Back in 2014, we started FALCON as a passion project. We struggled to find data-driven performance marketers and instead of always building a new performance driven marketing team for each eCommerce company from scratch, we decided to set up FALCON Agency and get the best people we have worked with together. So we assembled an incredible team of global talent that helped us build a performance-led agency from scratch. We were referred to as “the SWAT team of digital marketing” by some of our VC/PE partner. One of the many reason’s why we have expanded our service offering at FALCON from an agency business to an eCommerce vertical is literally the boom in SEA’s internet economy.
So back in DEC 2018, we decided to expand our core business to eCommerce with the launch of our direct-2-consumer arm with our first brand Sen Natural. During one of my last meetings with another entrepreneur we came to talk about the digital ecosystem in SEA and I recalled the study of Google/Temasek that is updated every year.
When Google/Temasek first published their e-economy report in 2015, they were forecasting a compounded annual growth (CAGR) of 24% for online media and 34% for eCommerce. Every year they had to revise up their projected growth for SEA’s internet economy. At the last update in November 2018 they updated the online media CAGR to 44% and the eCommerce growth to 62% respectively. Yes, 44% and 62% CAGR! In fact, SEA internet economy is forecasted to triple to U$240b by 2025.
If you zoom in the report, you can see that the online media vertical is now worth over $11billion with 7% billion of that coming from online advertising. Or as they wrote it in the report, much of the $ spent was driven by “digital marketing investments on platforms like app stores, new sites, search engines, social media, and video streaming.”
Adding to this, eCommerce has been the “most dynamic sector” according to the report. This sector has grown 4x over the past 3 years.
Nowadays, you read (and hear) about a potential contraction and/or recession in certain markets and industries. And yes, there will be little to no growth in most industries. BUT, I am convinced that a contraction in the economy will further accelerate the growth in SEA’s internet economy. Why? Because marketers and advertisers have to be “smarter” in their investments in marketing. So the overpriced billboard or the one-pager in the daily newspaper will have it difficult to compete with a data-driven (and trackable) digital advertising solution.
One of the next big wave in SEA internet economy will be the (digital) innovation driven by corporates and conglomerates. Nowadays most businesses in SEA still spend far to little on digital advertising. There are some corporates that claim that they want to spend “up to 50% of their marketing budget in digital”. But the reality is that most of the media spend is still (over)spend in offline channels. A possible contraction will accelerate the shift from offline to online.
So I guess over the next years we will see Google/Temasek again to revise their plan. Upwards.