Bangladesh’s Entry into the Digital Vortex

June 6, 2015 6:05 pmComments Off on Bangladesh’s Entry into the Digital VortexViews: 368
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Bangladesh’s Entry into the Digital Vortex Part 1

By Lightcastle Parnters

With the proliferation of smartphones, internet connectivity and social networking in Bangladesh, the digital marketing industry is gaining momentum. This growth trend has been impressive over the last few years with the number of agencies and sectors investing in digital marketingincreasing at a rapid pace.Even though traditional marketing methods are still predominant with a high focus of companies on TV advertisements, billboards, and newspaper ads, the market scenario is ready to be transformed. This special report aims to analyze the status quo and the potential of the digital marketing industry in Bangladesh.

 At the cusp of a Digital Media Revolution

With steady GDP per capita growth, which is expected to sustain over the coming decade, the disposable income of Bangladeshi citizens is constantly increasing. The increasing ability to purchase 2G/3G supported mobile phones, smartphones, and computers is causing more and more people to enter the digital realm. With a declining birth rate and expanding economy, the per capita GDP is only going to rise in the future, which means the digital landscape will inevitably observe remarkable growth.

gdp

A Young Population Attuned to Digital

 While traditional media is still strongly prevail among older demographics, Digital Media is more popular among younger segments. The diagram below illustrates that 77% of Facebook users are aged between 18 and 34. Bangladesh has a median age of 25.4, and the 8th largest population in the world (Source: World Bank). In fact, Bangladesh has a lower median age than most Asian countries, as the following diagram demonstrates. Additionally, youth comprise of one third of the country’s entire population, while 70% of the population is under the age of 35, making media consumption increasingly skewed towards digital.

median age

The digital space of Bangladesh is centered on this increasingly tech-savvy youth as data concerning use of social media sites such as Facebook show dominance of the age group 18 – 34 years.

age

 

Source: Socialbakers

Rise of the Telecom Industry

The telecom industry has experienced extraordinary growth in recent years, resulting in 99% of the population being under network coverage. This growth has been leveraged to increase internet access for the masses as experts from Mediavest claim that 60% of internet users get access using mobile phones. The telecom industry has a direct role in promoting the culture of internet usage, by introducing lucrative data packages, conducting push marketing and improving the overall mobile network infrastructure of Bangladesh.

Bangladesh has the highest 2G coverage rate among emerging economies, along with the steady proliferation of 3G networkand over 15-25 million active mobile internet users. (Source: LightCastle Interviews)

Currently, there are six mobile operators in Bangladesh, with Grameen Phone as the market leader with 42% of the market share (Source: BTRC). Banglalink, Robi, Airtel, Citycell and Teletalk make up the rest in a fiercely competitive industry with high price sensitivity and quality parameters.

 

smartphones

Smarter Phones

Proliferation of mobile networks over recent years increased people’s awareness and comfort with mobile devices and now, the inflow of low cost Chinese smartphones and economies of scale are making smartphones the next frontier. Suddenly, masses of people are able to access the internet right in their pockets. The increase in smartphone usage isn’t just boosting internet usage, but also opening up the scope for digital marketing in mobile devices.

Bangladesh’s Entry into the Digital Vortex

LightCastle Partners recently conducted a study regarding the use of smartphones among the urban youth using random sampling of different age groups of cellphone owners. The following results were obtained

 

types of phones

 
Expanding Internet Penetration

Inevitably, there is an increasing level of internet usage in Bangladesh owing to the increase in GDP per capita, low median age and expansion of the telecom sector (both 2G and 3G). While Bangladesh is lagging behind technologically advanced nations like Hong Kong and Malaysia, the internet penetration rate is higher than that of Nepal, Pakistan and Sri Lanka. Thenumber of Facebook users has been growing at impressive rates with the trend set to continue on the back of strong fundamentals.

internet stats

key indicator

Digital Media is Cheaper than Conventional Media, Allowing SMEs to Advertise More Effectively

One of the greatest features of Digital Media is that it allows companies to reach out to more people at a lower cost. Boosting posts on Facebook costs only about USD 5 for instance. The average cost for reaching 1,000 people using Digital Media is over 8 times cheaper than that of print media, and around 17 times cheaper than that of Television ads.

REACHING

SMEs generally cannot afford a hefty advertising budget, and are forced to find cost-effective tools to reach out to customers, which makes Digital Media the perfect platform for them. Restaurants, fashion stores, electronics shops, event management services and other SMEs are using Facebook news feeds to conduct their promotional campaigns with companies like Gadget & Gear, Bridal Moments, and Gadget Gang 7 acquiring strong fan bases in the process.

FANBASE

Digital Media is Extremely Scalable sincethere is very little Physical Barrier to Growth

Digital media has the capacity to reach out to 160 million people in Bangladesh; highest among the various forms of media. This is because Digital Media faces little logistical barriers, and can theoretically extend to the entire population. 2G network already covers 99% of the country’s geographical area with the 3G network catching up. Given the technological progress that is to follow, companies are expected to aggressively exploit the scalability of Digital Media.

Social Networking Sites are Becoming Increasingly Active, With Growing Fan Bases Everyday

With 3,352,680 Facebook users and counting, marketing on Facebook and other social networking sites is increasingly being used to reach audiences. Pages such as Grameenphone, Airtel Buzz and Robi are increasing in popularity every day, as their digital content becomes widespread. Given that people spend a significant portion of their time on social networking sites, the interaction with content is more likely, causing people to “like” and “share” posts whenever a piece of content catches the user’s attention. The role of digital marketing is to convert these ‘interactions’ into ‘product demand’.

FACEBOOK BD

 

YouTube Pages are Gaining Momentum Due To Faster Internet

Owing to faster internet connections, Google cache servers, and better streaming, YouTube is gaining height in the Digital Medias cene. While the overall presence of YouTube is minute in comparison to that of Facebook, it is on the verge of expansion with the telecom sector using it to market, and others following.

As part of an article series by LightCastle Parnters titled Bangladesh’s Entry into the Digital Vortex Part, here’s Part 3 that focuses on the growth of Digital Media.

The Growth of Digital Media is Inevitable

With an internet penetration rate of 24.5%, an internet user base of 40 million, and an ever-growing digital infrastructure, companies are bound to invest in digital marketing sooner or later. Expert interviews reveal that the digital marketing industry will undergo exponential growth over the coming years with current agencies to grow larger, and new ones to launch. While the share of the advertising industry in 2014 was 2%, it is expected to grow to 5% in 2015, 10% in 2016, and 17% in 2017.

size

Digital Media Trend is Towards Replacing Traditional Media over the Coming Years

size

Currently, people are constantly on the go, and want to grasp as much content amidst their busy schedules. For instance, people in public buses listen to podcasts, read news, and watch YouTube videos on their smartphones on their way to work. So the replacement of traditional media can be attributed to the increasing dominance of Digital Media in people’s lives.

size

The current size of the advertising market in Bangladesh is approximately BDT 2,000 Crore.Current trends regarding the industry suggest that advertising in radio will remain unchanged, because of the stability in the customer base. However, advertisement in TV and print media is expected to decline because viewership in these forms of media is expected to decrease. TV shows, news and magazine are readily available on the internet, which is leading to a rapid substitution of conventional media with digital with its targeted content, low costs and wide reach.

The growth potential of Digital Media is stunning. By 2017, the size of the digital marketing industry is expected to be BDT 452 Crore. This translates to an exponential growth of 1000% from the current size. However, TV advertisements are still expected to gross highest over the next decade, unless services such as Netflix starts to popularize in Bangladesh.

How Digital Marketing Works in Bangladesh

Digital Media marketing in Bangladesh is fast catching up as a favored media outlet among Telco’s, FMCG and other industries. Fund allocation remains modest at 5-10% across companies, but as conversions improve, this statistic is set to change drastically.

illustration1

The illustration shown above shows the types of content active in the Digital Media scene. Mobile apps directly engage the user in an activity that communicates the brand. Videos and animations are more effective than static images because users tend to interact more with motion pictures. Text is least interactive, since it requires users to take the trouble of reading the material.

The most commonly used form of contents are static graphics and text. Text includes status updates and posts while static graphics include images, infographics, and comic clips. Videos, while considered the most effective form of content, are less prominent because of high bandwidth requirements and high production costs. Furthermore, videos need to captivate the audience within the first 20-30 seconds in order to create a “watch-on” factor. However, with rapidly evolving infrastructure, both videos and mobile applications are likely to become more popular.

“We know that the young people don’t watch TV as much, they do only when they are following a particular showor event. They get their fixes digitally, both for news and entertainment. Radio, as we have already discussed, has already gone through the evolution. The penetration of mobile phones is single most important catalyst to such patterns.” – Awrup Sanyal, ex- Creative Director, Bitopi

illustration1

Digital Media in Bangladesh can be divided into five broad horizons. Services can be produced either by combining multiple horizons, or by dividing each horizon into multiple segments.

Content development and Digital Media marketing are the most popular services that digital agencies offer at the moment. Content has always been the core of any form of communication, making it one of the top services. Since Facebook is almost synonymous with the internet in Bangladesh, companies invest quite heftily in managing and growing their presence on the platform.

Digital media buying allows companies to strategize digital content to ensure maximum effectiveness. Online advertising is slowly gaining height as video platforms mature. Magnito Digital coined the term “Digital Media Commercial” for online ad clips that they produce. Experts claim that the requisites of this form of advertisement are quite different from that of conventional media.

Fast, Cheap Analytics Facilitating Rapid Growth

Digital analytics is still quite young in Bangladesh, and is not actively sought out by corporations. However, as companies move towards data-based decision making, it will start becoming a core component of their digital ventures. For instance, companies can analyze the age composition of the people who “liked” particular posts to identify what sort of content works on different age groups. There are broadly three things to measure: impressions, clicks, and acquisitions. These numbers show the extent of reach of a brand in expanding mindshare and sales revenue. The simplicity of analyzing digital content effectively makes targeting significantly easier.

illustration1

Industry Dynamics

Agencies are Getting Equipped to Steer the Nation towards a Digital Revolution

The growing use of internet and the transition towards digital marketing has led to the formation of various digital agencies that are dedicated to managing digital resources and online activities of client brands.

illustration1

Telecom sector takes the lead in digital marketing expenditure, while classifieds and FMCG follow

illustration1

Source: RyansArchive

The telecom industry spends the highest amount in online advertisements. Grameenphone leading, followed by Banglalink, and Robi Axiata. There are also numerous small and medium companies that invest in Digital Marketing because of its affordability and effectiveness.

illustration1

SMEs have very little scope to advertise on television and radio. Print media is also often too expensive for them. Digital media is the best means for SMEs to strengthen their respective brands in an affordable and targeted way. Restaurants, fashion stores, gadget shops, and lifestyle pages are all aggressively spending on digital marketing, prompting other industries to take notice.

“Digital marketing is bound to be extremely popular among SMEs. Given their limited budget, digital marketing is the perfect advertising platform.”– Riyadh Shahir Ahmed Husain, CEO, Magnito Digital

While a significant portion of operations are automated to the point that human effort is minimized, the generation of content is still brain intensive. Starting from producing status updates to high definition videos, creativity and effort are crucial components. There is still a severe lack of digital marketing professionals in Bangladesh. One of the fundamental reasons behind this is the negligence of universities towards Digital Media. According to SidratTalukder, MD of Strategeek, business schools should offer separate courses on digital marketing, or at least make it a significant part of marketing courses. He also suggests that emancipating more and more interns into digital agencies is an effective way of creating a strong talent pool.

illustration1

Bottom Line: Digital marketing is the inevitable future of the advertising industry. Internet users, mobile network users, increasing standard of living, government policy and a myriad of other factors are to combine and thrust the industry into the forefront of media. Businesses are going to be sucked into the vortex of an increasingly digital population in the coming years, producing rich dividends for those who manage to acquire expertise in the field.

http://sdasia.co/2015/05/14/bangladeshs-entry-into-the-digital-vortex-part-4/

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