TWO of the key people behind online retailers Zalora and Lazada are trying to build a digital marketing network in South-East Asia.
Lion & Lion, headquartered in Kuala Lumpur, started out about 2½ years ago as the internal marketing arm of global investment company Nova Founders Capital. It provided support for Nova’s various ventures.
However, it didn’t take long before Nova co-founders Mads Faurholt-Jorgensen and Raphael Strauch, being successful entrepreneurs, to see the growth potential for Lion & Lion by spinning it off.
They had been global partners of German start-up incubator Rocket Internet, where they had been responsible for the founding of Zalora and Lazada in Asia, among others. (Rocket Internet, founded in 2007, has become an e-commerce powerhouse by replicating successful Internet business models in new or under-served markets.)
Nova Founders, which began in Malaysia but is now headquartered in London and Hong Kong, invests mainly in Internet businesses in financial services, also known as “fintech” (financial technologies). Nova is behind the price-comparison portal CompareGlobalGroup and other successful technology businesses.
Lion & Lion managing director Hugh Batley says Faurholt-Jorgensen and Strauch wanted their internal marketing team to be among the best in the market.
“The way they wanted to achieve that was by forcing us to go external (after half a year of operating internally),” he tells StarBizWeek. “It’s If your service is not good enough to sell, then it’s not good enough for us type of attitude. The other thing they said was, the more scale we can get, the more efficient we will be. So I think they wanted us to deal with the scale perspective and to be at the top of our game.”
Lion & Lion has expanded rapidly in South-East Asia in the last two years. Besides still servicing its parent Nova, it has a growing clientele that includes IKEA, Google Malaysia, Maybelline, L’Oreal, and Adidas.
Apart from Malaysia, it also has offices in Indonesia, Singapore, the Philippines and Hong Kong. It has a staff of 65, and most (more than 50) are based in KL.
The Nova co-founders, who hail from Europe (Denmark and Germany), really like the South-East Asian market, says Batley, who is British.
He says this is an exciting market based on reports from the likes of McKinsey. “They really see this as one of the great markets for the next 10 to 15 years.”
Adding to the region’s appeal is that digital is near the start of its journey here, Batley says. “E-commerce represents 6% of the business in China and 12% of the business in Europe, but here, it’s below 1%.”
He also notes that while there is a growing consumer group on digital, marketing spending on online media is not “quite there yet”. In 2011, less than 1% of media budgets in the region was on digital media.
Showing a Google chart, he says annual online media spending in the five Asean founding members plus Vietnam, Hong Kong and Taiwan is forecast to more than double to US$7bil by 2018.
Lion & Lion started out in media buying for search and display ads. Today, while media buying/planning remains its most advanced capability and biggest contributor. Lion & Lion has turned into a full service digital agency with a large and growing content team.
Not bad for an agency that started off slightly by accident. “One of the original founders, Stefan Bruun, was speaking at a conference on a Rocket’s company’s approach to media buying. IKEA was at the conference and afterwards they approached him,” Batley explains.
IKEA became Lion & Lion’s first external client in early 2013. It continues to be a client, having just just signed a new two-year contract with the agency.
Batley’s focus this year is to strengthen the agency’s operations in the five current markets. He says he is looking at growing further the Philippines and Singapore offices this year.
Asked whether it wants to venture into China and elsewhere, he says: “From our office in Hong Kong, we may help some brands enter China. For us, South-East Asia is the most exciting market.”
In terms of staff, Batley hopes to recruit 50-60 people this year, hence doubling its size.
He notes that digital has a talent gap globally since things move very fast. “That will be our biggest challenge going forward – not just talent but talent with the right attitude and culture.”
Over the next 18 months, Lion & Lion plans to invest in an academy system, he says. “Interns can come in and balance between learning and on-the-job activities. It is a big investment,” he says, adding that the programme will start in-house.
On the attitude that he seeks, Batley says employees need to be comfortable challenging him as well as challenging themselves. “We believe in robust problem solving.”
Batley, who had been a mechanical engineer at BAE Systems and a consultant at McKinsey & Co, stresses that he and joint managing director Casper Andersen, a Dane who was formerly CEO of publishing house Bonnier China, come from a business background. “My background is business, not so much marketing. When Casper and I joined Lion & Lion, one of the things that’s really important to us is we keep that mentality of growing businesses.”
In helping the clients, they try to think of the closest things to sales. “Sometimes it is sales (for clients doing e-commerce) but often it is not. For example, for IKEA, it is about identifying a good visitor to its (online) site, someone who shows a closer intent to purchase rather than just awareness – i.e. who views the products and clicks on the store locator. Then we try to develop a campaign to optimise and grow that aspect,” says Batley.
On the relationship with clients, Batley wants it to be a partnership whereby Lion & Lion works towards both the clients’ short and long-term goals.
“I think I have a bit of a reputation with some clients for being quite challenging – asking why they’re doing certain things, etc. We are quite fortunate that we can be in that situation. From my time at McKinsey, there’s one value I love, which is the obligation to dissent. You have an obligation, not just the right, to say if something is not right,” he says.
Is it difficult pitching against agencies that are part of global marketing communication networks? He says: “There may be higher inertia in businesses that have traditionally gone with the big networks. But what you (the client) get with an independent business – we’re actually bigger than a lot of the big agencies here – is much more flexibility. If we want more people to do e-PR, we will just go for it without having to go back to the lords and masters overseas. We try to keep decision-making very dynamic,” he says.
On the growth target for this year, Batley says: “We have internal targets, but it’s more interesting to see what are the opportunities in the market. I think we probably wouldn’t have aimed as high if we sat here early last year and decided where we would be in December. I think we’ve done really well in the last year.”