Tell that to Kosuke Sogo. His company, AdAsia Holdings, has expanded into nine countries and generated over US$12.9million in revenue in only eight months. On top of that, the company received US$12 million in Series A funding, the most for an ad tech company in Southeast Asia.
I spoke with Sogo to find out how he achieved this tremendous expansion internationally.
In this piece, he shares his international expansion strategy.
Joe Escobedo: How did you go about directing the international expansion of your company? What strategies are available to startups for global expansion?
Kosuke Sogo: We started the company in April 2016, but before that, my cofounder and I had already developed a strategy for overseas expansion.
Expansion is one thing but to expand and perform well is a whole other beast. It is why we came up with three scalable pillars that have set the foundation for the company: people, innovation and localization.
Bringing the right people in is paramount to a startup’s growth, particularly in the early days. Age should not be an issue here, but rather, whether they have the personality and character to fit in and do well in the company.
Innovation is key to being competitive in this region but being agile is even more important. Having the ability to quickly evolve and shift is the reason why we decided to start our own company.
This brings us to our third pillar. With Asia being such a diverse region, it is important to approach expansion with localization in mind. Each market in Asia has their own unique cultural norms and nuances. Strategizing ways to localize products, services and manpower should be one of the first things to do when planning business expansion. This includes understanding and finding out about local business and industry practices, government grants and regulations, as well as historical market reception to products.
Apart from bringing in local staff, we had to localize our solutions as well. Take Thailand for example, where users are almost equally on social media apps (Facebook, LINE, etc.) as they are on browsers. This has also become an essential part of Thailand’s media consumption – where social media has become their news feed. Thus, apart from obtaining desktop and mobile web ad inventory, our publisher team also sourced local mobile and social in-app ad inventory to cater to this market.
With all that said, most of our moves were driven by client demand. This allowed us to plan our initial budgeting – and along with our three pillars, allowed us to enter and scale our business further in each country.
Escobedo: What are your plans for further international expansion?
Sogo: Having covered the majority of Southeast Asian markets, the Greater China region and Japan, we’ll look to move into Malaysia and the Philippines within this year. Up next is India, Russia and the United Arab Emirates by the end of next year.
Quick and agile engineering teams are needed – with some working on enhancing existing products and some developing new solutions. This gives us the flexibility to quickly localize our products before we enter a new market, while developing new solutions. For example, markets like India and Russia have sprouted their own ad tech and mar tech ecosystems and we would have to partner up and integrate with local players to keep momentum going.
On the marketing front, we will employ a range of B2B and B2C marketing tactics when we enter our future markets due to our wide range of current and future products.
Here are some of the ways we will reach our target demographics for new markets:
On the offline end, trade shows are a must to get “face time” with prospective B2B clients and run product demos. There are many that have packages for interesting startups. Two things here that are requirements of our staff: wear our company t-shirt and hustle. However, there are other ways to stand out as well, but first, find out what makes your company so attractive.
Our reach in Asia attracted many potential clients and partners, especially those from the West looking to break into Asia – and our backdrop, brochures and pull-up banners made sure of it. Another way is to always be ready for product demos. If you have a booth, bring more than the required number of laptops needed as your staff will be able to grab one to run the demo outside of the booth. Throw on a company t-shirt and you’re pretty much a mobile booth.
Speaking of online, our key focus areas would be organic and paid search, as well as influencer marketing. Search is a platform that everyone goes to make decisions. Just getting into the conversation matters, even if they search for more information about a competitor. It then comes down to how your online properties can convert them.
Our future solutions in other industries also require a certain degree of B2C marketing targeted at digitally-savvy users – and that’s where influencer marketing comes in. Most of the countries we’re looking to expand into have high social media usage and influencer marketing allows us to influence that precise audience. Of course, the message for each market has to be altered accordingly.
Escobedo: What was your biggest challenge in starting and scaling your business?
Sogo: We now have over 170 staff in Asia across a variety of functions including engineering and product, sales, corporate and operations. We’re planning to bring this number up to 400 by the end of 2018.
Like most early-stage startups, there were growing pains in attracting and retaining talent. We had an idea of the kind of people we wanted in our company – people who would be an asset in the long-term – but we did not clearly define the type of person.
Fast-forward a few months, and we observed certain characteristics in our best-performing staff. These are grit, positivity, teamwork, speed, result-oriented and fairness, and we grouped and termed these the AdAsia Standard.
The AdAsia Standard has set the basis for our hiring managers and human resource personnel to benchmark against when selecting candidates – and provides scalability and clarity to our hiring process.
Apart from job advertisements placed across local job portals, our staff leveraged their professional networks to find people who fit the criteria above.
I’ve also worked with many clients, partners and vendors in the past and have built up a good network of contacts. During this time, I have experienced their working styles and abilities firsthand, but more importantly, how they treat clients. In this sense, I’ve leveraged my network to bring people I know who can help grow my company.
Retaining the right staff poses another challenge for many early-stage startups as well. I believe in recognizing and awarding staff based on performance and that is why we have biannual performance and pay reviews, and monthly and quarterly awards, among others. We’ve also achieved profitability at the end of last year, so people who join the company know that they are entering a safe space with fast business, personal and professional growth.
Escobedo: Why do companies often fail at expansion?
Sogo: I really like this saying: “If you fail to plan, you plan to fail.” As a startup, we knew that expansion would be tough at the start, but it was a unique stage of growth for advertising and marketing in Asia. That is why we decided to plan for quick expansion – timing is key, and it’s important that companies see the opportunity, plan and act quickly.
My cofounder and I have experience in this industry across the region, and knew from the start that we wanted to set up the company in Singapore. We then planned to expand into Southeast Asia before moving into Greater China and Japan. Our industry experience helped us identify emerging, high potential markets to expand into like Vietnam and Indonesia, who were just on the cusp of the growth we’re seeing today.
At the same time, it is important to be dedicated, flexible and always willing to learn and try out new things in Asia. For the first year of operations, my co-founder and I flew around the region meeting likely candidates and potential clients, setting up offices and more, while overseeing operations. We even flew to four countries on certain weeks, often taking red eye flights. This constant interaction with our customers meant that we could adapt our products and strategy to meet their needs. That’s not to say that this pace of work has changed since then. Our new markets like Hong Kong, China and Japan require more of a focus, and we still have to maintain the growth of our existing markets.
Another factor is localization. Having a scalable plan and business is still very important but keep localization top of mind as well. Get feet on the ground before expanding into those markets. Network with the locals and find out their pain points and see how you can tailor your solutions to meet their unique needs.
For example, marketers in Vietnam prefer to use managed marketing and advertising services, rather than self-service ad tech and mar tech platforms. This is due to the lack of time, manpower, skills or knowledge to operate a self-service platform.
Apart from our technology that we offer to our clients, we’ve also built a team in Vietnam that consists of account and client support teams, similar to an agency. Additionally, we’ll be looking to launch our free educational initiative there to upskill Vietnamese marketers. Remember, you have to cater to what the market needs.
Escobedo: What advice do you have for Western-based companies who want to expand into Asia?
Sogo: Asia is seeing unique growth across emerging markets. These are countries that are experiencing high growth rates in digital and device adoption and will present opportunities for disruption.
Of course, localization should play a key part in a company’s expansion in Asia. It’s important to first understand though, that each country and even city has its own unique culture and characteristics. After researching the market and finding out if there is a localized product fit, adopt a customized marketing, product and operations strategy and you will be able to see the benefits of this approach.
Find out if different cities in each market have different ecosystems as well. When we opened our office in Ho Chi Minh City last year, for example, it was only a matter of time that we had to open an office in Hanoi. This is not due to geographical reasons, but more because Ho Chi Minh City has a generally higher level of digital marketing sophistication compared to Hanoi. Couple this with Hanoi consisting of mostly local businesses and governmental organizations, and a more consultative approach has to be used in sales.
Joe Escobedo (www.forbes.com). 15 Sep 2017