Phew. I’m finally back from graveyard work, showered and waiting for my hair to dry. I’ll blog while my memory’s fresh. If I go to sleep now, I’ll wake up with only half of what I was thinking the night before.
Chewy gave a very interesting talk at NUS today. It gave me new perspectives of the CPC/CPA advertising scene but I have my thoughts decided to blog them so everybody can discuss. I’ll be sending Chewy an e-mail so he can comment as well.
I totally agree that search is a place where money can be made. When Google went offline for two hours in the middle of last year, the Internet literally died together with them. Imagine the world without search today. (Food for thought.)
The local consumer industry’s probably not as competitive as in the US, but they certainly have found ways to suck your money without the need to spend more money on advertising. I mean, as a business, isn’t that fantastic? 😛
I think Singapore’s a weird economy. Here’s why I think so:
We don’t really have much choices. When Chewy said that Singapore’s the richest country in Southeast Asia, well, maybe we are in terms of raw GDP per capita, but I’m not entirely sure if we’re equally rich when taking real costs of living into account. The way PPP is calculated just isn’t fair. I mean WTF is a Big Mac Index? It’s almost like a currency conversion against US$! PPP needs to take into account other living standards and not just a “basket of goods” plus a Big Mac — stuff like a house or a car for example. It’s not like in the US where I could choose to live far out and buy a house cheap, I don’t really have a choice! Punggol is as far as you can get! Half a million for a HDB flat? Forget it!
We’re materialistic. So when Chewy brought up the point about Taxi queues, I’m not surprised. It’s a matter of how people perceive the value of money. I’m sure there are times you think to yourself, “OK, I can afford to wait. I don’t need to spend $3. I’ll stand in line.” Singaporeans are a materialistic bunch of people who’d rather spend money on goods for showing off than for services that convenience them.
We’re suaku. I tune in to News Radio 93.8 when I drive and there’s this programme called Talk Back or something like that where people call in and debate some topic, like “do you think Taxis are expensive in Singapore?”. Sometimes it just drives me nuts listening to what people complain about here. I can only conclude that we’re very suaku.
That much about what I think is the state of Singapore’s consumers, I’ll move on to the part on advertising.
The current CPC/CPA advertising does indeed encourage competition, but this type of advertising (price war) is unhealthy for businesses. It turns consumers away from the real value of a product (or brand) and focuses on price instead. If the industry worked this way, there wouldn’t be Bread Talk or Apple and business would fight themselves to death and create more disparities of wealth.
If you looked at PC hardware in Sim Lim, the stores there basically compete on nothing but price. Same probably goes for shoes at Queenway. If they wanted to win the sales, they simply cut the price. Plain and simple? Not so. At the end of the day they basically do more work for less and customers don’t even remember the stores’ name. So now goes back to the question on my TV purchase. If Chewy asked me why I didn’t go to Sim Lim to buy my TV, my answer would be that I trusted Harvey Norman (or Best Denki/Challenger) more than the dodgy stores at Sim Lim. That’ was why I decided to take a walk at Harvey Norman (instead of Best Denki/Challenger) which was nearer to my home.
Any business who’s looking for long term growth needs to build its’ brand. And by branding it doesn’t mean a colorful logo or a fancy yodel. A brand is something people have an affiliation to and builds royalty over time. Unfortunately though, brand building has to start when a consumer is unaware, and that’s where the CPM advertising and Search Engine Optimization (SEO) guys come in to screw around with generic algorithmic search results.
Although I’d believe that that there’s potential for CPC/CPA to aid in building brands, this is still an area that’s untapped. CPC/CPA isn’t necessarily positive for brand building. Some people may perceive advertisers as scammy or desperate, for example. I’m also sure that most people don’t plan and search online to buy everything. Some purchases are made on impulse, especially small value items like little earrings. Females 14 to 25 years of age should be familiar with such a buying pattern. 😛
March 1, 2010 at 10:44 pm
Ah… I would argue CPC is more to drive action and not brand awareness. CPM based advertising (display, papers, TV) is more on brand awareness and richness if what you can deliver. CPC has primarily been text (that is changing).
Ignorig the CPC, CPM, CPA stuff… what do people think about business in SG. Worrying about brands are typically a ‘larger’ business’s issue. From what I can tell, the small and mid sized business is alive and well in Singapore. Those are the folks that do not need brands as much (or rides off the brand of the goods they carry). How come CPC ain’t picking up more steam here? Or maybe… like I postulated during my talk… Singaporeans are more driven by convince than on value.
Hmmm… wouldn’t SMBs be better served then by saying farewell to marketing and hello high rents at premium locations?
Can anyone tell me of a SMB business in SG that does well PRIMARILY due to marketing? Not a rhetorical question… seriously, I think that would add a lot of value to the discussion.
February 24, 2010 at 12:35 am
Haha, the Big Mac thing is just a for fun version of the PPP index lar. Houses and cars are most likely included in that basket, but of course, the devil is always in the details. In this case, the weightage of the components matters a lot. Flat prices are crazy in Singapore though, and Mah Bow Tan still say they are affordable.
Haha, if you find 93.8 funny maybe you should go listen to 95.8 version, there are even funnier stuff there sometimes 🙂
February 23, 2010 at 4:46 pm
Hmm… I don’t get why you don’t think Singapore is as rich. Honestly, there are many places in Europe which have their houses about as expensive or more, also. And some states in the U.S. Sure, they have the choice of living somewhere out of town. Well, maybe some sgers can go live in Malaysia 😛 But seriously, even with real living costs taken into account… SG is rich in this region man. And that affluence itself gives us more choices than less affluent nations imho.
“I totally agree that search is a place where money can be made. When Google went offline for two hours in the middle of last year, the Internet literally died together with them. Imagine the world without search today.”
what do you mean by it literally died? :X
““OK, I can afford to wait. I don’t need to spend $3. I’ll stand in line.” Singaporeans are a materialistic bunch of people who’d rather spend money on goods for showing off than for services that convenience them.”
Or, like, you can take the bus or MRT 😛 Taxis stink. Well look, I just complained 😛 (HAHA I think TalkBack is so funny, dunno why some of those people even call in xD)
And, you should have brought up the best denki and harvey norman decision yesterday, I think xD Building their rep. is a form of differentiating themselves (in non price way).
February 23, 2010 at 12:31 pm
I’m not sure that’s entirely true. It’s unhealthy for businesses, because it forces them to become commodities. But it’s good for everyone else – us, especially – because we get good products at cheap prices.
Healthy competition is really a nice way of saying the strong survive and the weak die, and I’m not sure that entirely a bad thing. If companies are strong, they’re more resilient, and more likely to survive outside Singapore, right?
That being said, Apple and Bread Talk’s business models are built around resisting this commodification. It’s their niche, and that niche is hard to copy.