too difficult to understand which product to use,” suggesting an opportunity for marketers to refine their message in these markets.