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Written by Pieter Van Den Eynde, Chief Growth Officer & Founder of admiral.digital
Working with brands globally gives us a unique perspective on how brands in North America, Europe, the Middle East, and Southeast Asia approach their digital strategies.
A recurring observation is that Southeast Asian brands tend to underinvest in Search Engine Optimisation (SEO). Understanding the reasons why this is the case, we firmly believe it’s time for Southeast Asia to start prioritising SEO.
Southeast Asia: A changing landscape
In 2013, Southeast Asia’s digital landscape was growing at a rapid pace, attracting both local and foreign businesses to adopt successful models from the US and Europe. The rise in internet usage and affordable advertising on platforms like Google and Facebook fuelled the idea that anyone could become a millionaire online.
During this fast-paced and exciting era, businesses either became leaders in their industry or failed. The favourable environment allowed for quick growth through performance marketing and paid digital media, which provided instant results with just a click. However, many businesses neglected the importance of SEO in their fast pursuit of more efficient and effective marketing channels.
Fast forward to today, the digital marketing and ecommerce scene in Southeast Asia has undergone significant changes, with the Covid-19 pandemic driving the digitisation of all brands and leading to the migration of brick-and-mortar stores to online marketplaces. Performance marketing and digital media continue to be the leading channel for many brands, but change is inevitable.
Why is it time to invest in SEO?
Reason #1: The cost of running ads has increased
Despite growing ad inventory with the arrival of Instagram and TikTok, the advertising industry in Southeast Asia has experienced an increase in the Cost Per Click (CPC) and Cost Per Thousand (CPM) impressions across performance marketing channels.
As more and more businesses compete for advertising space, the cost of advertising on these channels has gone up. This has a direct impact on marketers’ ability to acquire new customers, as the Customer Acquisition Cost (CAC) increases in line with CPC and CPM. As a result, it has become more and more difficult to run performance marketing campaigns efficiently and brands should ensure they are not 100% reliant on paid traffic only.
Reason #2: Efficiency of performance marketing channels has been impacted by privacy regulations
The recent implementation of privacy regulations, such as Apple’s iOS 14 update, has impacted the efficiency of performance marketing channels by limiting the amount of data that can be collected and used for targeted advertising. The update requires apps to ask for user consent to track their data, which can negatively impact the accuracy and effectiveness of targeted advertising.
Prior to the update, performance marketing channels relied heavily on the collection and analysis of data to deliver personalised, targeted advertisements to users. With the limitations imposed by the iOS 14 update, advertisers now have less access to data, making it more difficult to deliver relevant and personalised advertisements. This can result in decreased efficiency and lower conversion rates for performance marketing campaigns.
Additionally, the update also affects the measurement of campaign performance and ROI. Since advertisers have less access to data, it becomes more difficult to track the effectiveness of their campaigns and optimise them for better results. This can further impact the efficiency of performance marketing channels and make it more challenging for marketers to achieve their desired outcomes.
Decreasing conversion rates driven by less accurate targeting, in combination with an increase in CPC and CPM will drive up CAC.
Reason #3: Average revenue per customer (ARPU) in SEA is still relatively low
Internet penetration in Southeast Asia has grown to 63.6% in 2023 and is expected to reach 69.1% by 2027, comparable to Australia’s 76.3% and the USA’s 81.6%. However, the Average Revenue Per Customer (ARPU) has not kept pace, with Southeast Asia’s ARPU of USD$397.20/year being 11 times lower than the USA and 6 times lower than Australia, as reported by Statista.
The cost of running digital ads has been rising faster than the growth of ARPU, making it more expensive for businesses to acquire customers through paid marketing channels. Despite this, the average yearly spending per customer has not kept pace, making this approach less cost-effective. This paid media driven strategy might have been viable in 2013, but it is no longer the case today. The unit-economics of this approach have become unprofitable.
Reason #4: Changing market conditions
Recent market conditions have had a significant impact on marketing budgets and how marketing teams operate. Driven by economic uncertainty, companies have become more cautious in their spending and are looking for ways to get the most out of their marketing investments. This has led to a shift towards smarter, more data-driven marketing strategies that prioritise efficiency and ROI while at the same time causing a shift in marketing channel mixes.
Free, high-quality traffic through SEO is becoming more and more important. Combine this with increasing interest rates, inflation, a slowdown of the tech industry, and a global shift to profitability and efficiency. All these elements have put additional pressure on marketing teams to prove their worth and demonstrate the impact of their campaigns on the bottom line.
How SEO investment can benefit Southeast Asian brands
An analysis of the 150 brands we have worked with over the past few years shows that companies that invested in SEO early on and balanced it with other digital channels have a significant advantage over those that did not. This advantage translates to a steady flow of high-quality, free traffic and a lower blended CAC.
It is not correct to say that all brands in Southeast Asia are lagging, but rather that the opportunity for improvement still exists. Brands should consider investing in organic rankings sooner rather than later. By driving organic traffic, businesses can reduce their media budget and become more sustainable. It will allow brands to navigate the uncertain times ahead of us.
These are the benefits of investing in organic traffic for Southeast Asian brands:
Digital asset building
Organisations can build digital assets that rank for relevant keywords and drive high-quality, free traffic that converts. A page that ranks is not futile and can be considered a digital asset.
Sustainability
Over the past 18 months, the global technology market has experienced a significant decline, with valuations plummeting and investment dollars declining by up to 70%. This has made the once popular tactic of ‘buying-the-market-through-media’ no longer feasible. As a result, many large tech companies based in Southeast Asia have had to lay off staff in their quest for profitability.
To achieve sustainable growth over the long term, investing in SEO can be a smart move for brands. By optimising their online presence and leveraging search data, companies can increase visibility, better understand their audience, and establish a more sustainable and profitable growth path.
Quality of customers
Over the past years, our analysis has consistently shown that organic search outperforms paid search in terms of attracting higher quality customers. We perform this evaluation on a cohort basis, examining both generic and branded traffic.
Investing in organic search strategies can not only bring in free users to a website, but it can also deliver a higher calibre of customers. This is because organic search results tend to be seen as more trustworthy and credible compared to paid ads.
Reduced media spending
By focusing on organic traffic, brands can benefit from an increase in free channels, allowing for lower media budgets to be invested. Alternatively, these budgets can be redirected towards other growth initiatives.
Consistent performance
The high turnover rate of marketing teams in young companies can lead to loss of expertise and knowledge. However, organic traffic is less impacted by changes in personnel, ensuring consistent performance over time.
Expanded reach
Organic traffic and SEO strategies allow brands to optimise for affiliated traffic beyond just root keywords, increasing their reach and exposure.
Increased trust
A brand that ranks first in search results is perceived as more trustworthy and relevant, compared to those ranking lower.
Enhanced user experience
As part of SEO optimisation, websites are made more user-friendly through improved navigation and relevant content. This not only enhances the user experience, but also drives higher conversion rates, making it a win-win scenario.
At admiral.digital, we work with multiple brands on improving their organic rankings through technical SEO, strategy, content writing and link building. Reach out to hello@admiral.digital and we can start with a quick audit.
