The 'New Normal' In China Marketing
Part of our partnership with Campaign Asia's Top 1000 Brandson 12 June, 2015 at 12:06
Ogilvy POV | Chris Reitermann, Chief Executive Officer, Ogilvy & Mather China
Without doubt, ‘digital’ is the new buzzword of Chinese marketing. But despite all the talk, brands and agencies still risk putting the cart before the horse. First and foremost, they need to broaden and deepen their understanding of Chinese consumers. Becoming more attuned to the drivers that shape consumer behaviour, preference and values across social groups, cities and regions is key. The following commentaries offer a wide range of perspectives on what international and Chinese brands need to do to prosper in the ‘new normal’, where lower growth calls for higher sophistication in marketing.
The ‘new normal’ has become the ubiquitous phrase used by media commentators, economic analysts and politicians to describe the slowdown in China’s high-speed economic growth. In much the same way Chinese marketing has become littered with buzz words like Wechat, BAT (Baidu, Alibaba, Tencent), online video and big data.
Ask any marketer in China about ‘digital’ in 2015, and they’d all tell you about it being the only game in town when it comes to brands engaging Chinese consumers. And they’d be right; but only to a point. As brands and agencies all fight to climb aboard the digital bandwagon, what is becoming increasingly apparent is that ‘digital’ has very different applications for different consumers and categories.
Digital has massively impacted how brands are built, but in low growth environment deep consumer understanding and strategic differentiation are essential weapons in guaranteeing success in the market place.
As an industry, we need to move away from current mindset and practices which treat Chinese consumers as a homogenous group, and adopt a more segmented approach based on a more nuanced understanding of the Chinese consumer landscape and fresh insights. We wouldn’t apply a one-size-fits-all approach in other developed markets, so why would we do it in the soon-to-be biggest consumer market in the world with its many hundreds of cities?
We have reached a decisive juncture. Businesses and agencies now need to broaden and deepen their awareness of the different drivers influencing consumer behaviours, preferences and values across the country’s various cities and regions. By having a more sophisticated understanding of the various consumer archetypes in China, brands can engage their audiences in more targeted, relevant and effective way. Crucially, a better understanding of these consumer dynamics will enable brands to find a clear differentiating positioning in an increasingly crowded and vociferous market place.
At the moment, luxury, automotive and technology brands in China lead the way for digital innovation and creativity. Some of the most progressive brands are increasingly challenging conventional wisdom when devising campaigns by identifying the latest digital platform and developing a specific idea and content that will be the best fit.
More commonly, a campaign concept is meticulously devised before being altered or manipulated to make it function on a desired platform, often diluting the original idea. This inverted thinking is frequently allowing the more daring and adventurous brands to steal a march on the competition.
Skimming through the list of China’s Top 1000 Brands and it’s clear that big, international brands continue to dominate the rankings, but it’s important not to overlook the many Chinese brands that are on the rise and, in some instances, starting to set the pace.There has been much discussion about whether domestic marketers are simply paying lip service to the importance of long-term, brand building. In terms of strategic know how, some domestic brands may lag behind their large, international competitors who benefit from having more mature and extensive global infrastructures and deeper talent resources. However, local players often outdo MNCs when it comes to reach, penetration and their ability to be nimble and flexible. Many domestic brands are effectively leveraging their size and business models to lead the way in the digital space with short-term, high-impact campaigns which are resonating with consumers.
In the new digital era in China, the talent needs of in-house marketing teams and agencies are evolving. Digital creativity and social media expertise, as well as specific knowledge of the Chinese market are now essential. Agencies are moving quickly to adapt their structures and workforce to embed digital capabilities across their operations, with a view to making digital the lens through which all client problems are viewed and solutions are conceived. But a word of caution, this is a potential double-edged sword. In the clamour by organisations to make themselves digitally literate and relevant, the role of the digital specialist remains vital and should not be forgotten. Failure to maintain a core of specialists, and there is a risk of expertise becoming spread too thinly.
All too often most marketers are just making noise. We regularly see social and digital campaigns generate ‘impressive’ results, but ultimately fail to make an impact on vital brand measures or the bottom line. The realities of the ‘new normal’ and slower growth places greater emphasis on more sophisticated, high-level, marketing skills. Strong digital and creative capabilities need to be allied with high quality, marketing strategy and integrated thinking, as market competition becomes more intense, budgetary pressures grow and clients demand greater efficiency.
Digital is undoubtedly the ‘new normal’ in China marketing. There has been plenty of talk and much noise. Now is the time for informed, intelligent and innovative action.
China’s Real No. 1 Brand Didn’t Even Make The List
No, it’s not Apple, Coca-Cola, Baidu or Tencent, but it’s a brand that has captured China by storm. This brand has left traditional advertising a long time ago and has stopped digital banner ads and websites. This brand puts almost all of its investment into mobile.
This brand is the Chinese consumer.
Chinese consumers are really now committed to one brand: themselves, and spend a majority of their waking hours focused on building and promoting their brand to their circle of friends through WeChat. They also look to these friends for advice for purchase decisions, many of whom consider themselves experts. According to a recent MEC consumption-trends study, 31 per cent of consumers said they considered themselves as high-tech experts within their communities.
Mobile is the tool of the brand consumer and China now has leapfrogged other markets in hours spent on mobile devices, it’s replaced televisions and computers to become the sole entertainment device for video, games, chatting with friends and shopping.
And now with the diminishing role of Weibo, combined with the restrictive WeChat environment, it’s becoming next to impossible to reach consumers these days on their favorite social channels. Chinese consumers are ignoring direct brand communications with a vengeance.
Some brands have given up entirely in the digital space or are just waiting at the end of the customer journey to engage. Marketing managers have long reacted to the transformation of the market through a radical shift in media spend towards digital, but some are now abandoning previous consumer engagement practices in favor of a pure e-commerce strategy because it’s the channel that can finally show top management that digital marketing spend works. Unfortunately, a pure trade-marketing eCommerce strategy cannot drive brand awareness alone and the result is often discounts to hit volume targets.
Those still in the game claim that they don’t do advertising but can instead rely on content marketing, which is really just a fancy term for something quick and tactical with low production costs that can be viewed on a phone. Their rallying cry is “always on”, a strategy that simply translates to doing a lot more frequent communications because consumers now digest and abandon branded content in a matter of minutes and over a broad spectrum of channels.
Under the banner of “always on”, consumers are now so bombarded with mundane content that they generally ignore it. And it’s clear that no brand can deliver consistent, engaging and relevant consumer content on a daily basis, especially in China where content needs to be highly engaging to be effective.
It’s time brands stop with the “always on” and start getting back quality content that consumer’s value because they see it relevant to their daily lives. China’s consumers are looking for experiential consumption opportunities beyond product benefits, experiences that stimulate, educate and provoke. According to MEC, 84 per cent of consumers surveyed want more amiable experiences throughout the entire customer journey, which is an increase from 47 per cent in 2010.
And yes, traditional retail still plays an important part in the experiential/validation process. GroupM’s 2015 “Winning in China” study shows an average of 30 per cent of eCommerce consumers still expect offline experiences through product engagement before purchasing online.
Branded content can be relevant when it’s positioned at the right place and at the right time, and that’s when CRM data and profiling come in. By combining consumer behavior with transactional data, brands can map customer journeys and tailor content messages.
Agenda Shanghai’s recent campaign for Ecco Shoes, called the “O2 360 Challenge”, is a fantastic example demonstrating successful content marketing. Ecco partnered with Gortex to create a breathable, waterproof, yet comfortable casual shoe; but it needed people to come to the store and try them to close the sale.
The “O2 360 Challenge” began with an awareness video using a famous travel blogger who encouraged his fans to go to the store and take the challenge for themselves to understand the waterproof capabilities of the shoe. An online simulation game was also developed to re-create the challenge using different weather conditions.
In just one month 34,875 people went to the store to take the challenge. The brand sold more than 10,000 pairs of the shoe, selling out in the first week of the promotion. Engaging consumers both offline and online also impacted sales of all Ecco brands, as sales increased a whopping 300 per cent during the campaign.
So marketers shouldn’t need to worry if their brand didn’t make the top of the list. In today’s China, partnering with and engaging the real #1 ranked brand, the consumer, is what matters most.
Below are the top performing brands in China. Click on the image to learn more:
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