Market News

Marketing Insights: Finding your footing in a fragmented Chinese market

DATADIGITAL EVENTS MARKETING 27/07/2018 Fri 15:33 in China by Ong Yi Xuan

China is fast becomingthe market to watch out for. The country is digitising at breakneck speed. Datafrom the China International Network Information Centre showed that the numberof internet users in 2016 amounted to 731 million, with 53.1% of the populationonline. Today, an average smartphone user in China spends approximately 3.9hours on his or her smartphone. These 3.9 hours are spent in a highlyfragmented manner across multiple apps and mobile sites.

Meanwhile, WPP andKantar Millward Brown’s 2018 BrandZ report ranked Tencent and Alibaba as thefifth and ninth most valuable global brands, while Chinese e-commerce was ranked 59th among newcomer brands. Cracking the Chinese market assuch, is becoming an important agenda for many western brands.

During a recentinsights titled “Discovering the secret to adopting data-driven marketing inChina” sponsored by iClick Interactive,created in collaboration with Marketing, Yan Lee, thecompany’s chief product officer, said mobile marketing spending in Chinasurpassed PC two years ago. He added that it might be the first country withthe largest economy to witness digital marketing surpassing offline marketing,in terms of print, TV, outdoor and magazines.

“Digital is takingover China. Because the country is so large, there is no single publication –not even the TV station – that can really cover the expanse of the entire countryitself,” Lee said. He also described the publishing landscape in China to be“relatively fragmented”, as compared to the US, where Facebook and Google takeup more than 80% of market share and are seen as a duopoly.

In China, Alibaba,Baidu and Tencent form only 60% of market share in total, with the remainingbeing shared by several other publishers such as Beijing-based news and contentplatform Toutiao and video platform Xigua.  Besides the fragmentation inthe publishing space, another challenge that companies encounter when marketingin China is the lack of standardisation of ad size guidelines. This is unlikecompanies in the US, which adhere to standards set by the InteractiveAdvertising Bureau. Due to the lack of standardisation and fragmentation thatexists in the Chinese market, companies turn to marketing technology to helpconsolidate all channels and various data sources into one single platform, sothey can better understand consumers.

As such, artificialintelligence (AI) plays an important role in predicting market trends moreeffectively and making marketing descisions quickly.  The iClickInteractive database for example, comprises two million websites and 109,000mobile apps, collecting 0.8 terrabytes of data daily on consumers, allowingcompanies to identify, access and engage the right audience for theircampaigns.

According to Lee,market intelligence is especially important for a country as large andfragmented as China. While companies can constantly stick to “conservative” or“safe” picks by targeting only consumers based in tier-one cities such asBeijing, Shanghai, Shenzhen or Guangzhou, they might not be “striking [their]pot of gold” in China. Companies should make use of the market intelligencethey have through the data gathered, to identify more potential markets withinChina that they should venture into.

“By employing AI andhaving standardised tracking or data definitions, be it in Singapore or Chinaitself, marketers will be able to accelerate their entire digital transformationfrom offline to online, as well as traditional to new forms of engagement withconsumers, and drive the performance that their marketing strategy deserves,”Lee said.

With insights in hand,brands need to start building their presence surrounding their customers’ needsand behaviour, and synchronise their content with their existing marketingefforts. Thereafter, they can move on to measuring and optimising theircontent, by consolidating data points with a real-time dashboard. The next stepwould be strategic listening, where brands can look into various culturalnuances and deep dive into their brand campaigns.

Combining hard datawith soft insights, brands can gather social intelligence to inform orrecalibrate their marketing strategies.

Being proactive at the initial stage helps brands build up thedatabase that they require before turning it into insights and reacting to it.

The power of transaction data

Last year, eMarketer forecasted that the overall digital ad spend in China will reach US$50.31billion, of which 72.0% will go to mobile channels. Video was also listed asthe fastest growing ad format within digital, and is expected to reach US$17.68billion in 2021, overtaking TV which is forecasted to reach US$17.22 billion.To succeed in digital marketing, companies have to be very targeted.

This is wheretransaction data comes in. Transaction data is not only real-time but also hasthe ability to provide details such as time stamp and location of transaction.According to speakers, this provides an accurate snapshot of consumerbehaviours over time.  Additionally, transaction data is anonymised andmade available to marketing technology platforms, enabling them to leveragereal behavioural data insights to better target consumers.

The data also helpscompanies understand consumers’ loyalty towards the organisation, reward themfor their loyalty, as well as help acquire new prospects. Leveraging paymentsdata helps to make these decisions a little smarter.

Opportunities for new growth in China

While tier-one citiessuch as Beijing and Shanghai are popular among companies that wish to breakinto China, Katharine Zhou, MD, innovation and marketing APAC, Ipsos, urgesmarketers to go beyond urban hotspots for new sources of businesses.

Second-tier citiessuch as Suzhou or Hangzhou, which is seen as China’s Silicon Valley, as well asthird-tier cities and rural areas offer “huge potential” for companies lookingto expand into China. To effectively do so, companies can leverage digital toreach smaller cities and micro-segments, as well as make use of insights anddata to carry out more effective targeting of consumers.

Zhou added duringiClick’s insights that having local relevance is important when it comes toexpanding into the market and connecting with Chinese consumers.

“Getting access toproduct, logistics and distribution is no longer a barrier, and digital ismaking it more challenging for companies to compete in the Chinese market. Assuch, companies will need to customise their offerings and actively engagingwith consumers,” Zhou said.

Meanwhile, companiesshould also look out for China’s digital natives who are “not your averageconsumer”, Radhecka Roy, Ipsos’ global lead – strategic curation, said. Thedigital natives comprise 18 to 22 year olds in China who see themselves asco-creators. Hence, Roy said companies will need to include them in theirmarketing strategy and engage them accordingly.

Additionally, thedigital natives in China are also “very open” to online marketing, with 70% ofthem not using ad blockers. As such, their openness presents a good opportunityfor brands to engage them online.

Targeting Chinese travellers

According to SingaporeTourism Board’s Tourism Sector Performance fourth quarter 2017, the country’sinternational visitor arrivals (IVA) witnessed a 6% year-on-year growth,amounting to 17.4 million. China was listed as the top market for IVAs,increasing by 13% to 3,227,000 visitors last year.

China also generated SG$0.9 billion tourism receipts last year,coming out on top ahead of Indonesia and India.

Leone Lau, associatesales director, China Search Asia, said during iClick’s insights most Chinesetourists to Singapore originate from the eastern provinces or tier-one cities.According to her, individuals from these areas have better spending power, andare mainly highly-educated young females in their 20s.

Also, Chinesetravellers generally take about 50 days to plan for their trip, which issurprising considering the fact that they have access to vast amounts ofinformation online. The main reason behind this, Lau said, is because Chinesetravellers source for information through various platforms, such as socialmedia, travel portals and friends. Also, they browse through different travelapps more than 120 times when doing research.

Click Search Asiapartners with Baidu to target overseas markets such as Hong Kong, Singapore andTaiwan, to provide online advertising solutions to marketers who want todevelop their business in China. Besides keyword targeting, Click Search Asiais also able to effectively target consumers through specific data sets such asbrowser cookies and phone numbers, which are provided by its hotel clients.

Meanwhile, Cindy Dai,Ctrip’s digital marketing manager, said it focuses on four peak travel seasons– Chinese New Year, Summer holidays, Labour Day and National Day holiday. TheChinese provider of travel services has a total of 300 billion users on itsplatform comprising 47% females and 53% males, and 75% of its bookings comefrom the mobile app.

To target users moreprecisely, Ctrip classifies them into four different membership tiers –regular, gold, platinum and diamond. This allows them to more effectivelytarget tourists with higher spending power which are in the platinum and diamondtiers. Dai added that its marketing strategies revolve around three stages –pre-travel for potential tourists, during-travel for the confirmed tourist andafter-travel.

“For after travel, wemainly focus on social networks and have key opinion leaders as well as word ofmouth campaigns to stimulate a second-time purchase,” Dai said.

This is a great example of leading readers through a story visually, using simplegraphics to promote action and highlight key features.

Nikereleased this post across its multiple Official Accounts, gaining almost 8,000views on the Nike Women account alone.

Tell a clever (yet simple) story  

Onceagain the use of engaging graphics plays a huge role in this spectacular postfrom Ogilvy for their client Ikea, highlighting key products throughstorytelling.

Thevalue of everything from a 4 RMB lint roller to a 4,990 RMB sofa is visualizedusing three gifs.

Inthis case, multiple stories are being told throughout the post, each producthas been made practical, relatable, or funny in some way, and this type ofcontent is just begging to be shared.

H5s are not dead, use them

H5 pages are animated slideshows that let you provide information in a fun,visually appealing and engaging way.

Viewershave to swipe or slide through different slides, great for event invitations,quizzes and telling your brand story.

Weencourage most brands to include H5s in the Official Account menu, as they canbe used for the “About Us” tab or showcase different products and services youoffer.

H5scan also be used in campaigns and are a great way to encourage sharing.

NetEase, a Chinese internet tech company recently released Net Ease Cloud Music, amusic streaming app similar to Spotify.

Toraise awareness they launched an H5 from their Official WeChat account in theform of a game, called “Your User Manual.”

People who click through the H5 take a simple test where you listen to certain sounds and choose from three options what the sound reminds you of.

Atthe end of the test, you are given a personalized page with your name and “userguide,” which serves as a type of personality, or traits indicator.

Depending on what you associated each sound with you are assigned certain characteristics, you can then share this page to your moments.

Linking to (useful!) mini programs

Miniprograms are the new hottest thing about WeChat, and according to QuestMobile,have reached over 400 monthly active users, penetrating 43.9% of the market.

While they are exciting and sexy, make sure you’re creating a mini program for the right reason, not every brand needs one.

Amini program should be created to perform a function – not to provide content.

Readmore about mini programs and find out if it’s right for your brand.

If amini program makes sense for your brand, by all means, develop one and use itas a way to pull people deeper into the customer journey.

Thegreat thing about mini programs is that they are visually appealing when insertedinto content published from your Official Account.

Takea look at this great post from Zara showcasing a new line of clothing.

Atthe end of a very beautifully crafted post, Zara has inserted a card for theirmini program, where you can click in and seamlessly browse more products, shareyour favorites, make a purchase, all without ever leaving WeChat.

Automation– why wouldn’t you?

Oneof the biggest missed opportunities on WeChat currently is the 48-hour window.

Thisis the amount of time brands have after the moment someone follows theiraccount to continue to engage.

Brandsacross the board are largely underutilizing the tools available to takeadvantage of this timeframe to gather crucial information.

If you want to maximize the value of your Official Account you’ll need to know more who your followers are than just their WeChat alias.

Howto do this?

Automatedresponses are a great way to learn more about what your followers areinterested in and segment them into groups so that you can push out targetedcontent to each group.

Agreat example of this is Elixir, a Chinese skincare brand, who uses a thirdparty provider to gather more information about users from the moment theybecome a follower of the account.

Justcheck out the journey below.

FirstI follow the account and receive a welcome article and then a personalizedwelcome message.

Itype in that I am interested in skin care and they send me a message with alist of different skincare related topics, such as skincare products, ways toapply the product, and techniques to apply the product.

I amprompted to enter the number of the topic I’m interested in, and when I do, Ireceive specific information about this.

I can also assume that I’ve been segmented on their backend, and in the future will receive content related to the topic I am interested in.

Thisis a basic way to segment your users and create a more personalized experience.

AsWeChat matures, brands will need to continue to adapt their strategy, whichmany are not doing at the moment.

Rightnow too many brands are still relying heavily on churning out content withoutknowing who their followers are and expecting this content to drive awarenesslike it would on Facebook or a regular blog.

Thinkabout the content you are publishing on your WeChat Account, what is thepurpose?

Isit useful to the followers you are sending it to? What will you gain frompeople opening it?

Wantget to know your audience better? Monitor your WeChat activity closely andengage with your audience with the help of socialmedia management software such as MavSocial.


Edited by Olivia Plotnick