With the current economic crisis, I have been frequently asked what will be the outlook for China's Internet marketing. I am absolutely optimistic that it will continue to grow exponentially.
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Let's look at the facts. By the end of 2008, the number of Internet users in China has risen to 298 million. China's Internet popularity rate reached 22.6%, exceeding the world's average rate of 21.9% for the first time. Broadband is now readily available at a fairly cheap rate and government regulatory environment has also changed. With the cost of mobile hardware decreasing, the number of mobile phone netizens doubled in 2008 reaching 113.7 million. The issuance of China's 3G licenses will certainly ensure an explosive growth in the next few years.
How the Internet has evolved
In the past 10 years, the use of Internet has moved from just receiving news and information, to making friends, joining communities, and consuming content from different channels.
Behind all these impressive numbers are also the evolution of content and technology. There are many people who are using the Internet as a TV outlet, or more correctly put, as video-on-demand, downloading TV shows and movies from the Internet. Free downloading of everything is easily available in China. People program their computer to download the content before they go to work or go to bed. They can watch exactly what they want, when they want it. The smart ones even plugged their PC directly to the TV to watch it on a bigger screen! Although such ‘video-on-demand' is already here in China, it is not yet an established business since it infringes the copyright law.
As I have often stressed, content is key. It is the content that builds a brand. It is the content that builds trust, make consumers ambassadors speak positively about the brand in their social networking channels. Original content is vital and is getting more important each day. The content must have strategic creativity, quality, and relevancy to the audience. You do not need the same content in your website as in the social networks such as Facebook.
This is definitely a year for the mobile in China. Mobile marketing and mobile consumption of digital content will surge. With the new technology and the sheer number of mobile phone users, the Chinese are already consuming more digital content on their mobiles per week than the Korean and Japanese. China is way ahead of Europe and America. This is bound to explode as agencies and clients realize that this is an additional media channel to deliver content that has already been developed and can easily be formatted to fit.
Social networking is the new media channel
Advertising and communication on the Internet and mobile are changing fast. It is much less about banners than about being relevant and contextually placed; reaching the right audience at the right time and at their point of need. As the advertising banner supremacy disappears, articles by bloggers will appear, influencing and starting a discussion in a branding manner, involving the community in a conversational type of marketing instead of the ‘push' marketing. This is happening a lot in China. It is a fact that the Chinese audience embraces the Internet. It's a platform for them to express themselves, something that is new to them in the history of China.
China now has more than 50 million bloggers. However, we need to look beyond the numbers and note how many of the blogs are successful: whether they are up to date or truly attract good audience. Usually there are very few and I believe most of the personal blogs will eventually be left behind. I would say, only the top 1-2% in China are serious bloggers who are loyal to a point of view. They do a good job in delivering value to a growing audience and have become the modern Internet journalists. They will become real influencers in their community. These bloggers succeed because they appear to be less biased than the traditional media who are willing to compromise for advertising. Just like the traditional mass media versus the niche media, the same is happening online in China.
From the very beginning, Nurun China has been using bloggers for our clients on a need to basis but now we use them for all our campaigns. We establish strong relationships by spending time talking to them, educating them on the products or services. They will independently decide to write or not write about them, choosing to give positive or negative comments. Such professional bloggers, as they are now often known, are big influencers and they will become a media channel of their own. These bloggers will also become more commercial as more are now being invited or being paid to cover events. For professional bloggers to survive, they will have to continue to justify and demonstrate they are unbiased or they will lose their credibility, their audience and their revenue.
Viral video and analytics
Viral video, because of the very nature of the media, has become a marketing phenomenon and many have been circulating in China for the past two years. To create a video that is truly viral, it is either through a stroke of genius or a creation that is really fun and engaging. However, for viral video or branded content to grow successfully, agencies need to be able to demonstrate that they generate traffic, stickiness and repeat visits. In more and more cases, the content is increasingly sophisticated and creative. As a result, an agency has to spend more time and resources on production and the client will need to increase the budget. For the client to provide a bigger budget, the client will want tangible results.
All this is directly linked to the development of an analytic practice in China which has begun to grow in a more professional and transparent manner. Agencies that are not ready to answer with transparency or real numbers in ROI, showing their successes as well as their failures, will have a tough time. The Internet is now a major media channel in terms of penetration and consumption as Chinese spend more time online per week. Clients are ready to invest.
Chinese and eCommerce
Chinese are very pragmatic people and they see the convenience behind online shopping. In China, Tabao.com offers online shop owners the convenient of online payment and delivery. The buyer and seller can also connect directly through an instant messaging service in the system. One can buy anything, and almost any brand. The shop-in-the-shop model is growing very fast allowing individuals to open their private stores and promote themselves in the community. Having a pre-selected range of products by an individual owner is an additional attraction and convenience for the audience. There is an affinity being created, similar to what bloggers have done. P&G as well as Coach have opened a store in Tabao.com. Many are following the trend and by doing this they are riding the growing traffic that has been generated. However, the success of eCommerce will still depend on whether one can deliver true value to the customers.
Mono brand shops in the digital landscape
Louis Vuitton recently announced they are closing their eCommerce. This is no surprise. The digital landscape is a vast world with a lot of nowhere land. LV in the real world would never open a flagship store in the middle of nowhere. Just imagine the amount of money they would need to spend to generate traffic. You cannot have a mono brand shop online and expect heavy traffic like the one in the Champs-Elysées where traffic has already been generated by all the different stores. Except for the Japanese market, LV failed as a stand alone because not everyone will go online just for one brand.
However, on the opposite end, you see a successful French store like Colette, a small brand but highly influential within the top level of designers and trend setters. Collette is an expert in selecting the latest, the best and the coolest of things. Her reputation was built when traveling around the world for the fashion industry. Her flair in picking the next big thing in fashion trends be it clothes, jewelry, cosmetics, electronics or whatever gets her eyes, are displayed in her store. The same model is established online and is extremely successful. Colette brings online, a convenience for people who are interested in the latest ‘in' things. Buyers are ready to pay 20% more at Colette's than in the brand's own shop, just to get it before anyone else.
A new contender for Search in China
Search is evolving, constantly changing in the format of search results, expectations and relevancy. We are see urban audience more sophisticated in their expectations. Search began with text, then images, now it shows more rich content with videos, maps, BBS links, 3D animations, and more. In China, what will be interesting in 2009 is the battle between the search engines, Baidu and Google. Recently, Baidu has been seriously challenged by the audience, clients and some government departments for its illegal download links and the transparency of their model. Unlike Google, Baidu's search results are bias, often sponsored and not necessary relevant or transparent. Their way of reporting results and charging clients have been seriously questioned and some companies have decided to move to Google. Google with its known ethics and a fast growing urban audience has become a serious challenger and possibly a successor to Baidu if Baidu does not rethink and change its business model.
2009 will certainly be an interesting year. The economic downturn will not impede the growth of Internet users in China although Internet spending may not be as bullish as previously predicted. We will see more online driven campaigns providing tangible results as clients tighten their budgets. Bloggers will establish themselves as formidable media channel.
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BY Yann Lombard-Platet
Source：China Tech News
Yann is CEO of Nurun China (formerly China Interactive). He is based in Shanghai and Nurun China is one of the leading interactive marketing agency in China with over 80 staff, providing global and local blue-chip clients with services ranging from Integrated Marketing Communication Strategies to Web Development and e-Marketing. Nurun is part of the Nurun group with offices in Canada, US, France, Italy, Spain and China. Website: www.nurun.com
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