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Digital marketing is growing fast in the Phillippines and the situation reminds me of the 1997-2002 period in the UK when anything seemed possible.
I had the honour to be invited to speak at the first ever Geeks on a Beach (GOAB) held on Boracay Island, September 26-27, 2013.
My presentation included key findings from, and my personal insights into, The State of Digital in Asia 2013 on behalf of Econsultancy Asia.
GOAB (themed as “Bringing together tech innovators – from startups to global heroes”) was an event put together by a team of volunteers lead by Tina “Tins” Amper, the founder of TechTalks.ph.
The event attracted over 300 delegates and speakers not just from The Philippines but also a healthy contingent from other Asian countries as well as a number of experts from Europe, USA, Israel and Australia. The event was a big hit and in fact the organisers have said that the feedback was so good that next year's event has been confirmed and speakers and sponsors are already lining up.
So what happened at GOAB? And what's happening in The Philippines' digital space right now?
Doy Vea, chief wireless advisor at Smart Communications, Inc. summarised GOAB quite nicely as “A beautiful day for the future of startups in The Philippines”.
One of the first speakers was Monchito Ibrahim, Executive Director of the Department of Science and Technology (DOST) Information and Communications Technology Office (ICTO).
He stated that the Filipino government has set a target to produce five internationally recognised Filipino startups with $1M+ annual turnover by 2016.
This might be seen as a modest goal by some, especially considering The Philippines has a population of 100M, is the 11th largest economy in the world and had the fastest growing GDP in Asia (7.8%) last year.
Perhaps it shows how far The Philippines digital market is behind some other SE Asia countries but I can assure you these are exciting times nonetheless. There are hundreds, if not thousands of very real internet/mobile business opportunities begging to be developed.
The obvious areas for exploitation are not in trying to mimic Silicon Valley with highly competitive sexy new ideas, but instead to replicate/localise proven (B2C and B2B) e-business models from more developed markets.
Not sexy, but profitable for sure, especially if the teams involved have enough skills and experience to execute well.
I drew a number of positive take outs from conversations with other speakers and delegates:
- There is a fast growing number of talented programmers and designers (many of whom now work in outsourcing but could easily? flip into startup mode).
- Filipinos are hungry for success and optimistic about the future.
- The youth are fluent in English (The Philippines adopted English as the language of business many years ago).
- Low competition in the marketplace.
- Filipinos are Facebook addicts (an unbelievable eight hours per day someone mentioned!) and smart phones sales are booming.
- Great opportunities exist to re-invent / digitise traditional businesses e.g. shipping (as pointed out by Zed Cohn? in his thought provoking presentation).
But it's not all roses, Filipino startups face some tough challenges before they can make an impact on the digital world stage.
- The startup ecosystem is very immature with many gaps to be filled.
- There are not enough mentors with start up experience.
- Digital marketing skills seem weak to average (in most cases) and certainly there are not enough experienced Filipino digital marketers.
In general there are not enough 'T-shaped people' with broad digital business experience and a serious depth of talent in one or more specialist fields.
It's also worth noting that Tina Amper, who returned to The Philippines after a successful US career, called for more talented Filipinos to 'come back now' and join in exploiting the amazing growth opportunities in The Philippines. Certainly a returning 'digital diaspora' would do The Philippines no harm at all.
- There are very few events and practical training programs available for potential digital marketers and 'growth hackers'.
There needs to be a significant increase in the amount of local funding available to startups because the “big money” foreign VCs etc. are not yet so interested in investing in digital startups from The Philippines.
As far as I understand (and this is not my area) the foreign investors are waiting to see some local successes born from local seed money before they step in.
- Due to the current lack of funding options start ups will have to bootstrap and take risks (not necessarily a bad thing).
Ron Hose, founder of Innovation Endeavours (an early stage venture capital fund backed by Eric Schmidt), pointed out that if Filipino start ups don't monetise quickly enough (i.e. before the seed money runs out) then they will be dead in the water.
The Philippine startup ecosystem is still in its infancy. Funding is scarce, experienced talent is hard to find, payment, delivery and Internet infrastructure is poor....But for all those challenges, opportunities abound.
The local market is big and competition is still very low. Widely spoken English and a super-friendly culture makes the Philippines a great first base for startups aspiring to tackle Southeast Asia.
A more in-depth report on the state of Filipino startups was presented at GOAB: Philippines Start Up Report (by Ron Hose).
When considering barriers to successful digital marketing specifically Jack Madrid: President, Digital Commerce Association of the Philippines (Previously Country Manager of Multiply and Yahoo! PH) commented that:
One primary barrier is that most brands still consider digital marketing as separate from traditional marketing. As such, most companies don't integrate online and social media channels in communicating their messages, missing a big opportunity to deliver holistic, impactful campaigns.
This is probably because brands still maintain a separate digital budget from their overall marketing spending, and even worse, maintain separate digital marketing teams. However, some brands and advertising agencies are gaining experience on how to use and optimize Google and Facebook for their marketing campaigns.
As the PH advertising industry develops more digital-oriented leaders and marketers, the landscape will continue to change and move towards creative solutions for mobile and tablet devices. This will come through learning and exposure to digital/mobile trends in the US and Europe.
Speaker, Jojo Flores (Plug and Play co-founder) stated that three years ago MIT funded 26,000 companies which hired 3m employees and earned $2 trillion a year and added:
This is the 11th largest economy of the world. That’s just a university. If the Philippines do this right, we can create startups . . . an industry of techno-preneurs on top of outsourcing. We still don’t have enough startups in the country yet.
Some delegates also echoed Jack Madrid's comments in emails to me after the event and added that other barriers include:
- Security issues.
- Fear of copycats (protecting IP).
- Small percentage in Philippines who have payment facilities e.g. credit cards.
- Fear in general of something "big" or new.
- Lack of partnering opportunities, lack of understanding rather than lack of skills.
- Lack of pervasive decent internet connectivity in the provinces.
- Lack of proof it works (compared to tested traditional channels).
(Thanks to Napoleon Beltran, Floram limotlimot, Dennis Morada , Vince Samson, Ruth Delano and Jay Albano).
In summary, digital is growing in The Philippines and the situation reminds me of the 1997-2002 period in the UK when anything seemed possible. Let's hope they don't make the same mistakes by trying to fund businesses that want to sell pet food online ;)
Filipinos have the energy, passion and opportunities. What they need is more local funding and most of all, IMHO, they need more skilled e-people and that's a gap that I hope organisations like Econsultancy will aim to fill (with training, events etc.) in the months and years to come.
In November I will be facilitating the digital tourism track at 5th National ICT Confederation of the Philippines (NICP) Summit. I'll have the opportunity to find out and report in more depth about the opportunities and challenges facing The Philippines... watch this space.