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Digital
Marketing
By Michael Alan Hamlin
February 23, 2004
"Outdoor is in," trumpeted
a recent story in the Far Eastern Economic Review. The proliferation
of billboards along major Manila thoroughfares - Edsa and South
Superhighway being perhaps the most prominent - suggest that marketers
are indeed finding that this traditional communication channel is,
literally, on the rise. But outdoor billboards are just one sign
of the dimensioning returns that once magic medium, television,
offers savvy marketers.
Digital marketing strategies are another, even in developing economies
like the Philippines and China. According to a recent report by
Kathy Chen in The Asian Wall Street Journal, Alibaba.com - a digital
meeting place for buyers and suppliers - is helping small Chinese
companies grow rapidly. Ms. Chen cited the example of Li Bo, who
produces memento buttons like those used in political campaigns.
After registering his company on Alibaba.com, revenues at Mr. Li's
small company jumped to nearly US$1 million, and last year half
of his orders came from customers who learned of the company by
visiting Alibaba.com. "We would never have done so well if
it weren't for Alibaba," Mr. Li told Ms. Chen. Alibaba.com
has three millions users in 200 countries that buy and sell to each
other. And the company recruits around 6,000 new users every day.
It operates sites in both English and Chinese.
Suppliers have done so well on Alibaba.com, it appears, that they're
now willing to invest a US$300 annual membership fee which entitles
them to international exposure and additional services. According
to founder Jack Ma, the renewal rate is 70 percent. The company's
goal, according to Ms. Chen's report, "is to help small- and
medium-size companies earn money by linking them directly to buyers
and markets to which they otherwise wouldn't have access."
Alaibaba.com also helps out by conducting rigorous credit checks
on both suppliers and buyers, and when a company isn't prompt in
meeting its obligations, is blackballed publicly. Although Alibaba.com
isn't yet profitable, it is cash flowing and still raising money.
The company generated US$12 million in "free cash flow last
year" and has just raised US$82 million from four institutional
investors.
Estimates of the value of e-commerce transactions vary widely in
China, but with millions peddling everything from political buttons
to ants nets - and thousands joining the party daily - it seems
to be booming. And for good reason. Alibaba.com's US$300 fee is
a fraction of the cost involved in marketing a company's products
within China, for example, let alone the world.
Another benefit is Alibaba.com's capacity to attract buyers. Looking
for a reliable supplier can be like looking for a needle in a haystack,
even with the beloved Google. Alibaba.com dramatically reduces the
time required to identify a reliable supplier of quality goods and
services. And since its reputation and future success depend on
its capacity to facilitate successful transaction, Ma works hard
to make sure users conduct themselves professionally.
Marketing guru Philip Kotler and co-authors Dipak C. Jain and Suvit
Maesincee in their book, Marketing Moves, suggest why companies
like Alibaba.com will probably be an enduring phenomenon. They write
that if companies "hope to grow and prosper in today's economy,
they will need to develop major new understandings and competencies.
They must fundamentally rethink and revise their corporate strategies,
aligning them with their marketing strategies, and they will have
to rethink marketing's role within corporate strategy.
Kotler and his co-authors believe that with so many companies offering
roughly comparable levels of quality and service, that industry
leaders will be the companies that communicate most effectively
and regularly with customers and prospective customers. Although
the dot-com bubble has burst, Kotler believes that "the information
age has created hypercompetitive markets," and that the digital
economy is redrawing industry boundaries while empowering consumers.
It's for these reasons that marketing and marketing communications
are changing, and they caution not to confuse the new economy with
high-flying dot-coms. "The new economy," Kotler and his
co-authors write, "is about something more fundamental: the
emergence of a network economy." Companies like Alibaba.com
- and BayanTrade here in the Philippines - show that the network
is working, and growing.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian Professionals
into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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