Digital Era Enables Chinese Marketers to Leapfrog

BEIJING--(BUSINESS WIRE)--The digital era, in the view of marketers and industry observers, has put Chinese advertising and marketing firms on a "level playing field" with their more established international competitors, according to a recent report by Z. H. STUDIO.

“Outside the US, China is the fastest-growing and most comprehensive market for e-marketing. In some specific areas, such as web portals, e-commerce, video websites, China has more internet companies than the US”

Chinese digital agencies are finding innovative ways to engage the almost half a billion Chinese "netizens", whose behavior online differs in fundamental ways from that of their Western counterparts.

"For many years, Chinese advertising agencies studied the best practices of international firms but still lagged behind overall," said Su Tong, founder and CEO of Hylink Advertising, China's most successful digital agency. "However, the new era of digital media is offering Chinese players an unparalleled opportunity to leapfrog."

The Internet is now the number one source of information, entertainment and career development for young people in China, known as the "post 80's" and "post 90's" generations. And traditional advertising and marketing techniques are no longer adequate, said 38-year-old Beijinger Su.

Su launched Hylink in 1996 and decided to concentrate exclusively on online business in 2004. Since then his company has won a string of awards for its service, which has diversified into innovative content, technology, and e-marketing, catering to both domestic and international companies that want to tap into China's huge potential customer base, Su said.

"Outside the US, China is the fastest-growing and most comprehensive market for e-marketing. In some specific areas, such as web portals, e-commerce, video websites, China has more internet companies than the US," he said.

Chinese netizens spend more of their time playing games, reading soft news, consuming streamed media such as (often pirated) films and socializing online, especially through the QQ instant messaging service, than Americans, according to Bill Dodson, author of the acclaimed book China Inside Out, which was published in February this year and includes a chapter about the internet in China.

"The presentation of information on Chinese websites is radically different from the more staid displays found on Western sites," said Dodson. "Chinese websites reflect the condition and dynamics of Chinese society itself: crowded and kinetic."

Chinese internet users are also more likely to upload user-generated content (UGC), said Su, which partly accounts for the explosive growth of Sina Weibo, China's equivalent of Twitter (access to Twitter is blocked by the Chinese government), which is less than two years old and had 120 million users by January this year, of whom up to 40 million are estimated to be active, and is forecast to have 200 million users by next year.

The service sees 30 million tweets at day and its top 100 users have a combined 180 million followers, according to statistics from Sina. Some 5,000 companies and 2,700 media organizations have Weibo accounts.

Hylink launched a Weibo marketing campaign to introduce 26 new Pizza Hut products in China. The Weibo account attracted more than 170,000 followers while more than 475,000 Weibo members shared the offer.

"We put the advertisement through Weibo and encouraged people who participated a discount. It was a new and totally comprehensive, new form of advertising," said Su.

"The response was good. Before, advertising was too commercial and people didn't accept it. But by sharing people can get comments from people they know and that makes them more receptive to products."

Such novel campaigns are among the innovations observed in China by Dr Chen Gang, Associate Dean of the School of Journalism & Communications at Peking University, who is also managing a Creative Communication Management Research Center.

"Domestic advertising agencies will be the ‘movers and shakers' in China. Able to take actions quickly and more adaptive to changes, they have very impressive advantages over the foreign counterparts," said Chen.

"Fundamentally, this is a 1.4 billion-strong marketplace and no international marketers can easily duplicate best practices from other continents here," he added.

The best marketers are able to create content that chimes with audiences and stimulates interest in new products, said Chen.

Hylink aimed to do just that with a set of online videos last year about a monster that left its imprint on buildings by night, with no mention of the product it was marketing, which was a limited edition BMW sports car. The sense of mystery attracted attention, witnessed by online discussion of the videos, according to Su, creating a readymade audience for when the car was finally unveiled.

The company is also working to include brands in online soap operas, far cheaper and quicker to make than TV series, which may screen years after they have been filmed, during which time any product placement may already be out of date. In China, web soap operas had 284 million viewers watching for about half an hour every day.

Hylink is also working at search engine marketing (SEM) as well as apps for mobile phone surfers. There are currently 303 million Chinese who access the internet using their phones but 879 million Chinese who have mobile phones, so the potential for development is huge.

"We have people observing new trends and trying out new things. Our biggest challenge is recruitment. This industry is brand new so there aren't any senior people around."

The sheer size of the Chinese market heralds a bright future for Chinese online advertising firms, both Dodson and Chen said, with the specific nature of the country and its internet to some extent insulating companies such as Hylink from international competition.

"The wall China is building around its internet – linguistically, politically, technologically and commercially – will mean that the gulf in the advertising industry between China and the rest will remain wide and perhaps even widen," said Dodson.

Western firms will increasingly enlist Chinese agencies for access to Chinese consumers, he added, while Chen said international agencies would acquire Chinese agencies in order to claim more market share in China.

Su's main challenge is to keep Hylink abreast of developments at home, but he dreams of doing business in the international arena as more and more big Chinese companies launch operations outside the country.

"As the Chinese economy grows, more Chinese companies are going global and we believe that we can go abroad with these companies to the world," he said.