Digital Advertising Industry in Sri Lanka - Part I

Internet is playing a major role in the business infrastructure in modern business world.. It provides the platform for the business community to meet their customers and deal with them in a much more sophisticated way.  The internet penetration in Sri Lanka 2016 a remarkable growth of mobile broadband connections and an exceptional growth of fixed the internet connection demand, the country is making a digital hub with the growth of e-commerce industry in Sri Lanka. According to (Internetlivestats.com, n.d.), currently Sri Lanka has 6,700,160 internet users, and it is 32.1% of the total population (Internet Worl Stats , 2017). It’s a share of 0.3% out of Asian internet users.. There are 23 + Million mobile connections in Sri Lanka which automatically results in high internet penetration. We can see a huge growth if we compare the stats with the year 2011. The current number of Facebook users is more than 3.5 million The evolution of the Internet environment and the rise of the computer-mediated communications resulted in a high degree of digitization of information products (Djoukanova, 2nd June 2014)and immense opportunities to create and distribute digital content (Djoukanova, 2nd June 2014)

Sri Lankan Digital Marketing platforms and Digital Advertising still at the emerging stage. But with the High internet usage and trend of using Social media widely with the native language and increase of video streaming grab the attention of Sri Lankan marketers to move with digital Marketing techniques. About 85% of the users are accessing Facebook only from their mobile while 15% use multiple devices (Desktop/Mobile) to access Facebook in Sri Lanka. (Seven Media Group). Critically analyzing the demographics of Facebook users in Sri Lanka there are about 3700,000 male users and 1600,000 female users. Also the majority of the Facebook users in Sri Lanka is between 19- 30 Age category and it is about 2.8 million users. (Seven Media Group) There is about 30% user growth during last year and the main reason can be the viral topics surfaced during the particular period and the mainstream media (TV/Radio/Press) talking about it frequently. (Social Bakers , 2017)

With the development of information technology, it’s possible to deliver advertising more accurately. Online behavioral advertising (OBA) is a kind of advertising which tracks individual online behavior in order to deliver advertising tailored to his or her interests. However, consumers still avoid advertising with more precise delivery. We can’t find out the measures which decrease OBA avoidance unless we know about the factors that influence the avoidance (Li W. a., 2016)

Sri Lankan Marketers should identify the importance of integration of traditional media with digital advertising to get a better result. This research will study about the current situation of Sri Lankan digital advertising industry along with the changing consumer behavior and ad avoidance.

Online advertising:

Online advertising is broadly delivering ads to the online users (Deshwal D. P., 2016). In online marketing it is not the marketer, Consumer gives the permission to communicate. The online population is younger, more affluent, and better educated. Philip Kotler in Marketing Management Millennium Edition mention that they easily find a way to connect and online is becoming mainstream. (Kalia, 2016)

Online Behavioral Advertising (OBA):

·         Online behavioral advertising (OBA) is a kind of advertising which tracks individual online behavior in order to deliver advertising tailored to his or her interests. (Li W. a., 2016)

·         Online Behavioral Advertising means the collection of data from a particular computer or device regarding Web viewing behaviors over time and across nonaffiliated Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors (Kaushik kumar, 2014)

Based on previous studies it is said that consumers avoid advertisements based on advertiser control factors, Consumer control factors. Same as the TV advertisement avoidance users tend to skip online ads. Based on the research conducted by Advertising Research Foundation it is said that consumers avoid ads because of Physical, Mechanical and Cognitive Reasons. (The Advertising Research Foundation, 2016).  Leaving the room, Attending to others / chores (kids, pets, cleaning, cooking, etc.), and doing their hobbies are few physical reasons why people don not expose to advertisements. Checking messages / email / social media, trying to fast forward through the commercials, Surfing the internet, muting the sound are the Mechanical reasons for consumers to avoid the advertisements. (The Advertising Research Foundation, 2016) That is where Online Advertising plays a bigger role in acquiring customers and grabbing their attention. Consumers expose to so many screens and they are shifting between screen. People will check their phone when they are watching TV. They might Facebooking while watching TV. Due to this reason Sri Lankan advertisers are now shifting in to Digital advertising whilst managing a balance between traditional mediums.

Global Mobile penetration and digital trends

It is not a wonder that digital consumers becoming more interested in using mobile device due to easy access and convenience. Global picture of mobile penetration is increasing day by day and digital consumers are turning in to mobile only consumers.

“Mobile fueled the internet economy in 2016, with advertisers showing their confidence in digital to achieve their marketing goals. This increasing commitment is a reflection of brands’ ongoing marketing shift from ‘mobile-first’ to ‘mobile-only’ in order to keep pace with today’s on-the-go consumers.”

                                                         -Randall Rothenberg, President and CEO, IAB                                                                                  (Source: IAB internet advertising revenue report 2016)

During 2016 in U.S Mobile advertising revenue accounts for 50.52% of total online advertising revenue.

                                                                     Shift from desktop to mobile

Source:IAB/PwC Internet Ad Revenue Report, FY 2016

Mobile revenues increased 68% from the $6.9 billion (40% of total) reported in Q4 2015 to $11.5 billion (53% of total) in Q4 2016. The highest revenue from Mobile consisted of Mobile Search ($5.3 billion), Mobile Display-related ($5.8 billion), and Mobile other ($466 million).

Ad format – Fourth quarter 2016 results

Source: IAB/PwC Internet Ad Revenue Report, FY 2016

It is said that today we are living in an audience era, which is everyone and everything has an audience. (Global Web Index, 2016).Also it says digital consumers are becoming mobile only users. That is they saw mobile as the only device to access in to internet. 

New Perspectives on Marketing in the Service Economy

In ancient times people defined marketing as “selling goods”. But selling concept is just a little part of marketing concept. When it comes to marketing, you may think that what are the things that we can market? Laymen people may say that “It’s all about the product”. 

But it is not about tangible products. With the development of economies and the business concepts, people are finding more ways and means to fulfill their needs. Basic needs are changing in the long run. In modern business context, product refers to tangible goods, services, events, experience, property, persons, places, organization, information and ideas. Now the whole world is digitized. We live in a digital world. Most economies are data driven economies. If you want to be powerful, wealth is not enough.  Data and the information drive the whole economy. What about services? Services dominate the economy in most nations. The highest contribution to GDP (Gross Domestic Product) is from service sector in most of the developed countries. The contribution to service sector is booming day by day. The following diagram shows the contribution to GDP by the service sector in Indian economy.

The GDP contribution of various sectors of Indian economy have evolved between 1951 and 2013, as its economy has diversified and developed.

 (Source : https://en.wikipedia.org/wiki/Economy_of_India)

The importance of service Sector in economy is growing rapidly. •Services account for more than 60 percent of GDP worldwide

•Almost all economies have a substantial service sector

•Most of the new employment is provided by services (Fastest growth expected in knowledge-based industries)

•Strongest growth area for marketing

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Services are the economic activities offered by one party to another. Services are intangible, perishable, variable, inseparable and involvement of the customer is a must to take the service. Marketing management tasks in the service sector differ from those in the manufacturing sector.

The eight common differences are

1.       Most service products cannot be inventoried

•Services cannot be inventoried. Service provider may have the capacity to serve 10 persons per day. But that depends with the customer’s situation. Because from person to person, service time may be varied. The best example for this is getting consulting service or getting medical advice from a doctor. To overcome this problem, in marketing, pricing, promotions and reservations are carried out to smooth demand.

2.       Intangible elements usually dominate value creation

•It is harder to evaluate a service. Normally tangible goods have a standard. So easily we can understand how well that we are than our competitors. But in service, it totally depends with the person who provides the service. In marketing we can emphasize the physical clues, employ metaphors and vivid images in advertising.

3.       Services are often difficult to visualize and understand

•Since the services are difficult to visualize we should educate the customers on making good choices and give them guarantees.

4.       Customers may be involved in co-production

•This is the interaction between the customer and the provider. Poor task execution will affect the customer satisfaction. Therefore, we need to develop user friendly equipment, facilities and systems. We should train customers to provide good support.

5.       People may be part of the service experience

•The best example for this is the service you get from a beauty salon. If you need a haircut you need to communicate with the service provider what is the exact way that you want to cut your hair. You need to support the service provider by moving your head and staying in the right position.

6.       Operational inputs and outputs tend to vary more widely

•Hard to maintain quality, consistency and reliability.

7.       The time factor often assumes great importance

•Customers want services at convenient times. Therefore, we need to offer extended hours and speed the delivery time.

1.       Distribution may take place through nonphysical channels

·         Mostly through electronic channels or telecommunications. So we need to provide user friendly websites and free access by telephone.

Value added physical tangibles elements helps distinguish goods and services, you will get a clear idea about that from the following diagram.

Everybody knows 4ps in Marketing. But in Service marketing we need another 4Ps to overcome those problems in services. That is

• Product Elements- core products always response to customer needs. we need to Satisfy their needs better than competing alternatives
• Place and Time- people want to get service at the time they want. As marketers we should decide when and where to deliver the products. We need to have clear service schedule

(Mobile restaurant at Nuwara Eliya)

• Price and Other User Outlays- people are always ready to pay more money if we can deliver good service. We need to satisfy the customer expectations. Beyond the customer expectations. Price is just a matter between cost and the value they perceive.
• Promotion and Education- we should keep informing, educating, persuading, reminding customers about our service. 

Carlton Ritz- “Let us arrange for a tailor at 5.00 a.m.”

                          “Let us move the heaven and earth then move it back”

                          “Let us invent a cocktail and name it in your honor”

• Process- we should clearly design the process. If not it will waste time, create poor experience and disappointing customers. We can design activity flows, role of contact personal, number and sequence of actions for customers.

§  Physical Environment - Design servicescape and provide tangible evidence of service performances. And also create and maintain physical appearances through interior design landscape, staff grooming, sounds and smell etc.

(98 acres resort and spa)

                                                           ( peacock beach hotel)

§  People- interaction between customer and the contact personnel strongly influence customer perception of service quality. They the once who engaging with customers. They should be educated with how to treat customers, how to welcome, how to use the language etc. example- the Carlton Ritz hotel says “we are Gentlemen and ladies who serves to gentlemen and ladies”. It shows how strong their human capital to serve the customers.

                                                      (Srilankan Airlines)

• Productivity and Quality- Productivity and quality must work hand in hand .Improving productivity key to reducing costs.

Service marketers play a huge role in modern business context. So we need to identify the advantages of focusing in service marketing in modern business context.