70% of companies planned to increase their digital marketing spend in 2015-2016. 78% of companies now have some form of social media. And why not? According to a report by ST, Singaporeans spend at least 3 hours on their phones daily, with 71% checking social networks at least once per day.
“Go with the times. Nowadays people don’t read the newspaper or watch TV Liao. All on handphone. We must reach them there.”
That’s what everyone says. And they’re right. So what’s the problem?
It’s a fact digital marketing budgets are increasing.
How about advertising space? Singapore is a developed nation with one of the highest internet penetration rates in the world. It’s unlikely we will see growth in this area.
A Forbes report showed that Facebook users posted 30% less content in 2016. Facebook got scared and arrested the trend by showing fewer ads.
This is not a new trend. People hate ads.
The above is an eye-tracking study by Nielsen. See how people generally ignore ads?
The first digital ads launched in 1994 had 78/100 people clicking on them. Today, out of 100 people who see your post on Facebook or websites, how many clicks? You’d be lucky to get 5/100.
Digital marketing space in Singapore isn’t growing. And there isn’t enough population growth or internet penetration growth to fuel digital real-estate creation.
What’s happening now
Here’s a logical way to think about the current situation:
Digital marketing spend is up.
Digital marketing inventory is stagnant.
More people fighting for the same space.
Space gets more expensive.
In such a situation, the market regulates itself. Costs go up until a point where only the maximum bidders are allowed to stay.
Unfortunately, for most Singaporean businesses, this means you’d eventually be forced out. The ones remaining will be global MNCs or investor-backed groups with deep pockets. Many MNCs hardly bat an eye at a $200m budget. They also don’t need to profit directly from marketing. Marketing spend is simply a % of the revenue earned.
Let’s imagine both you and McDonald’s going after a famous “influencer” in Singapore. Assume the influencer only has time to do 1 video. You calculate that paying $2,000 lets you breakeven with a small profit. McDonald’s comes in with a $20,000 bid. Sorry. You’re out.
This is a very real scenario today.
I talked to a doctor who just started her own clinic. Her digital marketing budget was around $800 a month. I know her competitor spends $30,000 monthly. She will be forced out of the space through a bidding war.
Another thing is AI optimization systems and bidding algorithms. Here’s the cold, hard truth. Those systems only help people with big budgets that can get big data.
Just like how real-world wealth and property will slowly be consolidated into the hands of the rich, the same will happen here. Eventually, all existing digital marketing space will be dominated by the rich and inequality will increase.
Nevertheless, this blog isn’t just about hard truths. It must also provide solutions. Here are 2.
The next big thing
A rich company that moves fast is a nightmare for all competitors in that industry. But big companies often move very slowly.
This is very similar to the property market in Singapore. Did you buy 5 condos in the early 2000s? No? They’re all taken now. Those other people went in cheap and now dominate the space. Your chance has passed.
And once again, if this was property, what will you do? You’d either wait for a crash (which rarely happens in digital marketing) or you look for overseas markets that are still cheap.
Have you tried OutBrain? Amazon marketing? Will WhatsApp introduce ads soon? Twitch will rise along with eSports. And there will be something new that’s not even invented yet today.
People will always be on the internet. The newest ways to reach them will always be the cheapest. But unlike the real world, even if you are a first mover, your advantage is eroded the moment the big boys come in(other than SEO, which factors in “time”, so the earlier you do it the better). Nonetheless, there will be a short period of time where you can get very good profits.
If all marketing methods other than SEO will eventually get dominated by the rich businesses, what can an SME do?
Big boys often “follow the book”. This means that they can only optimize things based on the world they know.
You, however, can go beyond that world. There are multiple, unorthodox and underground methods to help convert customers at a higher rate. These are the so-called “secrets” that Google and Facebook employees themselves don’t know about. And this is your best bet to win the digital marketing game.
If your competitor converts 1/100 customers, and you convert 5/100, you can effectively challenge his $20,000 marketing with only $4,000.
Use smarter tactics to get higher returns, allowing you to challenge people with 4-5 times your budget.