08 JAN. 2013
Digital in China: Top Trends and Best Examples of 2012
2012 was an eventful year in China, especially for those like us who keep a close eye on the evolution of China’s tech and web marketing scenes. Throughout the year, we have commented on key news items, analyzed major campaigns, conducted original research and delivered our insights about how brands could best leverage digital to achieve their objective on the Chinese market.
As 2013 begins, we took some time to look back on the past 12 months and present you the 7 most important trends that have agitated the Chinese digital scene. We will conclude by presenting our top 5 web-marketing campaigns of 2012. We hope you find our selection helpful and look forward to another year of digital and e-marketing news!
1. E-COMMERCE EVERYWHEREThis trend started in 2011 with e-commerce sales reaching 750 billion RMB (over $120 billion) and kept on going in 2012.
Sheer numbers show the extent of the phenomenon: total e-commerce sales are expected to reach well over 1.2 trillion RMB ($200 billion) for the whole of 2012. Alibaba group’s Taobao and T-Mall alone have registered annual sales of over 1 trillion RMB ($160 billion) which represents the equivalent of 770 RMB ($125) for each Chinese person.
While the e-commerce market still relies mainly on atomized sellers and the Taobao C2C platform, B2C’s share of the pie is increasing. B2C websites now represent 40% of total sales versus 20% last year. This points to greater professionalization and sophistication of business models (showed most notably in many companies’ rush to integrate vertically by developing their own distribution network). Many brands have also acknowledged the importance of e-commerce for their consumers and thus decided to take matters into their own hands by opening their own branded e-commerce website or partnering with 3rd party platforms such as T-Mall (and sometimes doing both). This tide is lifting all boats with e-commerce becoming more important in nearly every product category from luxury to FMCGs.
2012 also have showed us that e-commerce is more than a source of good bargains for Chinese consumers but is viewed as being a credible provider of engaging, entertaining shopping experiences that directly competes with traditional retail in most product categories. Recent figures from McKinsey show that 85% of Chinese online shoppers find e-commerce to be as good as or better than traditional retail. This is especially true in lower Tier cities where figures indicate that most of the growth is coming from.
Finally, the e-commerce customer journey is getting more complex and 2012 has seen deeper integration of online shopping and social media (as shown by our research with Chinese teens). The rise of Pinterest-like websites Meilishuo 美丽说 and Mogujie 蘑菇街 best illustrate this greater integration of social and online shopping. E-commerce websites are by far the number one destination of downstream traffic from Sina Weibo and cell phone maker Xiaomi 小米 has even been experimenting with Weibo Shopping, selling 50,000 of its Mi2 smartphones on Weibo in December.
2. BEYOND SINA WEIBO
2011 was the year of Sina Weibo but 2012 might be remembered as the year things started to go south for what was hitherto the undisputed star of China’s social eco-system.
Such a statement seems odd given that Sina Weibo has grown its member base to an impressive 400 million users (amongst which 40 million are active daily) and is now seen as the platform to be for local and international brands alike (it boasts over 130,000 active brand pages) thanks to its influence and to a new enterprise version.
However the road ahead may be rockier for Sina Weibo as it scrambles for ways to monetize its services, maintain a quality experience (for both brands and end users) and manage the transition to mobile (that represents 50% of its traffic but only 15% of its revenue). Over the past year it has launched many new features and services such as paid “premium” accounts, a LinkedIn type professional social network and a revamped payment platform. None of these innovations have really stuck with users and investors are starting to ask tough questions about the platform’s future.
Sina Weibo is also feeling the pressure of competing services; be them direct competitors such as Tencent Weibo, which has already accumulated over 350 million users or indirect competitors such as Douban (on which brands such as Semir and Gucci are doing interesting things) and especially WeChat whose new social features represent a direct threat to Sina Weibo. All in all, social media time is going to other platforms and marketing RMBs are following suit. While a solid Weibo presence should still be the cornerstone of most brands’ China web strategy, 2013 will probably be the year where marketers look to other platforms to build their brand on the Chinese internet.
3. HIGH-END MOBILE ON THE RISEIn June 2012, the CNNIC (China National Network Information Center) released a report showing that the number of mobile web users had surpassed that of traditional mobile and laptop users (388 million vs 380 million and 242.5 million respectively). This milestone once confirms just how important the mobile web is in China (something that we were early to investigate with our 2010 white paper on the topic).
What we believe is more important for brand is the fact that mobile usage is exponentially becoming more sophisticated. Users are accessing the mobile web at higher speeds (China Unicom added 3.25 million 3G users in November 2012 alone), through better devices (smartphone shipments are rising 200% YOY) and to accomplish more advanced tasks (over half of Sina Weibo’s traffic now comes from mobile).
One of the key drivers of this trend has been the launch of a series of competitively priced smartphones retailing at around 1500 RMB ($240) by local brands such a Lenovo, ZTE, Xiaomi and Meizu that have put quality smartphones within the reach of the masses.
The increasing sophistication of mobile habits manifests itself through the following figures: mobile netizens in the 15-25 age group spend over 12 hours per week on average on the mobile web, 38% of smartphone users use their phone for over 5 hours per day, smartphone users check their phones every 6 minutes on average, m-commerce is growing 416% year on year and mobile is the primary decide for watching web videos in Tier 1 cities.
As mobile habits become more advanced, conditions become ripe for brands to design innovative, engaging branded mobile experiences that leverage the full range of modern devices’ features and we fully expect more brand to embrace this opportunity in the year to come.
4. MOBILE: THE SALES CHANNEL OF THE FUTURE?A logical consequence of the explosion of e-commerce and the boom in smartphone adoption rates is that mobile channels are playing an increasingly important role in influencing customer behavior.
In 2012, mobile commerce grew an astounding 416% to reach nearly 12 billion RMBs. While mobile terminals still account for only 4.3% of transactions, this is 3 times more than last year and the trend shows no signs of abating. Figures from PwC show that 38% of Chinese e-commerce shoppers use their smartphones and 40% use their tablet at least once a month to shop (vs less than 10% for Europe). Beyond commerce, mobile’s importance in the customer journey is increasing with 98% of smartphone users looking for product information on their phone, often directly inside the store.
Despite the fact that mobile channels are becoming more and more powerful in influencing purchasing decisions, most brands’ mobile presence remains sub-par. For instance only 23% of major luxury brands have a mobile-optimized version of their Chinese website and a paltry 7% have an e-commerce enabled website. Other brands however are doing a better job at tapping this opportunity such as Lancôme with is “kiss the city” app or Swarovski who made mobile a central part of its communication around its “sparkling secret” expo held in Shanghai during the summer of 2012.
5. THE METEORIC RISE OF WECHATIf there was only one tech story to remember from 2012 it would probably be the rise of WeChat (known in China as Weixin). Just as we enter 2013, the mobile chatting/social networking application is expected to cross the 300 million active users bar only 2 years after its launch.
With WeChat, web giant Tencent appears to have figured out mobile in a way Facebook, Google and many other global tech behemoths have not. All over China, people are abandoning text messages and even voice calls in favor of WeChat messages and “talkie walkie” style voice messages. Throughout the year, WeChat has been rolling out new features such as official accounts and 3rd party applications that have moved it further into social networking and allowed it to grab an increasing share of user online activity.
During the 2nd half of the year, WeChat started opening its platform to brands. The first to test the waters were Nike (who used it to supports its “Sports week” operation in August) and Cadillac (with its “route 66” campaign). They were quickly followed by other brands such as Coach, Durex and Starbucks. So far WeChat and brands alike are taking a gradual, experimental approach. However, its penetration and flexibility make it a high-potential channel for brands to reach out through mobile on a large scale without having to develop their own platform.
6. WEB CULTURE IN FULL SWINGThis November, China’s navy accomplished its first touch-and-go landing on the Liaoning aircraft carrier. But the much publicized achievement did not elicit the expected reactions of nationalistic pride. Instead, Chinese netizens picked up on the curious pose taken by two technicians giving the pilot the “go” signal on the flight deck. Within hours the Chinese web was flooded with pictures of people mimicking the pose in various settings.
2012 showed us once again how powerful the Chinese web is in setting the tone of popular debate and creating cultural icons. While this statement may sound true for all countries, China has the right mix of conditions to blur the boundaries between web culture and popular culture. From the “aircraft carrier style” meme to rigged beauty contests and iPhone 5 parodies to more serious matters such as tense relationships between Hong Kong and mainland China (with the infamous “locust” ad that was abundantly edited and parodied) or debate about social inequalities, 2012 has been a year where one had to be online to stay on top of the topics that agitated society as a whole (see our article for the complete list of most discussed topics on Sina Weibo in 2012).
Interestingly, 2012 was also the year where brands started to pay closer attention to online debate and web celebrities. Nescafe, for instance, tapped Weibo celebrity Mike Sui (who rose to stardom after a video of him imitating foreigners speaking Chinese went viral) to be the star of its new campaign promoting its “white coffee” product line. In the future we expect brands to integrate the extraordinary cultural influence by moving a greater share of their spending online and releasing communication material that better echoes key trending topics in China.
7. THE RISE OF THE RESTFor years, the attention of marketers has been focused on what we can call the “shiny” section of China’s consumer base: high-earning consumers in Tier one cities who conformed to traditional ideals of social success and have made China the world’s largest market for luxury goods and high-end cars.
We believe that one of the biggest impacts of the digital revolution is that is sheds light on what can be dubbed the “silent majority”: people who might not conform to some markets’ idea of the ideal Chinese consumer but nonetheless represent formidable pockets of spending that in many cases have yet to be tapped. Digital channels are on the one hand empowering these consumer groups, giving them means of expression and new tools for consumptions, while at the same time opening for brands new channels to reach out and sell to these populations.
Consumers in lower tier cities are the first and most important of these new consumer segments empowered by digital. Internet and 3G penetration are rising at double digit rates in Tier 3+ cities, giving people there access to new channels for self-expression, entertainment and consumption. Mobile is especially strong in these places. Data from GroupM shows that the number of people accessing the web through mobile devices in T3-4 cities has shot up 351% since 2009 and smartphones are now by far the most popular device for accessible the mobile web (opening new possibilities for more sophisticated branded content). E-commerce is broadening the range of products available in these cities where distribution networks are often patchy and many major brands have yet to establish a strong retail presence. Figures from Taobao show that the bulk of growth in transaction volumes is coming from 3rd or 4th Tier cities while in the luxury goods category, 30% of potential consumers say that e-commerce is the only way of getting certain products.
Then, we also see the web as being a force for diversity in Chinese culture, creating new trends and sub-cultures that deviate from the mainstream and force brands to re-think their message. Amongst the most mentioned terms on Sina Weibo this year we can find “Diaosi”, “Baifumei” and “Gaoshuaifu”. All of them signify covert rebellion against mainstream culture and unattainable ideals of social and economic success. While we are not yet dealing with overt rebellion against the social order, an analysis of web debate shows that brands’ customer base is becoming more diverse with certain segments asserting a mindset of their own. Nescafe is one of the brands that have been riding this trend with its use of blogger HanHan as a spokesperson calling people to be true to themselves and “live boldly”.
BRANDS SMARTENING UP: OUR FAVORITE CAMPAIGNS2012 has seen many brands considerably step up their digital game and launch innovative made for China digital campaigns. All over the year we have brought you the best in digital marketing through our “Digital in China” articles. Here are our top 5 picks for the year 2012.
Nike and its ultra-reactive Olympics communication
By creating a direct communication channel between brands and their consumer base, social media opens new possibilities for ultra-reactive communication that surfs on key discussion topics and boosts the brand’s perceived relevancy. Nike fully leverages this possibility during the London Olympics. It reacted to the performance of Chinese athletes by rolling out super localized communication material mere hours after the action. All copies featured the idea of “Greatness” and were widely forwarded on social media.
For instance, in reaction to the controversy surrounding swimmer Ye Shiwen’s gold medals (whose performance was met with widespread accusations of doping), Nike released a copy with the text “They may doubt your performance but they can’t doubt your greatness”.
The other remarkable element of this campaign is that Nike created differentiation by celebrating the achievement of non-gold medalist (or even sometimes non-medalists). Following YU Dan’s bronze medal in the 10-m women’s air rifle shooting competition, Nike supported the athlete with a “They may not remember your name but they will remember your greatness”.
Brother gives you the chance to swap lives with its CEO
Most examples of digital best practices concern high-profile customer facing brands with the marketing budgets and know-how to create cutting edge web content. So how can a mostly B2B brand in the printer industry create a deeper connection with its Chinese customer base through digital? Brother found the answer with its “become the CEO” web campaign rolled out during the month of September.
During this campaign, brother organized an online contest and selected 2 people to switch lives with its CEO and vice CEO for a week. The operation was announced with a humorous web video and resulted in 2 mini films showing Brother’s CEO living the life of a florist for a week while his vice CEO did farm work in the countryside. Meanwhile, the contest winners stepped in the shoes of these high-flying executives, enjoying their luxurious lifestyle but also feeling the weight of responsibilities. During the swap, CEO and vice CEO had a chance to experience the conditions in which Brother products are used on the ground by small businesses. The operation aimed at demonstrating Brother’s commitment to understanding the end customer’s perspective in order to build better products and support services.
With this original campaign, Brother not only gained wide exposure but also gave its brand a more human touch and added depth to its image by showcasing its organization’s guiding values.
Starbucks successfully uses WeChat
When WeChat opened its platform to brands in the summer of 2012, the move generated enthusiasm but also raised many questions: how could brands leverage this highly personal channel without being seen as intrusive? Starbuck’s answer was simply to engage with fans by giving them what they want.
In late august, the coffee chain (whose talent for mobile marketing was already visible through its past partnerships with location based social network Jiepang) launched its official WeChat account with the objective of engaging in a more personalized relationship with its customers. Customers could add Starbucks to their contacts by snapping the QR codes prominently displayed inside Starbuck’s stores and on all of its digital platforms. In the dialogue box, fans of the brand could send emoticons reflecting their feelings of the moment and instantly receive a song from Starbuck designed to uplift their mood. The song could be played directly through the dialogue box without having to download it or open a mobile browser window. This focus on quality content was rewarded with great success: in only a few months Starbucks not only accumulated a WeChat fan base of over 130,000 members but also saw a noticeable increase in sales and a 9% rise its number of Sina Weibo followers.
Later in the year, Starbucks once again leveraged the possibility offered by WeChat to create interactive forms of dialogue that integrate quality media content. Over the 12 days before Christmas, fans of the brand on WeChat could send any number from 1 to 12 and receive holiday-themed mobile wallpapers.
Xiaomi strikes gold with Weibo commerce
Earlier we showed that e-commerce and social media were increasingly intertwined with many purchases starting with discovery through a social network before being completed on an e-commerce platform. The next logical step seems to be for brands to start selling directly through their SNS spaces and for social networking sites to set up the necessary infrastructure to keep the entire transaction within their site.
This is just the step that has been taken by smartphone brand Xiaomi in December. Relatively unknown in the west, Xiaomi is one of China’s most popular smartphone brands and a living example that “made in China” is not incompatible with smart branding and quality products. In barely a year it has sold 6.5 million of its phones and its Weibo sales campaign is only the last of a string of highly successful branding operations.
From December 21st to December 23rd, Sina Weibo users could place an order for one of the 50,000 Mi2 phones on sale directly through Xiaomi’s Weibo page. All orders had to be placed in the form of a “tweet”, thus giving the entire operation extraordinary levels of exposure. Ordering and payment could be done entirely through Sina Weibo without the user having to leave the site at any point. Results were staggering with Xiaomi getting over 1.3 million reservations for only 50,000 devices, 810,000 comments and 2.33 million “retweets”.
It is at this point unclear whether this is a one-off operation or whether it is only the beginning of Sina Weibo’s foray into e-commerce (although Sina’s recent revamping of its payment tool suggests the later). But if Sina manages to link its 400 million registered users and 130,000 brands through competitive, scalable e-commerce solutions, this could represent a major step forward in its development and would open up new possibilities for brands.
Six God revives its brand with web videos
Digital marketing levels the playing field and allows small and medium size local brands to capitalize on their local market knowledge and better understanding of the Chinese tech scene to revive their brands and strike back against larger, better funded foreign competitors. We indeed see digital as being one of the main driving forces behind the rise of new Chinese brands or the revival of old ones.
Amongst the old Chinese brands that are seeing in digital a way to revive their image, Liu Shen stands out. Liu Shen 六神 is a century old brand whose star product Hua Lu Shui 花露水 (a product universally used in China as an interior fragrance and mosquito repellent) was gradually fading into irrelevancy and suffering from the competition of imported fragrances with a more modern identity. In 2012, Liu Shen sought to capitalize on its image as a staple of everyday life in China through a series of web videos meant to touch the new generation of Chinese consumers for whom Hua Lu Shui may not carry the same emotional meaning than for their parents.
The first video humorously goes through the history of Hua Lu Shui, showing how the product has been an essential part of Chinese daily life throughout the century and how it is still relevant today as China steps into modernity. It does a very good job as reviving the brand’s emotional appeal. The second video strikes a more comical tone and shows two foreigners rapping in Chinese about their love of summer weather (and thus of Hua Lu Shui). The last video released during the months of winter aims at boosting winter sales for this highly seasonal product by showing how Hua Lu Shui can be used to bring back summer memories even in the coldest winter. All three videos were promoted through the brand’s popular Sina Weibo account and gathered millions of views.