NetworkNewsWire
Editorial Coverage: With China’s population now numbering 1.4
billion and internet use increasing at a tremendous rate, the
future of SaaS Enterprise Solutions and online marketing has never
looked brighter.
Despite causing a global economic turmoil and negatively
affecting some sectors, such as hospitality and travel, the
COVID-19 pandemic has led to a sharp increase in demand for certain
industries, like online gaming and ecommerce. Quarantines and
lockdowns are driving huge spikes in online traffic in China, and
digital marketing — already on the rise — may be more effective
than ever. iClick Interactive Asia Group (NASDAQ: ICLK)
(ICLK
Profile) is among the leading providers of independent
online marketing and enterprise SaaS solutions in China, supplying
integrated tools for analyzing and improving advertising and
marketing performance. One of the biggest players in online
marketing in the region is Tencent Holdings Ltd. (OTC:
TCEHY) whose multipurpose messaging, social media and
payments application, WeChat, has reached a monthly active user
base of over 1.1 billion. iClick has been a Platinum Service
Partner of Tencent Social Ads, and has effectively captured the
high growth of WeChat. Signifying tremendous market growth and
opportunity, foreign companies have recently been targeting the
East Asian market as well. American-based The Trade Desk
Inc. (NASDAQ: TTD) is moving digital-marketing services
into east Asia, starting with a partnership in Indonesia.
Cloud-based software company Salesforce.com Inc. (NYSE:
CRM) recently improved the partnership program it uses to
provide marketing and other digital tools, and HubSpot Inc.
(NYSE: HUBS) has been recognized as a leader in marketing
automation, thanks to its suite of online services.
- Chinese online users have tripled over the past 11 years,
leading to explosive growth for companies in the SaaS Enterprise
Solutions, online marketing space.
- Using big data and AI, savvy organizations can target
advertising with increasing effectiveness.
- Cross-company partnerships are driving these developments
across Chinese parts of the internet.
To view an infographic of this editorial, click here.
SaaS on the Rise as Chinese Economy Booms
China has a burgeoning middle and upper-middle class, driven by
its robust economic growth over the past few decades. The
fast-growing Chinese wealth has led to tremendous consumer
opportunities for both domestic and foreign companies to expand
their businesses to.
Software adoption has been rising rapidly, especially in the
advertising and marketing spaces, as both Chinese and foreign
companies seek to effectively target and market towards Chinese
customers, especially digitally where the captive Chinese consumers
spend most of their time. With hundreds of millions of potential
online customers and the growing wealth of businesses wanting to
target them, huge potential exists in the Chinese digital
advertising industry.
Marketing and Enterprise Software Solutions
In this context, companies providing marketing and enterprise
SaaS solutions are flourishing. One of the rising stars of the
sector is iClick
Interactive Asia Group (NASDAQ: ICLK).
iClick is a proprietary, marketing-technology platform targeting
Chinese consumers. The company’s data-driven analytical approach
provides targeted advertising in a market that has historically
been underserved but is increasingly online and accessible to such
marketing.
iClick is riding a rising tsunami of internet usage in China, as
the general population steadily increases its standard of living
and China surpasses the West in internet usage. In 2008, internet
users in the country numbered 298 million; by the first half of
2019, that number had
reached 854 million – nearly tripled in just over a decade. And
that growth is expected to continue.
It’s a sign of the power of this market – and iClick’s ability
to leverage that power – that iClick has seen more than 30%
year-on-year growth. The company is not only expanding into an
existing market but reaching into previously nonexistent online
market segments. Different companies approach this opportunity in
different ways. For iClick, success has come from a growth strategy
founded on two pillars: marketing solutions and enterprise SaaS
solutions.
iClick’s core business – marketing solutions – operates in a
different environment in China than in the United States. With
predicted CAGR of 23%, China’s digital advertising industry
significantly outpaces the 13% CAGR of its America peer.
Furthermore, digital marketing in the U.S. is dominated by the big
three – Amazon, Google and Facebook – in China, the market is very
fragmented. This represents ample opportunity for innovative
companies to grow and benefit from economies of scale and the
fragmented nature of the market.
This market also creates an opportunity for brands and
retailers, which is where iClick’s enterprise SaaS solutions enter
the picture. By providing full online-to-offline data integration
and analysis, enterprise SaaS solutions may help brands increase
repurchase rates and customer loyalty through building a 360-degree
detailed consumer profile. This leads to high gross margins for
companies providing SaaS solutions in this area, with stable
recurring revenues; iClick alone had a target of $10 million for
enterprise SaaS solutions in 2019 and estimates the revenues to
double to more than $20 million in 2020.
Big Data and Intelligent Analysis
With more than 1.4 billion people living in China, and a growing
number of those people becoming avid online users, marketers in the
country could benefit enormously from big data and smart analytics.
If those marketers can tap into the data these internet users are
providing and find ways to turn that information into actionable
insights or targeted marketing, they can reach remarkable levels of
consumer engagement.
iClick has a substantial advantage in this arena. The company
already has data sets on more than 820 million Chinese consumers’
dataset, providing a solid basis for comprehensive data analysis.
But data is only as useful as the analysis that can be drawn from
it. For this, companies are increasingly turning to implementing
AI-driven tech to facilitate the emergence of actionable insights.
Manual approaches and old-fashioned software simply can’t handle
the volumes of data now being gathered, nor can these older
processes produce the level of nuanced insight companies seek in
order to target advertising.
iClick stands at the forefront of the market with its
proprietary AI-driven, end-to-end marketing solutions. These
solutions do not only accurately identify and engage potential
customers, but also provide actionable business decisions based on
the analyzed consumers’ behavioral information. This is the sort of
effort that provides the backbone of SaaS — a specialist company
providing services on a scale and level of refinement that most
businesses can’t afford to do in-house. It’s also an approach that
has won the company accolades, with CEO and co-founder Sammy Hsieh
winning an EY Entrepreneur of
the Year China 2019 Award in Technology.
Partnering for Profit
For a company to succeed in this space, it has to develop a
strong portfolio of customers and partners that provide not only
revenue but also create valuable data. Work carried out for
customers feeds into the analytical engines. It’s a situation where
strong relationships become self-fulfilling prophecies as key
partners provide a company with the influence and credibility it
needs to attract new business and build more relationships.
This powerful process is evidenced in iClick’s powerful roster
of customers and partners. The company serves over 2,500 top-tier
clients such as Nike and eBay. In addition, iClick is a platinum
partner of Tencent and the largest overseas partner of Baidu.
Not surprisingly, these partnerships have proved profitable for
iClick. The company has developed a healthy cash position along
with the opportunity to seek fund support from HSBC for
accelerating businesses growth. As both its partnerships and the
pool of online users expand, the company plans to continue
expanding the reach of its SaaS work.
The value of these Chinese-focused companies remains
underappreciated in many quarters. iClick is trading at a fraction
of comparable prices of many of its SaaS competitors. Recognition
of inherent value will come with the realization that the
population of China has moved online and marketing to this group
can produce exceptional returns. With marketing automation in the
country currently only at 10–15%, compared with more than 50% in
the United States, a tremendous opportunity exists to increase
data-driven smart marketing — an opportunity that iClick appears
ready to monetize.
Selling to the Online Market
Outside of China, online marketing and ad placement is already
well developed. Among the companies leading the market is
The Trade Desk Inc. (NASDAQ: TTD), the largest
independent, demand-side platform providing real-time ad pricing
and placement. The company recently formed a
partnership with Gojek, Southeast Asia’s leading technology
platform, to provide advertisers with unprecedented insights into
how their online marketing affects offline sales. Launching in
Indonesia, this partnership will use in-store transactions instead
of cookie data to connect actual purchases to ad use, and so drive
more effective advertising.
Chinese multinational Tencent Holdings Ltd. (OTC:
TCEHY) is one of the largest providers of internet
services in the region. WeChat, the company’s multi-purpose
messaging, social media and mobile-payment app was released
in 2011, and by 2018 was one of the world's largest standalone
mobile apps, with more than a billion users worldwide. Most
recently the company announced plans to expand the scope of its
international investments, with a focus on smart
retail, Working in cloud and smart industries, the company has
naturally gravitated to big data and AI, the same tools that iClick
uses to target advertising. Tencent provides its own social
advertising, and iClick has closely integrated its technology with
the Tencent advertising system.
Cloud-based software company Salesforce.com Inc. (NYSE:
CRM) includes marketing tools among the many software
services it provides. The company works closely with companies
using its services and has recently revamped its
partner program to make these relationships work even better.
Salesforce’s reach extends into China, most recently providing a platform for the City University of Hong Kong
to unify its campus systems.
HubSpot Inc. (NYSE: HUBS) provides software for
marketing, sales and customer service, built on the basis of making
the bottom line grow in line with what’s good for the customer. The
company’s marketing hub makes it easier for businesses to generate
traffic, turn visitors into leads and track the activity of
customers. The company was recently recognized as a
leader in marketing automation by G2, with its services
standing out for ease of use and powerful features.
SaaS plays a powerful role in online marketing, and as Chinese
internet use grows, so will the role of SaaS – and companies
operating in that space. Meanwhile, as China’s middle class
continues to grow and spend, both domestic and foreign companies
will continue to market to the world’s largest spending
demographic, which will continue drive the growth of China’s
digital advertising industry. iClick is well positioned to
capitalize on the growth and scale of these market
opportunities.
For more information on iClick Interactive Asia Group, visit
iClick
Interactive Asia Group Ltd. (NASDAQ: ICLK)
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