An increasing number of incumbent marketing and advertising agencies are getting into digital marketing space in Bangladesh creating new challenges for small and medium digital marketing agencies.
According to several industry insiders, as the market matures and brands are increasing their digital budget, a growing number of incumbent advertising companies such as Asiatic, Mediacom, Adcomm, those did not have digital marketing operations before, are investing in the space creating a new wave of competition for small and medium scale digital advertising firms.
This has created a new kind of challenge for digital marketing agencies who are the relatively early starter in the space and has helped develop the market but now are in the risk of getting disrupted by the very companies they wanted to disrupt.
Many insiders predict a series of shutdowns of small digital marketing agencies and consolidation in the market. The recent merger of Madly and StrateGeek, two digital marketing agencies, could be seen as an early sign of consolidation in the market.
The advantage of incumbents
The advantage incumbents agencies enjoy is quite simple, these companies already have market access and serve small and big clients with marketing services and adding a digital media services to the list is least a challenge for them, while also convenient for their clients who otherwise need to find and work with a specialized digital marketing agency.
Contrary to that, digital media agency upstarts are new in the advertising scene and it is often difficult for them to get access to big brands and also to gain trust which big ad agencies already have. This market dynamic has made it difficult for digital media agencies to compete with the incumbent ad agencies and their digital wings.
The way forward
Given the new reality in the market, what could be the way forward for smaller new entrants working in digital-only mode? We spoke to CEO of StrateGeek, Sidrat Talukder, who emphasized on further specialization. “I presume that there are going to be two streams,” Sidrat says in an interview with FS, “there will be a small number of big clients who will be working with big agencies doing their digital integrated with other marketing work, and there will be small agencies doing digital-only for a lot of small brands. There is going to be both specialization and concentration at opposite ends of the spectrum.”
Saimum Hossain, Co-founder of Geeky Social thinks continuous innovation and best possible customer service will be the key to survival and thrive in this new reality. He, however, predicts more consolidation and closure of businesses in the coming days.
The digital shift
Digital marketing in Bangladesh has been experiencing a paradigm shift in the recent time. There is a growing interest among local companies to advertise their products on digital and social media platforms. Digital is the next big think, says Anwar Ehtesham of Dhaka Bank, while Aftab Mahmud Khurshid of SSG suggests that digital channels will outrun other channels within a few years.
According to analysts, the digital advertising in Bangladesh is more than BDT 1.00 billion market and growing rapidly. That said, while local ad network like G&R, which serves around a billion ad monthly, and RITS, take a small share of that market, a significant amount of this money goes to giants like Facebook and Google.
With over 65 million internet users and around 120 million mobile phone subscribers, the market is considerably big and growing. Moreover, over 65% of the entire population are millennials and post-millennials who are largely digital natives and live on digital platforms which offer an unparalleled opportunity for digital marketers and platforms in the coming years.