January 2000 

Branding Vs Customer Acquisition: Asia's Online Challenge in 2000

By Marc Phillips

Branding is often considered a vital ingredient for online success. Many bricks and mortar companies have huge leverage both in brand awareness and the depth of their traditional advertising budgets to cross promote their online digital properties. However, whilst brand equity continues to be viewed by companies that exist in the real world as a secret weapon against pure play online businesses, these companies must not miss the opportunities of taking wallet share of their customers.

The biggest threat to traditional businesses and their brand names are the Internet portals which have evolved into dominant media and transaction hubs. a tangled alliance of vendors, media organisations, merchants and users. They are the equivalent of newspapers, television stations and store fronts combined into one. As the Internet continues to expand throughout Asia, so has the need for localised web portals and search engines. This demand for localisation exists throughout the world both on and offline. Catcha.com is a Singaporean portal positioning itself as a bustling regional centre for new media in more than one language and culture.

Catcha.com.sg was formed following the merger of searchsingapore.com, malaysiasearch.com and searchindonesia.net websites in Singapore, Malaysia and Indonesia respectively. By merging, rebranding and enhancing those search engines, Catcha.com was able to gain leverage from those founding organisations to become  the largest directory of Asian websites in South East Asia, and by doing so is a . one stop shop. in the minds of users for whom it could conveniently be used as a default home page. This is known in Internet speak as a land grab and these moves usually enjoy first mover advantage.

A land grab is what company strategists should be looking for instead of relying purely on their brand being able to migrate off line customers into online shoppers. Catch.com have successfully done this across geographies with different languages and cultures. This is a major challenge for Asia's online businesses as consolidation of user bases on the region's leading websites becomes more important than mere brand name.

It is well documented that first mover advantage affords this company. As Amazon continues to cross sell their original book buyers with cds, toys and groceries, Barnes & Noble - with a bricks and mortar retail chain - lag behind in market share. This lesson has been repeated in other vertical markets for various products and services.

In a deal with Sin Chew Jit Poh, Catcha launched the first Chinese/English search engine in the region late in . 98. This first mover advantage will serve the brand well in the future as it builds it. s name throughout Chinese speaking markets in Malaysia and beyond, markets that are often in the . too hard. basket for other . Global. organisations.

In 1999, we saw major advances by US giants such as Yahoo and Lycos into Singapore and China. As more of the money raised from Initial Public Offerings in both the US, UK and Australia becomes allocated for alliances, mergers and acquisitions in the South East Asian region, local businesses will have to concentrate on quickly amassing customer databases and keeping them on their websites.

70 Internet and technology related IPO's in Australia throughout 1999, has left USD$2.1 billion  in the coffers of online businesses who must expand into the Asia Pacific region.

Therefore, with overseas online businesses looking to penetrate foreign markets and scale their businesses globally, local online businesses will need to quickly establish a brand name and expand their customers by offering a greater number of services.

In Singapore, both Silk Air and Catcha have done much of the hard work in terms of getting the names established, the challenge now for these companies is to position and re-position their brands to grow and take their place along-side the Cathay Pacifics and Yahoos of this world.

I endorse the recent words of Mr Patrick Grove, CEO and Founder of Catcha.com who said recently, "Catcha.com's distinct advantage lies in our database, which is developed by a truly Asian team in Asia. Based in Singapore, we have a better understanding of local wants and needs throughout the region. This will make Catcha.com a hot favourite among Internet users." 

Consequently, the biggest threat for foreign companies looking to enter Asia is the cultural inflections that are not catered for in US and European dominated web architecture.

As an advisor to many major websites around the world, Id like to suggest that the management of Asia's online properties should partner with offline brands to extend their market reach.

For an example, we need to look at E*TRADE Australia - who enjoyed first mover advantage when they launched in April, 1998. However, as more competitors entered the marketplace and the race to build an online brand was becoming more competitive, they realised the importance of a strong consumer base in the online arena.

In mid 1999, E*TRADE Australia and ANZ Bank announced an equity alliance, giving E*TRADE Australia access to 4 million potential investors who will be linked to the E*TRADE Australia service via the ANZ website. It also provides the opportunity for both companies to expand their current services and stand strong against competitors.

Yet, the drive to extend customer penetration should be planned well in advance as they also increase the valuation of publicly listed companies. The drive to gain a stable customer base is endemic of key online brands around the world. Microsoft. s pioneer Bill Gates realised early on the extreme value of having a diverse database of consumers by paying US$450 million for 9 million demographic and psychographic profiles listed in the Hotmail database. Similarly, Amazon.com has been striving to build a worldwide database of consumers and consumer information, at the cost of short-term profitability and returns.

With more offline brands beginning to bring their customer base online in all sectors of the market, emerging brands would be well advised to adopt the tactics of these leading online brands. This will drive the real value of the online brands balance sheet as the demand and hence price per user in an acquisition is increasing.

For further information contact APT Strategies at info@aptstrategies.com.au