LBB’s Addison Capper dives into the digital world of a truly ‘mobile first’ nation
“China is a very fast changing market; it’s in perpetual beta.” Joanne Lao, CEO, TBWA\Greater China.
China is the largest advertising market on the planet. Economically it only truly opened to the world in 1992 when Communist party leader Deng Xiaoping famously declared ‘to get rich is glorious!’, encouraging personal gain. The years that have followed have seen the rise of an affluent middle class with strong buying power and, as a result, a marketing industry that’s grown in parallel.
An industry coming into its own – at pace
Given its relative youth as a global player, outsiders could be forgiven for presuming that China is still lacking behind others. “In many ways China is still catching up to more developed nations,” says AKQA’s Eric Cruz. “But in other ways it’s leapfrogging the rest of the world since it is globalising from rapid evolution, which makes it a dynamic country to create for.”
The pace of growth shows little sign of slowing too. The Chinese government aims to grow urbanisation from 50 per cent to 70 per cent within the next ten years. That’s the single largest internal immigration and transformation project in the world. The move will essentially upgrade consumers’ consumption needs from rural to urban. “A fundamental understanding that we must have is that government policy drives sector growth,” says Isobar’s Asia Pacific and China CEO, Jane Lin-Baden. “That is the ‘pillar of change’ and, coupled with the lack of legacy infrastructure, China has turned to digital to meet consumers’ demands.”
FCB Greater China CSO Steve Xue adds: “Since China’s reform and opening-up policy, the country’s media environment has changed a lot, especially with regards to the boom of digital media. Today China’s media environment is complicated and fast changing, which is fundamental to making the advertising industry unique.”
The digital landscape in China is particularly noteworthy due to its lack of Facebook, Twitter, YouTube et al. Censorship laws in the country have led to the blocking of such social networks, but certainly haven’t deterred users from getting to grips with a digital life. “China has its own digital and social ecosystem with a multitude of layers,” says Joanne Lao, CEO of TBWA\Greater China. “It’s a diverse media market with over 688 million people connected to the Internet.”
Those 688 million people make up over half of the Chinese population and digital ad spend in the country is up to a massive 50 per cent, compared to 14.8 per cent just five years ago. Consumer behaviour is also rapidly changing. 90 per cent of those 688 million Internet users are mobile Internet users and, according to Joanne, behaviours such as mobile payment, shopping, banking, financial services and travel bookings have all experienced double digital growth, leading to China’s ecommerce market being the largest in the world, valued at 458 billion USD.
A truly mobile first population
“China is unique in that it ‘digitised’ during the mobile era, skipping the PC era, yielding a population that is truly ‘mobile first’ by nature,” says Eric from AKQA.
In fact, at the end of 2015 there were 1.28 billion smart mobile devices in China with 19.5 per cent of those users using 4G to access the Internet. Social platforms in China are actually beginning to surpass the very companies they were inspired by (Twitter, etc.), with WeChat alone now boasting over 700 million monthly users. And this evolution of mass social messaging hasn’t just opened up common conversation between brands and consumers – it goes way further than that.
“The event of smartphones and the innovation of applications in China has driven not just social communication between people and brands, but has evolved rapidly to provide commercial opportunities, mobile payments and services,” says Joanne of TBWA. “WeChat has become the number one dominant social platform for consumers and brands that has integrated instant messaging, O2O [online to offline] services and mobile payment into its app.”
AKQA’s Eric also notes the success of mobile payment services in the Chinese market. “While service technologies such as Apple Pay are not doing so hot in the US, WePay and AliPay are succeeding in China with rampant growth rates. Online shopping is the norm, not the exception.”
The success and scale of e-commerce within China is partly due to government-led schemes to improve infrastructure within the country. Whereas five years ago it would have taken at least a week to ship a product from a tier one city to a tier four city, it can now be done in one to two days. (China’s cities are broken up into tiers dependant on consumer behaviours, income levels and economy. Tier one is the highest, tier five is the lowest.)
Thanks to online decision-making being more agile and impulsive than offline, e-commerce is also opening doors for new brands trying to crack the market, according to Isobar’s Jane. “Such an environment gives new brands in the market tremendous opportunity to rise to the top from ground zero in a fairly short period of time,” she says. “Therefore the concept of ‘advertising’ is no longer relevant; instead brands need to think about ‘brand commerce’, i.e. last mile first.”
The use of mobile is also imperative in a brand’s attempt to navigate China’s scale and its diversity. Much of the massive 1.4 billion strong population live in fairly rural areas and cultures can differ widely from province to province. But you’d be wrong in presuming that such rural locations are ‘off the grid’. According to statistics from Kantar, the use of mobile to access the Internet in rural areas stands at 84.6 per cent, which is actually higher than the level of 79.6 per cent in urban areas. Data and technology is also allowing agencies to tailor and customise advertising to various audiences based on geography and behaviour, but within the same campaign framework.
So where do the rapid changes of the past 10 years leave China for next 10? Eric of AKQA admits that he believes the country is still coming of age – but progress sure isn’t slowing down. “It’s still finding its position in the world but also trying to regain the innovative stature it once held,” he says. “The appetite and hunger to become a truly world class creative and innovation super power are certainly there. It’s only now beginning to realise its potential, strengthening its global voice through critical mass and purchasing power, and cultivating the most powerful middle class in the planet.”
Eric also notes China’s current youth are a pivotal cog in the evolution of the country. Much of the middle class youth were sent to study in Western universities, while many foreign teachers were also imported from the world’s top universities. This, mixed with continued rapid tech innovation, is set to lead to an even more exciting future. “[There] is a more Western-educated youth force emerging to redefine the new China, which cultivates a more progressive and innovative approach to redefining the nation in the global context,” he says. “As new technologies push the country to evolve even faster, I think we will see the rise of Chinese brands influence the rest of the world, exporting ideas rather than importing them. This will enable China to be a cultural driving force, on par with Japan and South Korea.”
What’s more, Publicis Groupe just signed an historic global partnership with Tencent, the Internet giant that operates the most popular social and media platforms in China. Of the announcement, Publicis Groupe Chairman and CEO Maurice Lévy said: “China continues to lead the world in advertising growth, especially in digital and mobile, and we increasingly see new ideas and technology that leapfrog the West.”
Tencent Senior Executive Vice President SY Lau added: “This collaboration will give brands and organisations around the world a better understanding of China's unique and dynamic mobile Internet development, while creating huge business opportunities associated with this new market.” (You can read more about the partnership here
TBWA’s Joanne sees the partnership as “a signal of an increasingly open and collaborative environment for both agencies and clients” but urges caution to “see the actual outcomes of these partnerships”, while AKQA’s Eric believes it “will fuel and accelerate change, evolving the market faster.”
"Data utilisation will be one of the big changes in the near future for Chinese advertising,” adds Steve from FCB. “I think the partnership between Publicis and Tencent is just the first step for exploring this change.”
World. You’d better keep watching this space.