Why are Chinese tech giants Alibaba and Tencent building inhouse marketing teams?

The marketing sector can be a complicated place as new marketing tools and techniques are launched, almost on a weekly basis. Powered by The Drum Network, this regular column invites The Drum Network's members to demystify the marketing trade and offer expert insight and opinion on what is happening in the marketing industry today that can help your business tomorrow.

Collaborative working is part of the Chinese business culture, writes Arnold Ma.

Western social platforms first started working with brands as they commercialised ‘user attention’ and then ‘user data’. They moved to a monetisation model similar to when websites – especially publishers of unique content – first adopted banner ads, a publisher/brand direct relationship.

Then ad server tech changed the relationship a decade after the first banner ads appeared. It provided an array of advantages over the publisher/brand direct model, such as targeting, management, tracking and attribution across a network of sites.

Finally, came ad exchanges and DSPs to provide further consolidation and transparency. As the market matured, social platforms also started to work with agencies specifically. Platforms like Twitter and Facebook have dedicated teams to forester agency relationships and help them to be more effective. They went as far as hiring ex-agency talent! Essentially creating their own inhouse marketing teams. Same chain of events happened outside social, e.g. Google.

Meanwhile in China

Chinese monopoly/oligopoly platforms found interesting ways to monetise. Baidu, for example, franchised the ad business to create “official Baidu business units” in various cities. These had the benefit of Baidu’s central marketing teams behind them, but had a local focus providing advice to clients directly. This was hugely successful, but, a big but, they mostly preferred to work with agencies. Their goal to focus on onboarding more brands on Baidu regardless of the route brands came to the platform – i.e. they preferred for the agencies to focus on management of the brand relationships.

All of this gives us some insight into how Chinese platform marketing may pan out. The only difference is that flagship platforms from Alibaba and Tencent already are monetised, of course, though better/more in-platform advertising does not only add a new revenue stream, it also feeds more revenue into the current streams. Therefore, I think their motivation remains similar.

Fast forward to Alibaba and Tencent’s current situation in China. At the moment there are very few agencies that can master the ‘half art and half science’ of in-platform performance/social marketing.

The tech giants do not make it easy either. Tencent’s hero platform WeChat has never been about ad revenue, in fact, it’s founder Allen Zhang openly opposes the idea. Alibaba’s TPs (Tmall Partners – agents that support brands with ecommerce operations) claim they understand in-platform marketing, but in reality, they are logistics providers at heart, not marketers. Any marketing work TPs do are basic and lack sophistication required for effective performance or creative work.

History repeating

This leads me to think that platforms creating their own marketing teams is a good thing. Agencies shouldn’t feel threatened. Their purpose won’t be to become advertising/marketing agencies, nor would they be able to without huge investments.

History has a funny way of repeating itself. I think the tech giants’ marketing teams will include an element of, or evolve to, working with agencies specifically to leverage the platform opportunities and onboard more volume. To help marketers crack the mystique of in-platform marketing.

More so, collaborative working is part of the Chinese business culture. 有活一起干, 有钱一起赚 (task should be completed by teams and money should be made together). The combined power of agency’s experience on advertising craft and performance/acquisition skills, with platform’s in-house team’s access and knowledge of its products and users, makes one powerful team up! As previously demonstrated.

A win-win-win for platforms, agencies and brands!

Arnold Ma is CEO of China-focused digital marketing agency Qumin

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