2016 China's Social Media Trend Report

totem media

2016

social marketing in China

Trends for 201610

For brands marketing thru social media in China.

2016 projects to be a pivotal year for digital/social advertising in China. In 2015, economic growth slowed, retail shifted further

to online, WeChat conquered Weibo ... and for brands it became much harder to break-thru with audiences.

In this social marketing preview of 2016, we have highlighted 10 trends that will prove to be critical for marketers. The trends represent the most current conversations taking place with

brands in China.

These trends are placed in the context of China as an (overwhelmingly) digital-first market.

About This Presentation

Prepared by Totem Media

Digital Rules in ChinaDigital won easily over traditional media in China. Digital is all important.

“Traditional media never stood a chance in China.

Most commercial, entertainment media (TV, print...) only got its start in the late 90’s. Before that it was all government run, with near-zero audience value.

Unlike other markets globally, digital had an equal start with traditional media in China. (eg. Google was

incorporated in 1998, Alibaba started in 1999)

Given the equal start with traditional, its no surprise that digital dominates in China.”

Chris Baker, Totem Media

0

25

50

75

100

4h

6h

8h

10h

GlobalWebIndex Q1 - Q2 2014

Hou

rs/D

ay

Digital - HoursTraditional - Hours

W. EuropeChina

Time Spent By Media, By Market

0

25

50

75

100

Email

Search

Shopping

Online B

ankin

g

Trave

l Bookin

g

Recrui

tmen

t

Online P

aymen

ts

Friend

s (SNS)

Educatio

nSelli

ng

Forum

s

Blogging

Gaming

Instan

t Mes

saging

VideoNew

sMus

ic

% o

f U

sag

e

Source: eMarketer 2012

ChinaUS

Utility-First Entertainment

US vs China ...Activities Online

“In China, digital is more important than all other media combined for audience engagement.”

With 688 million people online in China, digital is of paramount importance for marketing.”

Jeff Sprafkin, CEO of Media Pacific

0

25

50

75

100

TNS Connected Life 2014

Online

TV

Print

Radio

Rea

ch %

Wake Up(in bed)

Early Morning

Late Morning

During Lunch

Early Afternoon

Late Afternoon

Early Evening

During Dinner

Late Evening

Bedtime (in bed)

Daily Use of Media Time (Online vs Traditional)

GIK Polling for Interactive Ad Bureau (IAB), Aug 2014

71%

28%

27%

9%

Several Times Per Week

Several Times Per Day

US

China

US

China

HOW OFTEN THEY WATCH TV ON A MOBILE DEVICE

China: All Eyes Are On Mobile

GIK Polling for Interactive Ad Bureau (IAB), Aug 2014

CHINESE RELY HEAVILY ON SOCIAL TO DISCOVER AND

RESEARCH BRANDS

“Social networks are the first place I research brand information”

“I post product ratings and reviews at least once per month”

23%

8% US

China

US

China75%

20%

China: Shopping Is More Social

Social media

Online video

ecommerce

News

other

5%

5%

search

games

28%

26%

18%

9%

8%

40online per

week

hours

User Time Online: Social & Video Lead

The China EcosystemA distinct ecosystem with sites that are only rough equivalents of US.

wechatfaceboook

Two Social Ecosystems

buy

CONSIDER

EVALUATE

AWARENESS

ADVOCATE

ENJOY

BOND

Source: Harvard Business Review, Dec 2010

US - Social Media Ecosystem

CONSIDER

EVALUATE

AWARENESS

ADVOCATE

ENJOY

BOND

buy

China - Social Media Ecosystem

display(Sina, Sohu)

online video(Youku/Tudou)

social(Weibo, WeChat)

search(Baidu)

ecommerce(Taobao, JD)

brand.cn

Weibo - users have moved on

Ecommerce - most sales flow through Taobao

Display - limited RTB, poor quality data

Baidu - effectiveness in decline

Challenges Online

China - Digital Ecosystem

Global = Long-TailLots of independent sitesLinked together by Search, RTB, Ad Networks...Open, “friendly” competition between big guysEfficiency in “open source” tools

China = ConcentratedA few dominant players hold most trafficSearch & Programmatic “relatively” less importantSocial more important (news, entertainment, WOM)Development of tools dominated by BAT

Global (Long-tail) vs China (Concentrated)

Trends for 201610

For brands marketing thru social media in China.

1. WeChat Still RulesBut growth is slowing ...the honeymoon is coming to an end.

1 WeChat continues to rule social but growth is slowing. With 570 million DAU (Daily Active Users), WeChat is king of social in China. It will quickly reach its peak in total users numbers (ie. 93% of T1 City residents are already registered). Reports also show that engagement is dropping.

WECHAT STILL RULES

Early Adopters

Early Mass

Late Mass

Laggards

RAPID FOLLOWER GROWTH

2009-10

2011-12

2015

Very active engagement with Creators ...modest,

steady growth

Sharp rise in new Registrations, Very

high MAU.

Modest number of new Registrations. Much lower engagement

totals.

Decline in Registered User totals. Much

lower MAU.

Social Life-Cycles - User Growth vs. InvestmentA lesson from Weibo.

Moments Ads on WeChatWith user growth slowing, now might be a good time to invest in ads.

Moments Ads: are pushed directly into users’ social stream (based on detailed targeting).

Ads in “moments” have been effective in building new followers for brands - quickly raising account numbers.

Minimum costs for ads have recently dropped, making them more accessible to smaller brands.

Looking back at the experience of Weibo, there is a peak period for involvement, where users follow a lot of accounts

(personal and brand alike), after which, new ‘follows’ slow down dramatically. Brand accounts built up during the

honeymoon of Weibo (2011-12), easily accumulated large followings. Those built up more recently have had to work

very hard to achieve more modest numbers.

This is the honeymoon for WeChat but its coming to an end soon.

Brands should therefore consider making the most of high user attention now before WeChat becomes too crowded

and user apathy sets in. It will only get harder.

Implications for Brands

2. The Rise of New SNSWhile WeChat dominates, there is a shift of “hip/cool” users to new platforms.

2 With WeChat now close to its peak, it’s been flooded by mass audiences. Younger (hipper) audiences are shifting their attention to new social/mobile sites, looking for more interesting experiences. Early adopters are sharing/creating/exploring on sites like NICE, Lofter, Meipai ...

NEW SOCIAL MEDIA

Early Adopters

Creators x Active (Demonstrate Engagement)

Early Mass

Late Mass

Laggards

Demonstrates “lite” engagement

Passive “Viewers” but rarely demonstrate engagement

CONTENT TYPE

UGC (Co-Created) Viewable (Video, Images)

Source of Content Distribution of Content

RAPID FOLLOWER GROWTH

Social Life-cycles - User Growth vs. Investment

Nice took 10 KOLs to Japan for UNIQLO to reveal the Spring/Summer 2015 collection. All KOLs visited Uniqlo’s flagship store in Tokyo, and shared their visits on Nice as a “live show.” The images were sent through NICE ...and later share more widely through WeChat.

Created on NICE - Shared by WeChat

Source of Content Reach for Content

For brands who require engagement with youth, style, fashion, design ...and taste making in general, there will be strong reason to invest time in building up presence on

sites like NICE and Lofter. These “instagram-like” sites are key for driving consideration from; (1)people who carry influence, (2)people who are willing to co-create and

participate with brands.

The influence (“cred”) developed with creators in these sites can then be amplified through WeChat, Weibo and other

other mass channels.


3. WeChat for RetailThey are looking to take over from Taobao as key ecommerce player.

WECHAT FOR RETAIL

3 During CNY 2015, WeChat increased the number of people registered for its payment system to 400 million. Combine that with (1)incredible daily active user numbers, and (2)the increasing availability of products ...and WeChat ecommerce is set for “take off” in 2016.

We first established an account on WeChat in June 2013 and have had really good traction so far. Our WeChat fanbase grew very rapidly and it drives really good

traffic to our ecommerce site as well. It’s actually one of the first times that we’ve seen a social site driving a large number of ecommerce sales.

Julien Chiavassa, Digital Head APAC for Clarins

JD.com is putting out advertisements for its selected partners on WeChat during Singles Day for the first time. The company is also offering RMB 2.5

billion (US$394 million) worth of coupons on WeChat’s Moments’ platform, according to

Deustche Bank’s report.

Alibaba says that mobile transaction represented 72% of total gross merchandise volumes (GMV) during Singles’ Day 2015.

WeChat is setting its ambitions beyond being China’s key social network. They want be THE dominant ecosystem and

rule the ecommerce market.

Tencent’s big growth efforts with WeChat have been in registering users for their payment system (eg. CNY red

envelope campaigns), and with fueling ecommece sales (eg. coupons/ads for Singles’ Day).

Brands that want to succeed on WeChat should develop CRM and sales strategies to align with WeChat’s long-term

vision.


4. Online Video is CriticalFor BRANDED CONTENT and audience engagement - Video is a MUST.

4 To break through with audiences in 2015, brands increasingly needed to use video. It’s quickly becoming the ‘key currency’ on social media and a ‘must’ for marketing. Large incumbents (Youku...) and new sites (eg. Meipai, Bili Bili...) have been focal points for this shift.

VIDEO IS A MUST

Growth in Video - More Site, More Formats

In our recent survey of 30+ top brands/agencies in China, video was cited as the second most important channel,

after WeChat for driving audience growth.

Brands should be looking to create more video assets and experiment with new video sites (with formats native to

those media).


5. Weibo is Twitter, againStarted as a Twitter clone (then like Facebook), it’s now a lot more like Twitter.

5 Orginally lauched as a Twitter clone, Weibo morphed into Facebook at its peak (lots of friend focused functions). WeChat has taken over and Weibo has shifted to focus back to news, trends and ‘realtime.’ It’s Twitter again and is facing the same challenges (ie. lite audience frequency).

WEIBO IS TWITTER

Weibo = Realtime Events/Trends

Started the Trend

Responses by brands add to/benefit from the “Trend”

The shift of daily audience attention to WeChat seems to be killing Weibo. However, Weibo has found its place as the

“Twitter of China” again. It’s the channel that people rush to when big news and realtime events hit.

For brands, it’s also still the best place to launch campaigns from. There is a well worn system for pushing content out,

which includes use of KOLs (Key Opinion Leaders) and more recently Weibo’s “FanPass,” allowing brands to see content move far-and-wide. And because its open and

trackable, brands are able to observe the full effect of their efforts. WeChat isnt open to tracking and so numbers there

still dont look as good as Weibo.


6. Distributed Social ShiftBrands struggling to build account followings need to grow an ecosystem.

DISTRIBUTED SOCIAL

6 Brands have struggled to build up follower numbers in WeChat. Most official brand accounts only tally a small fraction of what they did on Weibo. It’s time for brands to start looking at the bigger picture, by developing content and networks to spread across the entire ecosystem.

buy

CONSIDER

EVALUATE

AWARENESS

ADVOCATE

ENJOY

BOND

Grow: With Content Across Channels

Social networks like Weibo and WeChat host an incredible volume of user traffic. For brands, building up “official”

accounts on social platforms, it’s not always easy to (1)get audiences to sign up, nor (2)keep them coming back to the

brand account. Brands must become publishers - by creating much better quality (more audience relevant)

content.

Brands must also understand the entire online ecosystem and design content strategies for images, videos and stories

that go beyond “official accounts” - contents that start/grow from a multitude of new sites.

For instance, infographics designed for Zhihu (Q&A site), can be very effective in answering questions at the consideration/evaluation

stages...and can stimulate very broad circulation.


7. Niche Social ContentsBrands must look beyond core segments to connect with new audience sets.

NICHE SOCIAL CONTENT

7 Social media strategies were once all about “core audiences” but for most brands that want scale, there is need to develop connections with aligned groups online (non-core but relevant), by using content that speaks to the interests of new segments (interest groups).

ARTS

KOLs

KOLs

KOLs

HEALTH

TECHNOLOGY

KOLs

ADVENTURE

CORE

Fashion

Food & Drink

Music

Movies & TV

Sci-fi

Action Sports Fitness

Gadgets & Gear

Wellness

Auto (Toys)

Sports

Travel

Grow: Using Content X Networks (KOLs)

Small groups of loyalists dont get the job done for most brands. “Core audience” segments dont offer enough scale, for companies conditioned to mass media (TV) with broad reach. “Mass brands” need to employ strategies to target

larger audience groups on social.

Starting with “core audiences,” brands need to create maps of aligned audience segments (niches). They need reach

into those new segments with the support of KOLs/influencers and “segment relevant” contents.

A winning formula keeps the company “on brand” while demonstrating benefits relevant to new audiences.

Therefore, the combination of content x KOLs must be designed carefully.


8. Globals Must Be LocalFor content to breakthru with audiences, it needs to become more relevant.

B

LOCALIZATION

8 2015 has marked a turning point for brands in China. For decades, global brands have used ads designed for US/EU in China. That was useful in establishing awareness and credibility. But, now that the challenge has moved beyond awareness, brands must become more locally relevant.

Star Wars, Episode 7 Trailer Launch at Great Wall

Designed for USAdvertising Content For Social in China ???

The content relevance gap: US/EU Ad content for social in China

China Is Too Important

ChinaGlobal

A China First Approach to ContentTiffany features model, Liu Wen in both Global and Chinese campaigns.

China has become too big, too important. Brands cannot shoe-horn US/EU ads into China and expect that they will resonate with audiences on social media. It’s curious why

brands that would never run a British ad in the US, still think that running a US ad in China works.

For established brands in China, where awareness levels are high, the focus should shift to listening more to audiences

and responding with contents that have been developed in China, for Chinese.

The next round of growth in China depends on being more closely connected with Chinese lifestyles, challenges,

dreams ...etc.


9. Selling Matters MoreAs the economy slows, pressure is mounting on brands to sell more.

Social x eCommerce are very important in 2016.

$

ECOMMERCE

9 Companies that have invested heavily in awareness, now expect results. Consumption has slowed in many categories (luxury, auto...) AND offline retail has been challenged. Ecommerce holds the promise of new growth for brands. Singles’ Day offers proof that brands can grow online.

H&M Outdoor Ads, China

“Alibaba said total sales exceeded $5 billion in just the first 90 minutes of the 24-hour sale, which

kicked off at midnight Wednesday in Beijing. About 72% of sales were from mobile phones.”

Elizabeth Weise, USA Today (November 11, 2015)

Everything Sells Online In China“High-end brands that aren’t online in China are losing out.”

YES

74%

NO

26%

“Have you ever bought luxury products online?”

“A total of 40 percent buy luxury online more than five times a year, while 35 percent said they’re going to

increase their online luxury shopping.”

Exane BNP Paribas

Social Merchandising - Supporting Sales

Where to BuySupporting O2O

What to BuyAnswering Key Product Questions

Infographics used across social channels to answer questions by audience.

Product information and images rank highly with users. The release of new/hot products can drive very strong

engagement.

So, while companies need to do a better job of creative content to support branding, they should not forget that a

large number of users follow them to see new products.

In cases where a consumer is close to purchase, they may also check “official brand accounts” to find information supporting detailed product selection and buying. For

consumers at this stage, brands could consider additional incentives to drive/reward sales.


10. Outbound eCommerce“Haitao” and the practice of buying online from global sites is in full swing.

OUTBOUND ECOMMERCE

10 The liberalization of imports to China has lead to a dramatic increase in outbound ecommerce (hai tao), with Chinese buying on global websites - shipping back to China. Brands and ecommerce merchants that understand this movement can reap significant returns.

Mainland Chinese Shopping is Global

outbound

offlineTourists Overseas

onlineEcommerce From China

In search of products from around the world online.

“HAI TAO” - Ocean SearchThe term in China for the shopping trend to going online

...ordering direct from global Websites.

Outbound Ecommerce

Navigation Bar

Buying Guide

Banners

Chinese CRM

Payment Methods

user images

Involving users in campaigns to show-off products bought from

REVOLVE ...both inside Chinese SNS and

outside.

Email Registration

Leave your emailThose who leave

anemail address are more likely to buy from

REVOLVE.

REVOLVE - Overseas selling to China

KEY FEATURE

KEY FEATURE

Direct-to-China Sites

For some brands, more than 50% of sales to Chinese nationals are taking place overseas - from purchases made

while on location and from purchases made through “offshore” websites (hai tao).

For new brands, without operations on the ground in China, this is great. New brands can look to strategies where they

continue selling through offshore sites, marketing directly to China, (potentially) without costly local operations .

Larger, more established brands need to embrace this challenge by aligning China marketing to Global sales (to Chinese) - with more comprehensive CRM systems and

improved customer service.


A Pivotal Year For Brands?

Prepared by Totem Media

Brands focused on making noise and generating reach/awareness on social are seeing diminishing returns with audiences in China.

Social is still largely about "push" in China.

The big pivot in 2016, should be about listening more and infusing strategies with a stronger dose of CRM.

If audiences (who care enough about the brand to speak up), are telling you what they want, then it's time to listen. Too many brands

right now don’t even know who they are pushing content to.

The real opportunity on social is about scaling customer interaction; understanding audiences better, responding to their interests, and

growing together with them (depth & reach) ...scaling WOM.

Chris Baker, Managing DirectorEmail: [email protected]/WeChat: Talktototem