"NECESSITY is the mother of invention," at least according to Plato, but I concur. As someone who grew and has championed digitalization, e-commerce and internet technologies in the Philippines for 24 years, I was amazed at how the Covid-19 pandemic sped up the country's digital transformation.
This period triggered a technological quickening and awakening that led corporations, economies and small businesses to go digital in a quest for survival.
Crisis and opportunity
Some countries, like the US, the UK, Canada, Australia and Singapore, were better adapted to the disruption a global pandemic would bring because they made digital a key component of businesses years ago. On the home front, banking and finance, wholesale and retail trade, and real estate led the digital movement. Of the three, banking and finance was — and still is — the most aggressive.
However, the true hero — the foremost enabler of digitization, especially in the Asean region — is the financial technology (fintech) sector. Their practical solutions not only ensured that businesses could carry on, but they also created a ripple effect that inspired other worthwhile digital improvements that we are enjoying today. Fintech innovations like credit scoring, digital payments, e-wallets, lending and insurance enabled clients like you and me to transact remotely, 24/7. These online conveniences were also advantageous to banks, as they boosted profitability and efficiency, leading to 19 percent annual growth.
The digitalization of wholesale and retail trade, specifically retail, vastly changed consumers' purchasing habits. E-commerce made a wide range of goods available to the public, enabling retail to grow 17 percent year on year (YOY) — outperforming the economy at large by a full 10 percentage points and growing the whole sector by 14.9 percent YOY. Real estate also surged to a staggering 43.8 percent YOY because more clients, like overseas foreign workers (OFWs) and balikbayan audiences, could participate in the market without the need to be physically present.
The digital roadblock
There's a pervasive lack of digital literacy in the country. While that lack is present across all generations, the gap is largest among older generations, preventing them from both benefiting from and enjoying the potential that the digital revolution brings. You can see this in the pricing appreciation for digital services. In spite of the data transparency and directness of results from digital efforts, there is still the perception that digital is a game for "big business."
That mindset has allowed international players like Lazada, Shopee and Zalora to capture the value of e-commerce in the country rather than being held captive by local leaders.
There are now several local brands that have made the digital leap, but they must realize they need to take the next step by integrating online engagements with brick-and-mortar experiences and vice versa. Local brands have a wealth of data; however, that data is not used to its full potential, primarily due to a lack of experienced data and analytics engineers in the country. This illustrates why the country's digital transformation lags compared to its neighbors, Singapore and Indonesia.
The good news is that Philippine brands are making an effort to catch up. We've observed companies allocating more staff and budget to digital transformation. The question is, are we moving fast enough?
Philippine brands will still find it moderately easy to compete in the digital space compared to other Asean countries like Singapore and Indonesia, whose internet economies have significantly matured. Sectors like banking are already very competitive, as banks started their digital journeys as early as 2012. Sectors with minimal or no digital programs, like manufacturing, are open skies as far as opportunity and competition are concerned.
In spite of the positive outlook, I want to encourage some urgency in going digital. Digital may make the world your oyster, but that means we're on the menu for international players as well.
I make this appeal because, over the past two decades, I have seen the Filipino market evolve faster than the enterprises that serve it. This has allowed international companies to capture the value instead of our local homegrown brands. Lazada, Zalora and Shopee managed to capture the e-commerce market before any of our big players could get out of their pajamas. Uber and Grab disrupted our transportation economy before local players could put their shoes on.
The question for our business leaders is: Will we serve our local market's needs, or will we wait for international players to satisfy the needs of our customers?
The question for nation-builders is: Will we develop the solutions to address the needs of the market, or will we wait for others to capture that value?
Transformation
Being on Facebook is not the same as being digital, nor does having a website make you a digital competitor. The Philippines has the highest online content consumption and spends the longest time online worldwide. That is an opportunity. While social media is an excellent channel to create awareness and loyalty because it's an affordable virtual touchpoint, we have to accept that it alone is not enough to reach our customers.
To make an impact and return on investment, brands should embrace a strategy where digital is a key component. This means understanding existing technologies like marketing automation, CRMs, and business intelligence, as well as emerging technologies like artificial intelligence (AI) and big data.
Organizations can use AI to enhance analytics, turn data into a digestible narrative for their decision-makers, and personalize customer experiences. Big data, or large first-party data sets, on the other hand, can empower companies to make products and services more relevant to customers and serve content that is truly valuable to their audiences.
There is massive potential for going digital, especially since everyone is now online — Boomers, Gen Xers, Millennials, Gen Z, and soon Gen Alpha. Thanks to smartphones and the internet, the market is larger than before. As the economy grows 6.6 percent on average, the online economy's growth is 16 percent YoY, proving to be the lion's share of growth.
Baby steps
However, companies that are ready to take the leap shouldn't go it alone. They should collaborate with real experts who have proven experience in digital transformation. Digital marketing agencies, such as Truelogic, have been helping companies thrive in the digital space for 15 years. One of our company's most memorable projects was with a prominent bank, where we launched their first organic digital campaign. We successfully converted their clients from branch foot traffic to online channels and increased website traffic by over 50 percent, starting in 2015.
At the same time, our digital project with a popular Filipino-owned logistics company allowed us to help them grow their new and legacy services and gain a significant share of the remittance market. These are just two success stories we've gathered from the 14,100 clients we have served worldwide since 2009, including close to 100 of the most respected local enterprises. These include conglomerates, pharmaceuticals, fintech companies and educational institutions.
Entrants to the digital space should patiently take baby steps. The benefits of digital are compounding, and the impact of a campaign started this year will be drastically different from one started a year later. This evolving landscape requires brands to sharpen their digital saw by keeping updated with new methodologies, algorithms, trends and technologies.
Talk to people who test and experiment with new techniques and technologies and then adopt only useful ones. Yes, keep an eye on the competition, but keep an ear to your customers whose story is in the data you probably already have.
If organizations follow this route, the Philippines will reach the same level of digital maturity that Indonesia and Singapore have today in three to five years. By then, we will finally create an economy where digital touches and transforms businesses and lives, regardless of an organization's size or a customer's personal background.
One thing is for sure: Digital transformation is here; it will not "stay" but will continue to move forward. We do not want to be left behind. From companies to private individuals like you and me, we must adapt and learn how to use, hone and wield the power of a digitally revolutionized world. We must remember that digitized systems are equalizers and leverage this fact. Our future and the economy's future depend on it.
Bernard San Juan III is the managing partner of Truelogic, founded in 2009. Truelogic has grown from a small SEO company to one of the largest digital marketing agencies in the Philippines, having served thousands of clients globally and the most respected brands locally.