The World: Cashing in on social networking the Asian way

Social media users can be bought by advertisers for as little as nine pence each. Robin Hicks finds out how marketers benefit.

The Western social networking giants Facebook and Twitter may be struggling to turn a profit. Not so in Asia. Here, local players have been quicker to commercialise their sites, cashing in on monster audiences.

The world's richest social network is China's Tencent QQ, better known as QQ. The 11-year-old website started out as an instant messaging service. It has evolved into an entertainment powerhouse with chatrooms, blogging platforms, multiplayer gaming, virtual pets, ringtone downloads and personalised avatars that can be dressed up with designer clothes - at a price. The site claims to have 300 million registered users, putting it on a par with Facebook's global audience (although QQ users often have multiple accounts).

QQ's revenues reached $523 million last year, almost four times those of Facebook. Two-thirds came from virtual goods and games. Close to a quarter from mobile services. Only 13 per cent, however, came from advertising.

Things are different for Mixi, Japan's most popular social networking site, which has an 80 per cent audience share. Of the $19 million it made in profit last year, around 90 per cent came from advertising; banner ads, links to related sites that also host advertising and, increasingly, mobile formats (70 per cent of Mixi's 17 million users access the site using a mobile phone).

Mixi is rare in its ability to earn large sums from advertising. But it now faces stiff competition from faster-growing local players such as MobageTown, a $1.5 billion- valued youth-friendly social network that offers a virtual currency that users can earn by clicking on ads. Just as worrying for Mixi, Dave McCaughan, the Tokyo-based Asia-Pacific director of strategic planning at McCann WorldGroup, notes, is that its users are getting tired of the volume of ads on Mixi web pages.

The reverse is true for Cyworld in Korea. Local agency planners say that advertisers have not taken the platform (which is used by 90 per cent of twentysomething Koreans) seriously enough. "Most Cyworld advertisers do not update their content after a campaign or two," John Yoon, a campaign planner in the domestic interactive team at Cheil Worldwide, Samsung's global agency, says. "They do not have the right people to manage their campaigns, nor the financial support to keep advertising."

Advertisers in South-East Asia have been slow to embrace social networks too, Nick Fawbert, the founder of the web consultancy TheThirdSpace and president of the Interactive Advertising Bureau of Singapore, says.

Two of the world's fastest-growing social networking countries are Indonesia and the Philippines, which have seen users of Facebook (South-East Asia's most popular social network) grow by 432 per cent and 189 per cent, respectively, over the past year. Despite this, Fawbert estimates that only $5 million was spent on advertising on social networks in South-East Asia in 2008.

As in the West, traditional advertising is not the most popular way brands are using social networks in Asia. Advertisers are increasingly trying to enter the content stream itself, reaching "influencers" in blogs and friend circles. Even so, given the size and growth of social network audiences in Asia, low marketing spend levels are curious, Fawbert says. Yes, outside developed markets such as Japan, Taiwan, Korea, Hong Kong and Singapore, an Asian social network user is worth ten times less to an advertiser as one in the US or the UK. But what Asia may lack in user "value", it makes up for in scale, Fawbert points out.

The numbers are hard to ignore. One-third of the world's blogs are written in Japanese. An estimated 200 million Chinese, of a total online population of 253 million, use social media - despite sites such as Facebook and Twitter being blocked. The world's fastest-growing social network is Indian; SMS GupShup, known as "India's Twitter", has grown member numbers from seven million to 20 million over the past year.

"Asia is more actively engaged in social media than anywhere in the world," Thomas Crampton, the Asia-Pacific director of 360 Digital Influence at Ogilvy Public Relations, says. Crampton, a former New York Times journalist, says that the amount his clients are spending on social media campaigns that try to "manage influencers" has doubled in the seven months he has been in the job. And from clients all over the region.

He points to a campaign Ogilvy ran for KFC in Australia as an example of social media used to good effect. On becoming a fan of KFC Australia's Facebook group, people could get a free Cayan Grill Burger. One rainy day in June, 80,000 Australians queued outside KFC restaurants to get their burger.

Mark Cripps, the regional digital director of MRM Worldwide, is a judge at this year's regional Digital Media Awards. He says that there are some examples of big brands, such as McDonald's, Pepsi and Wrigley, using social media well among the entries. But he admits such examples are still rare in Asia.

Meanwhile, cases of it being done badly are increasingly common - none worse than a campaign by Langham Hotels International in Hong Kong. The idea was to attract foreign visitors and encourage guests to promote the hotel as "the perfect blend of East meets West". But a supposedly satirical viral video celebrated Langham as a welcome retreat from the "dirty locals" on the streets. A Tweet from Isabelle Neo that read "makes me want to visit anywhere but a Langham Hotel", with a link to the video on YouTube, was not the most negative reaction.

"Clients in Asia too often see social networks as a quick fix, partly because it's so cheap. This is the wrong view to take," Cripps argues. "It's about steadily building a relationship over the long term."

More extreme methods to get popular quickly are now emerging. USocial ( is an online marketing company that sells Facebook friends for 15 cents each (nine pence) to companies interested in a particular demographic or interest group that suits what they sell. Its largest client is the Korean Department of Tourism.

Susana Tsui, the president of neo@Ogilvy Asia-Pacific, says uSocial's model is reminiscent of the early days of e-mail marketing when e-mail addresses were traded in a similar fashion. But in today's social internet world, going down this path is "marketing suicide", she says. "Especially without permission. You just don't do that."

The founder of uSocial, Leon Hill, who, at 23, is even younger than Facebook's founder, Mark Zuckerberg, says that provided that brands do not spam their "friends" too often with messages and links, a relationship can be built over time. "It's not like buying Google ad clicks, which you have to keep on buying. A Facebook friend or Twitter follower, if treated well, can be marketed to indefinitely at no extra cost." A Twitter follower could be worth ten cents a month in sales, he says, while a Facebook friend is worth a dollar a month.

Starting out with revenues of $10,000 per month in December 2008, Hill says his monthly income now exceeds $100,000 boosted by the Facebook service he launched last month. But the good times might not last if the letters to his lawyers continue to arrive. He has already received legal writs from Digg and Twitter, but, after writing back to defend his corner, has heard nothing since.

Hill proves that the rules are still being written for social network marketing in Asia. "We're not breaking any laws. We're just doing what any other Facebook user would do if he had the knowledge or time," he says.

COUNTRY Internet users Internet Estimated social Most popular
(millions, penetration network users social network
2008) (%) (millions, 2008)
Australia 17 80 14 Facebook
China 253 19 200 QQ
Hong Kong 4.9 70 4 Facebook
India 60 5 48 Orkut
Indonesia 25 10.5 20 Facebook
Japan 94 74 75 Mixi
Malaysia 15 60 12 Facebook
New Zealand 3 74 2 Facebook
Pakistan 17.5 10 14 Orkut
Philippines 14 15 11 Friendster
Singapore 4 87 3 Facebook
South Korea 35 71 29 Cyworld
Taiwan 15 67 12 Wretch
Thailand 13 20.5 11 Hi5
Vietnam 20 23 16 Zing
Sources: Ogilvy, CR-Nielsen China,


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