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Johnson & Johnson's Kenneth Sim on Facebook's Ad Restructure, APAC's Gen Z, and Streaming in Southeast Asia

The MadTech Podcast

On this week’s episode of The MadTech Podcast, Kenneth Sim, digital marketing manager at Johnson & Johnson, joins ExchangeWire’s Mat Broughton and Rachel Smith to discuss the latest news in ad tech and martech.

Together, they cover:

 

– Facebook are restructuring their ads business so that it is no longer built on users’ data. The company announced that they’re currently working on a “very meaningful pivot” that will effectively scrap the system that propelled the social media giant to the top of the online advertising heap. The company are reportedly experimenting with a number of privacy-centric techniques, including “on-device learning”, which runs an algorithm locally on a user’s phone to decide which ads would be most suitable for them and then sends the anonymised results to the cloud for advertisers to review

The development reflects the infrastructural changes that the ad-funded internet economy is undergoing, with a flurry of regulatory efforts to reform the way that companies collect and handle users’ data. The EU are currently contemplating banning microtargeted ads under the proposed Digital Services Act, whilst the US government have indicated an interest in monitoring the “surveillance of users” by “dominant Internet platforms”. 

Fellow tech titans Apple and Google have already made changes to their operating systems to meet these anticipated changes. Apple have implemented a pop-up that allows users to opt-out of targeted advertising, with Google announcing plans for a similar prompt on Android. Facebook said that this approach would be too costly to their revenue growth, and previously criticised Apple for employing the tactic, saying that it unfairly impacts small businesses. Since then, the Mark Zuckerberg-helmed firm have begun experimenting with some of the privacy techniques Apple are using, such as ‘differential privacy’, although they maintain that they’re doing so is an attempt to “advocat[e] for a different and better approach to advancing privacy in advertising”, unlike Apple, whom they accuse of “exerting [their] control over the App Store to benefit its own bottom line” through the technique.

 

Gen Z consumers in APAC feel better equipped and more empowered to force brands to make positive changes than previous generations. That’s according to McCann Worldgroup’s “Truth About Generation Z” study, which reports that 89% of the region’s younger shoppers consider themselves more capable of driving cultural change, 15% more than the global average of 74%.

The study also found that Gen Z consumers worldwide typically place a higher value on empathy and creativity than preceding generations - in fact, ‘creativity’ is the highest-ranking adjective to describe a successful brand amongst this generation (above the general public’s favourite, ‘trustworthy’). Whilst over half of all Gen Z respondents said that the greatest benefit of social media is its ability to give a voice to the disenfranchised, the figure is higher in APAC. Furthermore, 77% of the region’s Gen Z respondents said that they believe they have a responsibility to make a positive contribution to the community in which they live. The number of Gen Zers who would happily pay more towards a brand that shares their values is also higher in APAC than the global average.

Interestingly, Gen Z respondents also indicated a greater affinity towards brands that can offer comfort, with 74% globally saying that they prefer brands who “reassure” to those who “challenge”, up from 62% in 2018. This is even more so the case in APAC, according to the report, although the region’s Gen Zers also appeared more confident than those in any other that they can create meaningful change.

 

– Southeast Asia has become a key streaming market, with players from across the region and beyond driving the market’s value up to USD $1.8bn (£1.3bn) in 2020, according to data from Omdia. The global research firm found that ad-supported video-on-demand dominated in the region in 2020, accounting for 68% of the market’s total revenue. Omdia also forecast that subscription-based services will see their market-share rise from 31% in 2020 to 40% in 2025. 

Netflix have made some progress in the region by focusing on localising their content through the use of dubbing and subtitles, as well as by introducing their app interface in regional dialects. The global market leader have also upped their local content catalogue and added mobile-only subscriptions in Malaysia, Indonesia, the Philippines, and Thailand to provide a more affordable option for price-conscious consumers. However, cultural factors, such as a lower inclination to pay for online content and disagreements over what subject matter is appropriate for viewers have kept Netflix from snapping up a large market share.

Regional contender Viu, meanwhile, have seen success by partnering with local telco providers to expand into new markets. The PCCW-owned streaming platform first launched in Singapore, Malaysia, Indonesia, and the Philippines in 2016, arriving in Thailand through a partnership with local telco AIS in 2017, and then launching in Myanmar in 2018. 69% of the company’s online video revenue now comes from subscriptions, a huge leap from just 3% in 2015. However, the firm have seen revenue from advertising decline by over two-thirds over the same period, falling from from 97% to 31%.