Five rules for digital China: Part two

What are the best ways to navigate digital China?

Hylink Digital’s US office was opened a year and a half ago to help Chinese clients enter the US while also supporting American brands in their efforts to tap and approach China’s booming (sometimes chaotic) market. Being constantly inundated with questions from US clients on digital China, they’re always asking: what really gives?

Navigating the market in China can be tricky. For brands looking to enter the Chinese market, it’s critical to first understand its ever-changing ecosystem, all its opportunities and challenges before and when taking such a leap.

And don’t be mistaken, it is a leap. Earlier this year, we offered five key insights in navigating China’s highly unique digital environment, and here’s part two of a two-part series.

Creative + media = big win

In the 1980s, American and European ad agencies experienced a tremendous shift from creative - with its own fees, understanding of user insights, brand planning, own ideas, interesting visuals and campaigns - to more specialized with the advent of digital.

Trouble arose as digital became more prolific and agencies became increasingly more specific. For example, in the US today, we have agencies solely focused on generating social creative, or only inserting media into TV and print, but not radio. These agencies simply become more and more specialized overtime. In the US, this works because clients have systems in place to manage dozens of agencies working together.

In China, however, the 80’s never had advertising, and the 90’s saw the advent of media companies that were formed by conglomerates. Therefore, there was no need to separate media and creative. By the time the West was talking about the “failure of the ad agency” in the 90’s, China had already anticipated this and decided to house creatives, ADs, copywriters and the like inside a bigger media agency that bought all forms of media and could produce content for the ads by creatives. This was often more effective because the creative idea could actually land on the media platform.

As digital started popping up in the late-90s, this made even more sense to the newly-formed ad agencies, and as digital formats grew, creative and media could work under the same roof. With planners who knew the media platform and understood the user, and creatives who could execute, big ideas could be generated more effectively. This saved cost for clients because there was no need to pay an extra retainer to a creative agency when account, creative and planner could work together in one place. So, today major ad agencies grown in China don’t have the creative and media separation, but rather are just two different departments within a company.

A caution to clients looking for these agencies - global creative or global media - they don’t always appear that way or work that way in China.

Size and leverage in media buying and scale

In the US, media leverage still matters. The size of your buying power as a brand dictates price, service, access to new platforms and new ad space, as well as innovative ways to target your consumer (as it does in China).

Unlike in the US where third-party analytics is relevant and most publishers give access to their data pools, if you don’t have the size or leverage as a brand in China, this just doesn’t happen. Many analytics platforms at the publisher level are not yet mature and are still very manual. Third-party data tracking across all mediums is not yet sophisticated and there are only really two options. As a result, there still exists a duopoly. For someone like a Hylink in China, size and leverage (traditional media buyer) of particular mediums and size and category of mediums matters tremendously.

Third-party tracking, much?

Data in China is subject to three problems:

  1. Delivery - Was it actually served?
  2. Accuracy - Was it served to the right people the correct number of times? And did they click?
  3. Viewability - Was it served properly?

China has also always had to contend with chronic data loss due to the growing infrastructure of companies. Therefore, the amount of data served is not always reported accurately. Third-party tracking applications have come of age, so don’t forget to use this technology for video, and display – always.

OS does not fit all

Beyond viewability, engagement metrics are now defined by how many views occurred after six seconds:

  • Display advertising is now not just click-through (CTR), it’s click-per-sale, or cost-per-sale (CPS).
  • Search is now cost-per-acquisition (CPS).
  • For social influencers, it is no longer cost-per-post, but rather cost-per- acquisition (CPA).
  • For social media advertising, it’s no longer CPM, but cost-per-sale or cost-per-engagement (CPE).

In China, be aware of your metrics; analyze them in-depth. Don’t trust it if you’re told that they don’t exist.

Hylink has enjoyed many years of setting the benchmark for the lowest CPA of a new car buyer in China because our clients constantly tell us to lower the cost of getting a person behind a steering wheel in a market that’s shrinking. We were able to grow Buick sales in a declining auto market in 2016 and will likely be doing the same at the end of the year.

Don't forget the Chinese traveler

Years ago, China had half a million outbound travelers internationally. In 2016, just under three million traveled to America, and over 100 million traveled globally. This number will only continue to grow. Therefore, when you’re buying advertising on Western platforms make certain you’re targeting Chinese travelers on Chinese platforms, apps, and websites as well. Google and Facebook have done tremendous work to integrate their platforms with Chinese platforms in anticipation of this trend.

If your product is worth gifting, consuming or investing in, don’t forget to adjust your preferences to target the Chinese traveler.

It’s a mobile World

80% of purchase decisions are made on a mobile device. In China, 105% of the population are on mobile. (Yes, there are more people on mobile than there are people!) China skipped a generation of the internet - going from dial-up straight to the smartphone. Many Chinese executives don’t even own a laptop, but rather make their decisions via WeChat or mobile email, often never turning on a desktop.

As a marketer, it’s important to develop Android apps and to adjust for the many Android screen sizes. Although there are lots of iPhone users in major cities, nine out of ten on mobile are Android users. Where does that leave desktop? It’s still important because just over a quarter of users/consumers do research and generate preference from looking at their desktops. If you don’t have a mobile and desktop- friendly website and aren’t serving the user advertising over desktop as much as on mobile, or giving the user a desktop experience that can only be achieved with a bigger screen, your brand actually loses legitimacy. Viewers still want to see a beautifully laid out page, which only a desktop environment can provide.

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Humphrey Ho

Humphrey Ho is US managing director for Hylink Digital, China's largest, independent digital full-service agency.

All by Humphrey