In this post, we present our analysis of the Chinese Mobile Market and underline critical trends for digital actors like Criteo.
For many, China’s image is still very related to the old image of low quality / cheap products. To all of these sino-skeptics people, we would advice to very quickly revise their judgment and travel to China for a couple of weeks in order to taste the reality of the booming digital economy. Of course, if you can’t afford the trip, you can also attend local events and meetings about Adtech and China.
China Connect Conference
Last month in Paris, we attended China Connect 2016, Europe’s largest gathering of experts on Chinese consumer trends. There, we had the opportunity to meet with other professionals, and to also take the pulse of the market. This conference boasts 40 speakers and 400 attendees, from 15 countries, with keynotes and workshops from European companies sharing their Digital & Marketing experience in China, as well as Chinese tech companies like LeEco (video streaming, mobile phones, ecommerce, connected vehicles), Ehang (drones) and WeChat International.
While many talks were about Brands and Travel industry, this edition of the conference mostly celebrated innovation and velocity. China has been embracing Internet mobile technology for several years and is now clearly ahead of everyone else. For Google, “When you come here (in China), you feel you’re stepping into the future”. That’s probably why Apple has just pumped $1 billion into Uber’s China rival Didi Chuxing.
Digital Marketing Trends
While most westerners now understand the importance of mobile in China, we want to underline some facts that reinforce this assertion.
- It is not just about mobile: Apps are the real game changers. In China and by extension in APAC, ‘One to many’ Social platforms (like Facebook, Twitter, Weibo) are going down, while the rising stars are ‘One to one’ oriented (Wechat, Line, Talk). As an example, 75% of CN mobile users are making purchases in Wechat.
- As a result, Social Marketing is getting a lot of traction, being used to promote, bond, discuss, build trust through ambassadors, and reengage. Within this strategy, coupons are a MUST, as well as QR codes that are used everywhere.
- Chinese retailers are getting global. They became very aggressive on export markets like Russia and Europe over the past 2 years, and are on the rise. In our opinion, this trend is very likely to intensify in the upcoming years.
- Chinese leaders message is “Openness and Reform”, which is Chinese people ongoing logic. Within this state of mind, Internet Control, Censorship & Blocking is not only accepted, but expected by most Chinese people (80% of users believing censorship is a good thing). Existing controls in the domestic market is certainly a factor that reinforce the trust of users in adopting new technologies. Typically, end-users are totally confident when making a purchase with their mobile App, as they know it is reliable as being monitored by authorities.
- Therefore, it means that when doing business locally, you need to follow Chinese Authorities Guidance’s: you will definitely need an ICP (Internet Content Provider) registration in order to operate. Also, your service will need to be hosted within Mainland China. Hosting in Hong Kong will not be sufficient for your service, as because of the Great Firewall. Loading a web page hosted outside of mainland can take up to 25 seconds. Hopefully for us at Criteo, we have been doing well on these 2 points!
Keys points that we want to share
Wechat is part of every Chinese’s life
- Most Westerners do not understand yet what Wechat is. It is certainly not another Facebook or Whatsapp. It is truly a lifestyle eco-system revolving around communication. Wechat value for business is around Engagement and CRM. It is used each month by +700 Million Active users (with 200 Million user outside of China). The former popular Chinese messaging tool, Weibo, is still trendy, but Wechat is used 6 times more.
- Typical advertising strategy on Wechat consists in pushing in Wechat moments feed a short copy with a visual that will extend in a short video with a punchline. This links to a longer video with a real story, and continues with a H5 site defining a clear Call-To-Action.
- As a side note H5 is how HTML5 is named in China, which just proofs how technologies can be owned in that market.
- As nearly every Chinese users have a Wechat account and the Wechat App, it means Wechat can easily replace your App and allow you to increase your reach very quickly. Retailers like Auchan for example are very successful in this approach, leveraging the power of in-stores beacons for their loyalty programs (invitation to Wechat Shake at check-in in order to get custom tailored coupons).
- As a platform Wechat is offering a unified solution to reach, track and engage users. Through a seamless user experience, the problem of switching between multiple apps is thus solved.@<
- Tencent will continue to innovate with Wechat, and are already investing in AI, VR, richer contents, and more interactions through the shake function…
Travel industry disrupted!
Chinese consumers, and especially travelers, are younger than what you think. They are from a digital savvy generation, and want as much information as possible BEFORE their trip. They make a decision to buy before the trip, and therefore, it is strategic for marketers to engage a discussion with them in advance, using mobile social networks. As a consequence, word of mouth is playing a huge role, as well as Wechat integration.
Engaging pre-trip to boost conversion is therefore a challenge on social networks, as users expect to get quality content and feedback very quickly. Typically, an answer within 1 to 10 minutes is perfect. A good example of successful strategy is El Corte Ingles, the Spanish department store, who selected Wechat influencers based on affinity with their brand, allowing to increase their presence in Wechat by +500% and create a much better brand perception and awareness. As a result, their flagship store in Madrid became a place to visit and shop for Chinese travelers.
During trips, Wechat is also becoming the ubiquitous tool to reach travelers. Traditional marketing tools (brochures, paper coupons) are inefficient and wasted investments. Chinese travelers are digital natives who want to pre order product, and benefit click & collect. This means Brands must kill paper lists in stores which are a terrible shopping experience. Instead, they have to work with their retailers to provide robust online to offline solutions. A great example comes from Zurich Airport which will deploy the most advanced use of WeChat in Europe this summer: When travelers open their phone once arrived they will find a rich WeChat-powered experience in Chinese, beginning with live chat available for their questions. It’s a winning strategy for the airport and for brands and vendors who engage. When these users are asked, “What are you looking for?” if their favorite brands are listed, they’ll be directed to the address, availability of goods, have a pre-order facility plus the ability to pay via WeChat. In turn, the brands will have these shoppers on their radar, well before they enter the boutique.
For a brief overview of Wechat’s introduction at the Zurich airport (Engage Me project), click this link.
This is one of the many examples outlining how brands and retailers have to shift away from a simple PR job towards a real marketing strategy where technology is a real enabler. Chinese consumers want upgraded, enriched experiences, especially when travelling. In this context, video is rising on the travel business, especially PGC (Professionally Generated Content) and PUGC (Professionally User Generated Content). VR is already getting traction and is the upcoming trend.
- Programmatic Ads are growing rapidly
This year, more than half of digital display advertising in China will be sold programmatically. The BAT (Baidu, Alibaba and Tencent) play a role in China similar to the one GAFA (Google, Apple, Facebook, Amazon) play in the US and UK. Alibaba alone is a juggernaut in China’s programmatic landscape, accounting for about 60% of all programmatic advertising.
As a result, smaller players are also booming. We had the opportunity to meet with Grace HUANG, Founder & CEO of Ipinyou who shared her vision of the local market. Foremost, the Chinese publishers landscape is extremely fragmented with lots of private exchanges. Following the overall trends, Mobile Programmatic Ads and Mobile Video Programmatic are flourishing.
Therefore, local partners tend to offer much wider products than international counterparts: as the market is very granular, complex and changing, marketers prefer to partner with companies that can provide simpler-to-use packaged solutions.
With 120 ad formats that really perform over the thousands available, Big Data Programmatic Creative is widely used, offering unique features most western professionals ignore (typically, in-banner information like distance/location to a store)
Finally, Viewability and Brand Safety, which were not strategic in the past, are becoming much more important.
China’s Digital Market has advanced at an impressive pace in the past year; we are impatient to see what next year will bring!
Post written by:
Senior Product Manager
Twitter: @ zejulio
Head of Infrastructure Operations
Twitter: @ tyeum
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