Advocacy revolution in Asia - how Web 2.0 is influencing consumer decisions in a big way

Author: Daphne Kasriel

Date published: 27 Nov 2008

Online advocacy is fast becoming a very powerful force in the consumer market in Asia. Internet users are quickly going beyond e-mailing, chatting and surfing, as they are using the web to equip themselves with better product knowledge and for making more informed and wiser purchasing decisions. Businesses with good word-of-mouth reputations can expect to start ringing the cash registers as consumers in the region put more faith in the opinions of others rather than plain old ads.

Key trends

Reducing risk in big-ticket lifestyle product purchases;

Trusting the opinions of others more than ads;

Ease of obtaining information;

China surpassing the United States;

Name-and-shame groups.

Commercial opportunities

To thrive in the Web 2.0 era, companies must emphasise communication tactics and become part of a community with their employees, partners, and customers;

The next generation of marketing is about more than just adopting emerging, consumer-generated "Web 2.0 channels" like blogs or wikis. Firms and consumers are undergoing a fundamental shift in social structure in which technology puts power in communities, not institutions;

As consumers of rich content become more savvy, delivery mechanisms becomes less prominent, and the ability to create compelling experiences that meet business needs efficiently and effectively takes a higher priority. The possibilities are endless, especially with rich internet applications (RIAs) which are designed to deliver the same features and functions associated with desktop applications but which do not require the installation of software.

Background

The term "Web 2.0" refers to second-generation internet applications. These online applications and services allow users to become contributors such as in the case of Wikipedia or participants in e-commerce site reviews and blogs. More often than not, these Web 2.0 tools are perceived to be personally enjoyable and beneficial, such as participating in social networking sites like Facebook and MySpace or adding your comment to the end of an online article.

Online opinion forums are large-scale internet-based "word-of-mouse" communities where individuals share opinions on companies, products, services and even world events. In Asia, over the past few years, these forums have been steadily growing in popularity and have become an indispensable component of chat rooms, web logs, portals and recommendation sites such as Australia's Choice Online (for all categories of consumer products) and Redbook (for cars), and Singapore's Hardwarezone for consumer electronics. A site heavily used by Asian consumers called Shoplette simply allows shoppers to share with others what they have bought recently, giving them details of where they bought the product, and how much it cost, hence helping spread the word on the latest products and styles.

Asian consumers are influenced more by personal experience and the experiences of others than by corporate-sanctioned messages. Marketers can no longer afford to ignore consumer- generated content as they must listen to, and nurture individuals talking about their brand and recognise that they must relinquish some control. Accenture, a global management consulting firm, found that in the case of products from around the world, more than 80% of Chinese consumers would recommend them to others, hence outweighing the influence of ads. Word-of-mouth is especially important amongst China's young people when it comes to fashion while for older shoppers, it is key for financial services and packaged consumer goods.

Reducing risk in big-ticket lifestyle product purchases

The best way to protect consumers from making the wrong purchases is knowledge. Sites dedicated to bad experiences with companies and individuals in a business transaction are a useful way of informing other consumers before they take the plunge of a big-ticket product purchase for things such as home entertainment systems, holiday packages and cars. "I did my research online comparing prices and reputations of dealers before even going in for a test drive. It's a big purchase, and I want to make sure I am well-informed before making the commitment," said 26-year old Australian engineer Tony Marsh who spent several months tracking blogs and discussion boards before buying his first car. Everyone wants the perfect holiday, and hotels play a big part in making that happen. There are plenty of online sites where people can share their travelling experiences, good or bad, especially in terms of accommodation. Sites such as Expedia and AsiaRooms have message boards where people can leave comments for all to see. John Tan, a Singaporean traveller who just returned from his holiday in Japan, said, "I was very apprehensive about staying in tiny hotel rooms, which Japan is infamous for. In the end, I stayed in one which was surprisingly spacious and comfortable, thanks to a recommendation by an American tourist on Expedia"

Trusting the opinions of others more than ads

Consumers want more access to online information and resources to help them know what products are the latest and most functional. And what better way is there to find such information than the web? David McCallum, Nielsen's global managing director of customised research, said, "The recommendation of someone else remains the most trusted source of information when consumers decide which products and services to buy." In a semi-annual survey done by the company, it was found that consumers trust other consumers more than they trust messages from paid media advertising with 78% putting faith in recommendations from consumers. Word-of-mouth was particularly powerful for consumers in Asian countries. Among consumers in Hong Kong, 93% said they relied on recommendations from other consumers in making consumer choices. Other markets where dependence on word-of-mouth was high included Taiwan, Indonesia, India and South Korea. "I want to know if someone has used it (a product) and like it before I would buy it. I don't want to regret my purchase later. If I hear many bad things about it, I will go for an alternative option" said Tommy Chan, a father of three in Hong Kong, who aptly summed up the power of online opinions.

Ease of obtaining information

Blogger Peter Chow in Hong Kong is looking to purchase an add-on car navigation system before he takes a cross-country trek through China later this year. Rather than relying solely on information found on several manufacturers' websites, Chow is getting feedback from consumer-generated content on blogs and Wikipedia. "I went to the companies' website for the technical stuff, but what meant more to me were the four or five blog entries that I read from people who had bought similar devices," Chow said. The combination of growing broadband penetration in Asia and increasing demand for online video user-generated content provides a huge opportunity for designers and advertisers to tap into. It gives online media platforms the flexibility to craft winning content and advertising strategies, allowing consumers to obtain information easily and efficiently.

China surpassing the United States

According to Netpop, a research company on consumers and the internet, Chinese consumers have dramatically surpassed Americans in adopting Web 2.0 behaviour, relying heavily on social media for guidance in buying decisions. The report also found that user-generated content such as consumer reviews, rating sites, forums, discussion board and blogs influence 58% of all purchasing decisions in China, compared with just 19% in the USA. Meanwhile, 47% of Chinese broadband users were found to post comments to a blog, chat room or forum, compared with just 28% of American broadband users. "As companies increasingly target a worldwide audience through internet technologies, it is critical for marketers and product developers to understand the unique perspectives that countries exhibit in the adoption and use of these technologies," said Josh Crandall, managing director of Netpop parent Media-Screen, a San Francisco-based research firm. The data "suggests that Chinese consumers frequently turn to one another, in addition to corporate media sources, when making purchasing decisions," Crandall added.

Name-and-shame groups

Social networking sites such as Facebook are an easy place to engage a group of people around a brand. The social tools, group functionality and free brand pages give companies an unprecedented level of access to a group of interested consumers. The easy advertising tools also allow businesses to promote themselves to the 100 million or so users on the social network, not to mention the social advertising that takes place when someone joins the group or becomes a fan. But as easy and powerful as companies find the features, garnering negative repercussions that drive consumers away from certain brands or companies can be just as easy too. Many groups exist on Facebook that are against certain marketers, especially those in the service industry such as hotels and restaurants. On the discussion board of a group called "Overpriced/Overhyped Restaurants in Melbourne", an annoyed customer wrote of his experience at a certain inner city restaurant chain, "I've been there three times and every time at least one item we had ordered was just forgotten. We're trying to buy food off you; we shouldn't have to remind you of what we ordered. Three separate occasions suggests to me that it's not a coincidence." Do not underestimate the power of such advocacy on social networking sites; a Chinese restaurant in downtown Melbourne was closed down due to its bad word-of-mouth reputation regarding its standard of hygiene discussed on a popular restaurant reviews site in Australia.

Outlook

Companies in Asia are looking at innovative business models with information technology at their core. According to IDC, a research company on information technology and the consumer market, almost one third of large companies will have some form of Web 2.0-enabled business initiative underway by the end of the year. There is no running away from the fact that consumers are driving change - the tech savvy young workforce will persuade mainstream enterprises to use social networks. In essence, it is the expectations of consumers for a rich web experience rather than upcoming technologies that will drive the way customers and partners want to deliver data and information. Companies failing to employ consumer-oriented web technologies will find themselves at a competitive disadvantage. A report released earlier this year by Forrester Research is predicting that enterprise spending on Web 2.0 technologies is going to increase dramatically over the next five years within the Asia Pacific region.

Countries and Consumers