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What's Next for 2014

  1. What’s Next for 2014 Asia Pacific
  2. Welcome to the What’s Next Trend Report 2014 We hope that you enjoy reading this report and that it inspires you for the year ahead. At What’s Next we’re passionate about the intersections between consumer culture, business practices, the never ending march of technology and media. We believe these intersections are what drives the future . This report explores the trends that will be created in 2014 when developments in each of those areas collide. Letter From The Editor
  4. EXECUTIVE SUMMARY Projections & Trends STATUS CONTINUES TO BE A KEY DRIVER OF ASIAN CONSUMER BEHAVIOUR. HOWEVER, WITHIN THAT WE’RE SEEING A RANGE OF SUB-SET BEHAVIOURS THAT ARE CHANGING THE MEANING OF STATUS. As Asia’s tier 2 and tier 3 markets open up further the luxury market is breaking up into two, if not three tiers. While newcomers to the category scramble for status badge logos, the experienced Asian luxury consumer is becoming more sophisticated in his choices, valuing the experience of luxury as much as, if not more than, the product itself. At the other end of the spectrum though, there is a move towards trade-up and trade-in retail formats for those entering categories such as consumer electronics for the first time. THE SMARTPHONE CONTINUES ITS DISRUPTIVE INFLUENCE, BUT AS THE INTERNET OF THINGS BECOMES EVER MORE PRESENT THE REACH OF ITS IMPACT GROWS Mobile continues to be a game changer but its influence is evolving. As the region grows in affluence more people are connecting and they are doing it via mobile: this has a significant impact on their expectations of brands. As smartphone penetration hits and goes beyond critical mass across all of Asia – even in developing markets – ‘mobile natives’ are demanding short form content, and image first communications. Executive Summary
  5. SMARTPHONE PENETRATION COUPLED WITH THE INTERNET OF THINGS COMING OF AGE WILL CHANGE RETAIL FOREVER. For a long time, any discussion of the impact of digital on bricks and mortar seemed to suggest the end of the traditional shopping experience. However, the smartphone is really the pioneer of The Internet of Things (IoT) and as businesses begin to harness these two areas more effectively its beginning to change the bricks and mortar game completely with heightened experiences for consumers reinventing the retail space. Furthermore, the impact of increased smartphone penetration (and to a lesser extent wearable technologies) and the IoT is empowering consumers in their daily lives. In 2014 we’ll see the IoT become more visible as companies begin to commercialise technologies that intuit what you need without needing to be told. EXECUTIVE SUMMARY Projections & Trends
  6. 10 Trends for 2014
  7. Image Powered Web Monthly e-Retail Formats The Need for Short Form Content The Polarisation of Luxury Disruptive Force of Emerging Markets The Mobile Empowered Consumer: Intuitive Technology Mobile Natives Owning the Multi-screen Mix Changing Retail Environment Second Hand Status 001 003 004 005 006 008 007 009 010 002 Mouse over numbers to expand, click for more information
  8. The Image Powered Social Web Although predominantly text-based apps such as Line and WeChat have had enormous success of late, it’s fair to say that over the last 5 years there’s been significant change in the way that people use the internet and social media. From almost exclusively text based status updates on Facebook and 140 character updates on Twitter we’ve moved, thanks to smartphones, to a more visually dominated form of communication online. Pinterest, Instagram and Snapchat have paved the way to for the image powered web. These days it feels like hardly a meal is eaten without it being documented visually somewhere on line. There are now over 40m+ users, & one million daily active users on Instagram in Australia alone and more than 100,000 downloads of the app in China daily. Data to the right shows the sheer rate of growth of image centric apps, with 27% of images uploaded now being done so through SnapChat. WHAT THIS MEANS FOR BRANDS With an increasing focus on image powered communications brands need to think hard about how they create and distribute content. With imagery fuelling how we connect, its changing the form and functionality of websites and evolving how we discover. Most significantly for brands, it’s evolving what we think of as content and advertising with native advertising starting to take off. Instead of display banners, this is about promoted posts on Facebook, videos on The Vine and photos on Instagram. Source: Internet Trends DII Conference, KPCB, May 2013 001 003 004 005 006 008 007 009 010 002 THESE DAYS IT FEELS LIKE HARDLY A MEAL IS EATEN WITHOUT IT BEING DOCUMENTED VISUALLY SOMEWHERE ON LINE.
  9. Monthly e-Retail Formats With the growth of smartphone penetration across Asia in 2013 e-commerce, and in particular m-commerce has been a hot topic over the last 12 months. However, hot on its heels as retail trend du jour is that of monthly e-retail formats. From beauty and cosmetics to candy we’re seeing retailers and manufacturers start selling on a monthly subscription or ‘subcom’ model. As well as pre- ordered favourites, customers frequently receive additional ‘surprise’ items to experience making this a great avenue for sampling. WHAT THIS MEANS FOR BRANDS Currently e/m-commerce has become a relatively standardised experience across companies and brands. Through the subcom model some brands are finding an avenue for differentiation and bringing the ‘surprise and delight’ factor back into the transaction process. Korean beauty brand Memebox has seen exceptional growth through the subcom model and now has over 100,000 subscribers to its monthly service, equating to $2m+ of revenue. Off the back of this success it has expanded the service into Japan, the USA and is coming soon to Thailand. Source: 001 003 004 005 006 008 007 009 010 002 FROM BEAUTY TO CANDY WE’RE SEEING RETAILERS AND MANUFACTURERS START SELLING ON A MONTHLY SUBSCRIPTION OR ‘SUBCOM’ MODEL.
  10. The Need for Short Form Content Sources: nVision (2013),, eMarketer, Mintel and Warc One Second Everyday prompts users to capture a clip of their life each day. Each clip is then saved to a calendar. Clips then play in chronological order to create a short film. With the overwhelming amount of content and information we now have access to, consumers have an ongoing need for bite size and engaging content. Consumers are no longer just consuming media but also creating and sharing it themselves. WHAT THIS MEANS FOR BRANDS Brands should take advantage of this creativity and provide consumers with ingredients and content that they can adapt, improve and share amongst their networks. Making use of the creativity of a brand’s customer-base not only produces a better output, it also builds a bond between brand and customer. It is, therefore, important to provide all communications with content that can engage people and make them want to share it. Content should generate interaction with consumers and offer them social currency - something they want/need to share with their social network rather than an intrusive or commonplace sales message. Vine requires users to tell their stories within a very short period of time. Creators only have seconds to get their point across to viewers. 001 003 004 005 006 008 007 009 010 002 WITH THE OVERWHELMING AMOUNT OF CONTENT AND INFORMATION WE NOW HAVE ACCESS TO, CONSUMERS HAVE AN ONGOING NEED TO HAVE BITE SIZE AND ENGAGING CONTENT.
  11. The Polarisation of Luxury With the coming of age of T2 and T3 markets across the region ‘luxury’ in it’s broadest sense is becoming increasingly democratised. Arguably, some brands such as Louis Vuitton may have fallen into the realm of ‘expensive mass brands’ rather than real luxury. For the uber-rich or more ‘experienced’ shopper this has opened up the market to include a new tier of luxury. More sophisticated in its out look, this new tier is notable for its emphasis on experience, service, story and discretion: it’s a move away from obvious badges that say ‘I have arrived’, although status seeking is still the key purchase driver. Those who are already purchasing traditionally defined luxury goods are beginning to speak of luxury in experiential terms; it’s less about showing off your purchase and more about having exclusive access to unique experiences to brag about. WHAT THIS MEANS FOR BRANDS Brands have the opportunity to redefine luxury further. Its application can extend much further beyond expensive products where brands infuse luxury into unique experiences. Further to this Point of Sale enjoys an augmented role in which the story of where and when I bought X is as important as the purchase itself. Status comes from the story more than the object. Logos that demonstrate status through expense are no longer going to give an ‘easy win’ in Tier 1 markets in which consumers are now looking for something more from a luxury experience.. Source: McKinsey & Company, Chinese Luxury Consumer Survey, December 2012 001 003 004 005 006 008 007 009 010 002 ARGUABLY, RANGES FROM THE LIKES OF LOUIS VUITTON MAY HAVE FALLEN INTO THE REALM OF ‘EXPENSIVE MASS BRANDS’ RATHER THAN REAL LUXURY.
  12. Disruptive force of emerging markets The rise of middle-class consumers in emerging markets is leading to radical shifts in business models and NPD. Global brands are now producing innovative designs, reducing manufacturing costs and therefore offering cheaper entry price points. The telecom and automobile industries have been the first to benefit from this and balancing the affordable with product functionalities will be key focus for these consumers. With emerging markets accounting for nearly 50% of the world’s total consumption and China and India accounting for two-thirds of this expansion alone, brands need to continue to identify opportunities for growth within these untapped markets, especially as they are up against aggressive local players. WHAT THIS MEANS FOR BRANDS For global brands wishing to extend further into these markets, providing a strong value proposition will be key. The needs of these emerging markets have the potential to disrupt entire industries by offering cheaper entry and price points - brands should also look for opportunities within NPD. Mobile optimisation also needs to be strong for global brands operating in these regions as, quite often, access is mainly through a tablet or mobile device. A test and learn culture with optimisation needs to be implemented now rather than later, to ensure that brands are ready for any immediate growth in these markets. Sources: nVision (2013), and Warc Chinese mobile brand Xiaomi has achieved tremendous growth across the region, destabilizing the leadership positions of big name manufacturers through competitively priced products and innovative sales formats like its recent flash sales on WeChat. 001 003 004 005 006 008 007 009 010 002 THE RISE OF MIDDLE- CLASS CONSUMERS IN EMERGING MARKETS ARE LEADING TO RADICAL SHIFTS IN BUSINESS MODELS AND THE TYPES OF PRODUCTS THEY ARE PRODUCING AND AT WHICH PRICE POINTS.
  13. The Mobile Empowered Consumer: Intuitive Technology Consumers feel the need to be connected anywhere and everywhere and expect information to accompany them. Smartphones are almost becoming an extension of the consumers themselves - rarely leaving their side. They, along with wearable technology will become so ingrained in people’s lives that we’ll eventually scarcely even notice them. Over the next 12 months we’ll begin to see the smartphone used as a ‘control’ device that manages a multiplicity of connected screens. The Internet of Things will also mean that everything will soon become connected - not just people, but objects and places. The digital ecosystem will develop intuitively across platforms and devices, making everything work together much more seamlessly. As consumers become more comfortable with handing over their data, the more personalised technology will become. Future technology and connectivity will become more intuitive, passive, automated and require less input from us. WHAT THIS MEANS FOR BRANDS Moving forward, brands will have plenty of opportunities to blend into this intuitive digital ecosystem. The challenge for advertisers will be how to sync with the consumer’s frame of mind without interrupting their task. Thinking should be shifted from how and where brands can advertise on mobile platforms, to how brands can blend more seamlessly into consumers’ mobile lifestyles. With consumers having the power to filter out irrelevant messages, it is essential that brands work harder in a more human way in order to draw attention to themselves. Sources: nVision (2013), and Warc The Galaxy Gear launched in 2013, selling 800,000+ units in its first two months: significantly more than expected in spite of the current limitations of the product. Hundreds of other watch based devices were introduced at CES 2014. 001 003 004 005 006 008 007 009 010 002 WITH CONSUMERS FEELING THE NEED TO BE CONNECTED ANYWHERE AND EVERYWHERE, BRANDS WILL HAVE PLENTY OF OPPORTUNITIES TO BLEND INTO THIS INTUITIVE DIGITAL ECOSYSTEM.
  14. Owning the Multi-screen Mix From smartphones and tablets to laptops and televisions, 90% of all media interactions today are screen- based. Consumers now move among screens to get stuff done: simultaneously and sequentially. Smartphones and tablets have become the enablers of two dominant forms of viewing multi-tasking, (although multi-screening is about more than just those two devices). Simultaneous ways of consuming media are growing, such as ‘media meshing’ (multiple devices simultaneously used to enhance a media experience by communicating or interacting with what they are viewing) and ‘media stacking’ (using multiple devices simultaneously to conduct unrelated tasks while watching TV). With each mobile device having a different role, it is important for us to understand how consumers use those screens: smartphones keep us connected, tablets keep us entertained and computers keep us productive. With multi-screen behaviour moving more mainstream, it is essential that brands own the second screen. WHAT THIS MEANS FOR BRANDS Brands need to engage with their consumers with meaningful and shareable content to provoke conversation, interaction and an emotional connection. Media should increasingly be thought of as a meeting point and brands need to think less about using media based on customer journeys & purchase funnels and more about choosing media based on how they can build bespoke personal relationships and friendship funnels. Sources: nVision (2013),, iab Europe, Global Web Index, Google Think Insights and Warc McDonald's, created a smartphone app to engage Chinese consumers during the 2012 Olympic Games. The app adopted GPS and motion- sensor technology to allow people to virtually 'compete' with Olympians via a mobile game as they watched the Games live. 001 003 004 005 006 008 007 009 010 002 WITH 90% OF ALL MEDIA INTERACTIONS BEING SCREEN- BASED, CONSUMERS ARE NOW MOVING ACROSS SCREENS SIMULTANEOUSLY TO GET THINGS DONE.
  15. Mobile Natives Source: Social Bakers October 2012 WHAT THIS MEANS FOR BRANDS Brands need to cater for this new group of consumers who come to the digital world from a mobile first perspective. Analysts are predicting that by the end of 2014 more consumers will consume more content on mobile than on any other device. Considering that 90% of all media interactions are now screen based that’s a significant step. Most importantly advertisers need to remember that mobile can no longer sit on the periphery of campaign planning. It needs to be at the heart of what we do. With an entirely new ‘segment’ emerging that are used to the dialogue afforded to them by being ‘mobile native’, as advertisers we need to make sure that we monopolise on the power of now and recognise that awareness media no longer has to be a one way conversation. Connectivity will continue to blossom in 2014. With the middle classes continuing to grow rapidly across Asia, we’re seeing that the first thing that people want to do with their increased affluence is to communicate, and to participate. Mobile penetration is surpassing 100% even in developing markets, with that of feature and/or smartphones not that far behind. With that a new type of consumer is emerging: the mobile native. 001 003 004 005 006 008 007 009 010 002 MOBILE PENETRATION IS SURPASSING 100% EVEN IN DEVELOPING MARKETS, WITH THAT OF FEATURE AND/OR SMARTPHONES NOT THAT FAR BEHIND.
  16. Changing retail environment The retail landscape is experiencing change. While we have plentiful opportunities to shop online, retailers are also giving new reasons for shoppers to spend time in their physical spaces. Mobile technologies are helping to enhance and extend the shopping experience and lines between online and offline shopping experiences are becoming blurred. With technologies that have already been implemented like fingerprint scanning, 360˚scanners and OOH virtual shopping walls, it has meant that alongside mobile apps, smartphones have and will further become, indispensable pocket shopping assistants. WHAT THIS MEANS FOR BRANDS At a time when retailers and brands are struggling to entice reluctant, hard- headed shoppers, brands need to ensure that their channels work together seamlessly to create the best, unique online and offline retail experience. These channels need to help arouse consumer curiosity by creating buzz, delivering unique experiences. Both the physical & digital worlds need to be connected through all-in-one experiences. Sources: nVision (2013),, eMarketer, Mintel and Warc MasterCard’s ShopThis feature helps tablet magazine readers purchase product directly in-app. This then shortens and simplifies the consumer journey to purchase. 001 003 004 005 006 008 007 009 010 002 PROVIDING CONSUMERS WITH A CONSISTENT SHOPPING EXPERIENCE ACROSS CHANNELS, HAVING CHANNELS WORK TOGETHER AND ALLOWING CONSUMERS TO ACCESS MULTIPLE SHOPPING CHANNELS SIMULTANEOUSLY THROUGH AN ‘OMNI- CHANNEL’ SHOPPING APPROACH
  17. BIG NAME BRANDS ARE COLLABORATING IN ORDER EITHER TO MAXIMISE THEIR IMPACT ON THE MARKET OR ENTER MARKETS WHERE THEY PREVIOUSLY HAD NO PRESENCE. As Asia’s population becomes increasingly wealthy more people are coming to ‘affluent’ categories more quickly than ever before. These consumers are becoming exposed to an increasing number of products on the global market and are eager to try aspirational brands. However, this aspiration is set against traditionally price sensitive mind sets and there finds a curious tension which is finding expression in ‘trade up and trade in’ retail portals. Discounted, pre-owned or pre- used models are bringing an uncomfortable – or even impossible – financial stretch within reach. WHAT THIS MEANS FOR BRANDS Consumers are coming to high profile, global brands for the first time in a way that the brand has little ability to control. With status still being the key driver for ownership brands need to think about how to make the experience of buying through legitimate retail outlets and/or ‘unboxing’ a strong enough pull to be willing to go the extra mile financially. Maintaining control of the brand and product experience needs to be a key consideration. Source: Second hand luxury is taking off in China thanks to stores such as Milan Station. In 2013, over 300 new secondhand luxury stores opened in China, with sales of approximately CNY 3 billion (USD 4.94 billion). Second Hand Status 001 003 004 005 006 008 007 009 010 002
  18. What this means for ADVERTISERS THE CONSUMER AND ADVERTISING LANDSCAPES EVOLVE QUICKLYAND OMG IS CONSTANTLY THINKING ABOUT HOW TO KEEP UP WITH THAT RATE OF CHANGE IN ORDER TO HELP BUILD BRANDS AND DELIVER GROWTH. Advertising is becoming more complex, less streamlined, and harder to execute and reach audiences at scale. Today, digital media not only presents multiple challenges, but also multiple opportunities to extend content and experiences beyond traditional media norms. Omni-channel advertising has been gaining momentum. Brands need to use platforms less as siloes, and more as a seamless approach to engaging with their consumers in a meaningful way and across multiple screens at the same time. The rise of the smartphone, tablet and Smart TV penetration is presenting more and more opportunities for advertisers. The increase of smartphone ownership has also encouraged the emergence of new behaviours. What this means for advertisers
  19. WHAT’S NEXT At What’s Next we’re passionate about the intersections between consumer culture, business practices, the never ending march of technology and media. For more information, contact Sarah Yems at Follow us on Twitter - @OMG_WhatsNext