2. 40 November 2016 Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
Chinese consumersINTRODUCTION
42 THE ‘NEW ORDER’ OF VIRTUAL REALITY
Technology allows marketers to sell ‘thin air’
44 BREAKING THE INTERNET, CHINESE STYLE
KOLs drive a wave of social commerce
48 INVEST WISELY: WAYS TO WIN AT
STARTUP ROULETTE
Big brands look to partnerships to inject energy
50 PLAYING IT SAFE IS RISKY
Darren Burns says agencies need to think big
52 THE FAST MACHINE-LEARNERS
Data-driven marketing flexes its muscles
CONTENTS
Welcome to Campaign
Asia-Pacific’s annual
‘China Innovation’ report,
our third deep-dive into
the state of inventiveness
found in the marketing and advertising
industry. Interesting developments abound,
dear readers, in this part of the world where
consumers, not technology, are accelerating
innovative ways. Further content in addition to
what you will find on these pages, including
innovation ‘cheat sheets’, will be going live
this month on a dedicated landing page:
www.campaignasia.com/chinainnovation.
Read away.
Jenny Chan is Greater China reporter at
Campaign Asia-Pacific
jenny.chan@haymarket.asia
Brought to you by
INNOVATION NEVER STOPS
Innovation is our DNA.
At Tencent, we strive to
anticipate, observe and
understand the latest
digital and technological
developments, and
constantly adjust our
directions promptly, based
on these insights.
In 2016, we are seeing
signs that the industry
is coming together to
bring some of these
developments to daily
life: consumers use
multiple devices every
day, creating a highly
connected, yet disparate
audience — advertising
evolves to recognise
people, not devices.
Winning media will be
those which are able to
provide the best integrated
cross-media or cross-
screen experience.
Tencent has built
competitive advantages
in the areas of content,
technology, smart data
and AI. We have honed
our ability to develop
super intellectual property,
based on local insights,
utilising technology
to enrich the content
experience. By combining
data from multiple
platforms, Tencent is able
to better target advertising
content which is relevant
to the end user. What’s
more, Tencent’s integrated
marketing products, which
have linked up media-
based sales and services
in a closed loop of digital
marketing, make it easier
for marketers to adopt
AI, which will in turn
facilitate brands with the
ability to tap innovation
opportunities.
Tencent is taking the
lead in building internet
ad standardisation,
media evaluation and
accreditation systems in
China. With this report,
which features the top
marketing innovations
unique to China, we
can not only learn, but
together contribute to a
better internet advertising
ecosystem in China.
November 15, 2016 Shanghai
Tencent Online Media Group
3. 2016 November 41Campaignasia.com
C O V E R S T O R YC H I N A I N N O V A T I O N
China’s innovations in business models translate to imaginative marketing, enabled by
novelty craving consumers who are keen to experiment, writes Jenny Chan
T
he most fascinating part of marketing in China has always been the rise
and evolution of fresh business models to solve consumer problems.
From direct online purchases of overseas goods (known as haitao), to
peer-to-peer mobile payments via digital hongbao; to online-to-offline
commerce, to the hectic rise of live-streaming and virtual gifting on zhibo sites
— brands have hopped on for the ride.
In fact, Alibaba has combined all of the above for its mammoth ‘Singles’
day’ online sales bonanza. The lead-up to the 11 November shopping festival
— expanded this year to last 24 days rather than hours — includes a live-
streamed eight-hour fashion show, an end-to-end virtual reality shopping
journey, and offline QR codes that link to online-only products.
China’s business models have automatically become communications
channels opening up new avenues for marketers,
says Philip Hwang, associate director of strategy
at Brandimage China. He puts this partly down
to a societal craving to express individuality and
reach out to the wider world. Live-streaming ads,
for example, would “never happen” in any other
country that values privacy. “There is no sense of
privacy here in China. It’s more of a ‘let’s just kick
down the doors and let’s just do it’ attitude,” he says.
Props to marketers? No, props actually to
Chinese consumers, who enable marketing
innovation by being willing to accept imperfect
product iterations, then giving feedback to
brands for rapid refinement. Domestic household
appliance, smartphone and internet brands,
highlights a McKinsey report, are outperforming others as they have learned to
read consumer minds — fast. “The key word for China is speed,” says Hwang.
It’s fun in China
“Nothing is useless for marketers in China,” says Hwang, not even a robot
dog or a mobile phone shaped like a robot — both of which were exhibited
at this year’s CES Asia. “The product doesn’t have to be functional because as
long as it’s fun, Chinese people will talk about it and share it.”
This pursuit of fun has seen entertainment marketing explode in a unique
way in China, where intellectual property from mainstream movies can extend
out to brands, points out Chris Chen, CEO ECD at Trio Isobar.
DreamWorks, for instance, allowed Master Kong to create a “branded
character” called Master Rabbit in a spinoff production of the movie Kungfu
Panda 3, as well as use Kungfu Panda assets to market its instant noodles.
Watch Frank Underwood — aka Kevin Spacey — tell Chinese shoppers to
buy “burner phones” and “presidential MMs” in a plug for Singles’ Day last
year, and you realise how show business is a fixture of consumption in China.
The latest and greatest
Chinese consumers crave and expect novelty, such that a Forrester report calls
57 percent of metropolitan adults “progressive pioneers”, who lead the demand
for both product and experience innovation.
In Edelman’s 2015 study, Innovation and the earned brand, Chinese consumers
called for more innovation to come from traditional industries such as energy,
healthcare, food and beverage, and education. On the flipside, they complained
“ There is no sense of
privacy here in China. It’s
more of a ‘let’s just kick
down the doors and just
do it’ attitude ”
Philip Hwang, associate director of
strategy, Brandimage China
that the pace of innovation from technology and
mobile brands was “too fast” and questioned
their motives. They feel like these brands are
“shouting at them” with more than half (52 percent)
being bored or frustrated by constant reminders
to upgrade and update. Two in three Chinese
consumers also believe brands are simply innovating
to keep profits high, according to the study. “[The
brands] may be innovating, but they are failing as
marketers and not moving in the right direction in
how they communicate,” elaborate the authors.
Three’s a crowd
No one has applied
innovation better than
China’s infamous BAT
of Baidu, Alibaba and
Tencent.
At Tencent’s
WeChat, innovation
stems from the “intense
integration and hyper
customer experience
all within one app”,
says Darren Burns,
China president and
Asia-Pacific chair of
innovation and creativity, Weber Shandwick.
WeChat, along with Alibaba’s Alipay, is creating
a cashless society where anything from gold futures
to fried rice can be paid for. For marketers, this
removes countless barriers to purchase, says Ernest
Tan, Edelman China’s national consumer chair.
Yet this seemingly unassailable trio has developed
a wobbly leg. The B in BAT has “gone off the
tracks”, according to Vineet Arora, managing
director of Havas Media China. Search giant Baidu
has gone from having the largest share of digital
ad revenues of “any company in China” last year,
according to eMarketer, to being hit by negative
press and regulatory punishment over ambiguity
between its paid ads and organic searches.
Arora tips LeEco — a brand that weaves
together UHD TVs, phones, cars, bikes and films
in hope of seamless marketing — as a strong
contender to take Baidu’s place on the podium,
given its forward-facing and strong O2O strategy, a
lynchpin of Chinese marketing.
Baidu’s fall from grace highlights the key
challenge for brand marketers in China: how to
stay innovative and sustain consumer desire and
standing over time.
power an innovation engine
4. Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
The ‘new order’
of virtual reality
Peddling products in thin air may be the future reality of marketing
in China, writes Jenny Chan
W
hen’s the last time your shampoo sent you flowers? Or tried
to hook you up with a celebrity boyfriend? These days,
virtually anything can be done to win customer loyalty —
with the operative word being ‘virtually’.
From cranberry juice to real estate, brands in China are adopting virtual
reality with gusto, and consumer-facing brands have been among the most
imaginative. In a recent campaign, L’Oréal showered customers with AR
flowers if Baidu’s image-recognition app spotted them with a bottle of the
brand’s new Ultra Doux shampoo. Not to be
outdone, PG turned a Chinese male celebrity,
Yang Yang, into a “VR boyfriend” to woo fawning
fans into buying Rejoice shampoo, as part of
Alibaba’s VR Lab testing.
But it’s in the travel and hospitality sector where
Chinese consumers are most keen, finds recent
research from Greenlight VR. Shangri-La Hotels
and Resorts was one of the first in the sector to
deploy VR headsets in its sales efforts. The chain is
in the process of creating 360-degree tours of all its
properties worldwide to offer virtual previews for
potential guests.
“ The whole point of VR
is about immersion;
VR ads should be
non-intrusive product
placements ”
Alvin Wang Graylin, China regional
president of VR, HTC
42 November 2016
“We see VR technology as an enabler to enhance
our brand,” says Raymond Ye, the hotel chain’s
China VP of marketing.
Dirk Eschenbacher, co-founder and chief creative
officer of luxury travel brand, Zanadu, is also a vocal
advocate of the format’s potential in the sector.
“Travel makes sense for VR marketing as it gives
a teaser of what the real destination could be,”
he says. In August, Zanadu opened a VR travel
concept store in Shanghai where customers can
‘fly’ around the world, experiencing their dream
destinations virtually, before making a booking. It
has attracted up to 10,000 visitors a month.
Zanadu is not unique in its use of brick-and-
mortar, retail-oriented spaces to push mainstream
VR adoption in China. Shenzhen is home to VR
Lounge, a membership-based club, similar to a
karaoke lounge, where users can browse, select, pay
for and play VR games. In the same city, startup
Emax runs pay-per-view kiosks of 30 to 60 square
metres in size, each equipped with VR headsets
screening simulated rides in theme parks.
Observers predict that VR is likely to become a
bigger factor in the marketing mix in China sooner
than elsewhere. Chinese audiences have shown
a propensity for being early adopters, says Alvin
Wang Graylin, China regional president of VR at
HTC, and they are willing to pay for it.
More than one in five 25-to-34-year-olds in
China are planning to buy a VR device within the
next six months, says an HTC-backed survey run
earlier this year. In comparison, just 12 percent of
youth in the US are planning to buy a unit, finds a
comparable study by Newzoo Market Intelligence.
5. 2016 November 43Campaignasia.com
C O V E R S T O R YC H I N A I N N O V A T I O N
“ We need to plan
very carefully where
the cameras and
crew are placed in a
360-degree shoot ”
Sascha Engel, China director,
K1ND, Ogilvy
Imaginary worlds… KFC’s
virtual art gallery (left)
linked directly to social
media to boost awareness
of autism; celebrity Yang
Yang (below) puts in a
turn as a virtual boyfriend
for Rejoice
Full-functioning VR equipment from Oculus Rift, Samsung Gear VR and
HTC Vive, naturally have the most appeal, for those who can afford it. These
high-end headsets are more sensitive to motion and result in more immersive
advertising experiences. But for the less-affluent, the cost can be prohibitive.
Fortunately, the proliferation of cheaper, smartphone-powered VR
accessories in China is fuelling the trend. Li Qi, marketing head of smart
homes and VR at Xiaomi, is paying attention. The brand developed its first
VR viewer for smartphones, the Mi VR Play, in just 10 months. “It allows
consumers to quickly experience mobile VR,” Li says, adding that affordability
and user experience will accelerate the mass adoption of VR in China.
Chinese users have access to a range of “surprisingly cheap” smartphone-
connected VR equipment, says Sascha Engel, China director of Ogilvy’s
innovation unit K1ND, citing Baofeng Mojing, LeEco’s LeVR, DeePoon
VR, Huawei VR, VR Shinecon, VR SJG, or VR Box as examples. Engel says
he conducted price comparisons, and found the exact same brand retailing at
US$35 in other countries available on Taobao for less than $5.
Graylin believes that once there is a large-enough audience for VR,
advertisers will automatically follow. VR will be a “dream advertising system”,
he says, because engaging content and experiences will move audiences to
wherever advertisers want to. The key, however, is to use the medium correctly.
Today’s ads are designed around interrupting
audiences, but that defeats the purpose of VR, he
warns. “The whole point of VR is about immersion;
VR ads should be non-intrusive product placements
within multidimensional content.”
The need for strong interactivity and shareability
means talent who can “plan visually and socially”
are in demand, Engel says. “VR content used to
be all app-based,” he says. “Since HTML5 mobile
sites within WeChat are so popular in China, we
thought of making a plug-and-play VR tool.”
K1ND recently helped KFC China launch a
charity campaign aimed at raising awareness about
autism via a VR art exhibition. It was built using
StoryBuilder, a proprietary tool that transformed
flat illustrations into 360-degree images, mapping
in WeChat friends’ profile photos automatically.
Engel says this shows where VR marketing is
heading: towards “a future which will incorporate
VR storytelling with highly-personalised,
emotionally-resonant brand experiences”.
Much VR content today is more about novelty
than production values — especially in gaming,
where themes often border on soft porn and
horror. But proper VR video productions require
a tremendous amount of work. “We need to plan
very carefully where the
cameras and crew are
placed in a 360-degree
shoot,” Engel says,
stressing the need for
exceptionally detailed
storyboards, clear
directions and tight
sequences. VR ads might
also call for audio or
visual clues to guide
viewers to ‘hotspots’
linking to ecommerce
sites or product coupons.
So far, the metrics for VR marketing are the
next thing to fret over. HTC’s Graylin expects
new metrics to move away from click-through
rates — for the simple fact that there will be
nothing to click. Future metrics, he argues, should
revolve around the amounts and lengths of VR
interactions, as well as follow-on activity such
as purchases or sign-ups. He predicts pay-per-
interaction ad models to become more important
than pay-per-download or pay-per-click types.
However, Shangri-La’s Ye stresses that China
is still in the early stages of VR advertising, and
the brand is still unable to “evaluate everything on
financial terms”.
Eschenbacher agrees that VR conversion rates
have yet to set the hills on fire. “Not everyone
who sees our VR travel films will make a booking
right away, maybe a few months later,” he says.
“Presently, it’s 2 percent to 3 percent conversion
for popular places like Thailand and the Maldives,
but it’s not easy to track.”
6. Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
A
ndy Warhol famously said in 1968: “In the future, everybody will
be world-famous for 15 minutes.” Warhol was one of his era’s great
KOLs — notably the guy who made Campbell Soup more than just
a product on the shelf.
Fast forward to Shanghai in 2014. “KOLs are often more effective at
creating digital content,” said Jacquelyn Wu, China marketing director for —
you guessed it — Campbell Soup.
KOLs, or key opinion leaders, come complete with their own audience that
already trusts them, so there is a great value proposition for brands.
In fact, asserts Ivy Wong, founder and CEO at VS Media, China’s KOLs
can deliver “the highest ROI of any marketing platform in the world”. Say,
when a celebrity influencer posts about a certain brand on their Weibo page,
the post can reach a fan base 1,800 times greater than the brand’s own, and
achieve engagement up to 6,000 times more, according to a report by L2. This
amplification effect is a hundredfold of what could be achieved in the West.
Working with ‘moneyball’ influencers, or wanghong (internet stars), is
certainly innovative in China, conversations among the nation’s marketers have
44 November 2016
Fashion forward…
internet celebrities
GoGoBoi and Aikelili (top
left) have teamed up to
guest curate a cover of
the digital style magazine
Vogue Me (bottom left);
video blogger ‘Papi’
Jiang Yilei (top right)
regularly draws audiences
in the millions for her
live-streaming acerbic
monologues
Simon Young discovers how brands are successfully tapping China’s
unique influencer marketing environment
shifted from whether a brand should work with an
influencer to how much they should pay them.
For some influencers, prices and customer
acquisition costs can run to eye-watering levels.
GoGoBoi, a fashion influencer, for example,
charges Rmb130,000 (US$19,500) for a single
post. Such high-flyers are putting the sustainability
of the KOL market, including entire workforces
backing each KOL, in doubt.
How do you know who’s the real deal? Who will
have more than 15 minutes of fame, and make a
good partner for your brand?
The consensus among agencies Campaign
spoke with for this article was that the future
lies in matchmaking between brands and KOLs.
We’re finding that’s an industrial-scale task as the
influencer market heats up.
Breaking the internet,
Chinese style
7. 46 November 2016 Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
“ Someone you like
because they’re funny is
not necessarily the one
you’d trust to advise on
baby products”
Kim Leitzes, founder
ParkLU
Buchwald names a number of “meta-statistics”
that Bomoda uses to assess KOLs: “increase in
popularity, increase in purchase intent, growth
in transactions, growth of high-quality followers,
longevity of KOL effect”.
Depth of influence
There is no unified ‘score’ such as Klout in the
West — which many in the industry argue is
oversimplified — so effective monitoring will
depend on the brand’s particular goals. Different
KOLs can serve different marketing purposes for a
brand, depending on its audience, goals and market
stage. If the brand is new to the market, launching
a new product or undergoing a brand revival, the
choice will be different.
“There are KOLs who share everything about
their lives and those who curate [on a particular
topic],” says Leitzes. “We’ve found the ones who
tend to curate more have more purchase influence.
Someone you like because they’re funny may not
be the one you’d trust for baby product advice.”
There’s also the strength of a long-term
partnership, Reuter points out. “I’d much rather
create a long-term collaborative relationship with
[a KOL] who falls in love with the brand.”
But Robin8’s Miah suggests brands need to stay
agile and not stick to a single influencer purely out
of loyalty. Rather than a single A-grade star, they
should select a mix of “long-tail KOLs” who are
actually truly influential ‘superfans’ of the brand.
This means managing the expectations of
clients, which brings up another question: what’s
the lifespan of a KOL? Will today’s hot-shot be
tomorrow’s has-been?
“A mediocre KOL’s lifespan could be very short,
like a few months or a few weeks,” says Kantar
Media CIC’s Linda Xu, adding that a hot WeChat
post will normally only stay hot for up to 72 hours.
Because KOLs have to be smart and adapt
quickly, so do marketers. Curiosity’s Bonhomme
adds that “understanding who is doing what is
clearly a must when marketers want to innovate”.
They should look for tools for themselves and
not just rely on internal Powerpoint reports, as is
common in China’s marketing departments.
Theoretically, KOLs should be very measurable in China where ecommerce
and social platforms are tightly integrated, but different platforms have
different standards.
“KOL decision-making in China is still largely based on ‘feel’ or reliant
upon basic evaluation tools,” says Brian Buchwald, CEO of Bomoda. That
less-scientific approach may be changing as a range of third-party tools
developed by foreign firms help brands decide who
makes the grade.
According to Chloe Reuter, founder and CEO
of Reuter Communications, some brands are
essentially turning KOLs into commissioned
salespeople with sales targets. “A lot of KOLs are
pretty stressed about [this kind of approach],”
says Reuter. Instead, she advises brands to view
their investments into influencers in the same
light as public relations and events, where the real
value may be indirect, but the activity is leading
consumers down the path to sales.
Exacerbating the issue is the simple fact that it
takes time for influencer activity to show an impact
on sales. On the other hand, reach is the easiest to
measure, but also the easiest to fake. Therefore,
reach alone (measured through subscriber numbers or article views on the
KOL’s account) is one of the least reliable metrics, and needs to be combined
with engagement.
“There’s a difference between having tremendous reach and having
tremendous influence,” points out Kim Leitzes, founder of ParkLU.
The typical metric used is interactions (likes, comments and shares) divided
by views. Tread with caution, warns Alexis Bonhomme, co-founder and general
manager of Curiosity China: what looks good may in fact be fake. “If the
engagement rate is above 1 percent, it might be an indication that the KOL
account is not legit,” he says. Tencent’s recent purge of fake views left a lot of
brands looking embarrassed, but it’s still hard to tell fake views from real.
“A lot of the time, fake followers are showing up from Henan, Heilongjiang,
Xinjiang and Guangdong provinces,” says Bonhomme. “If on Monday at
8.30am, I get suddenly 500 followers, all from Guangdong, I smell a rat. The
growth is not logical, not human.”
Robin8 co-founder, Hassan Miah also advises caution. “Given the amount
of click fraud and inflated follower numbers,” he says, “the best way to analyse
the data is by reviewing multiple sources of data over time.”
Observing trends enables you to gauge a KOL’s growth potential, and also
to ensure the legitimacy of data associated with him or her.
In the loop… internet
celebrity Aikelili shows off
an invitation from Chanel
on his video channel (left);
Joyce Lemon has risen to
online stardom on the back
of her popular makeup
tutorial videos (below)
8. Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
Invest wisely: ways to
win at startup roulette
Big businesses are striving to navigate China’s turbulent startup waters. Soon Chen
Kang explores how they can pick a winning partner
M
ore than 2,000 startups in China — about 10 percent of the
total number — folded during the last fiscal year, according to
Chinese venture investment site gplp.cn. O2O, ecommerce and
transport startups were the biggest casualties. When startups
fail, both the founders and any brands that have put money into the startups
suffer losses. Yet, this has not deterred brands from investing. Alvin Foo,
head of Airwave China, the mobile business unit of Omnicom Media Group,
believes that brands have little choice.
“Innovation doesn’t come from companies like us,” he says.
The Unilever Foundry is one of the highest profile examples of a major
business reaching out to startups. The consumer goods giant launched the
accelerator in 2014 with a “mission to transform Unilever’s growth model to
make sustainable living commonplace”.
Its first two years have resulted in over 100 pilots globally, says Dorcas Lau,
Unilever’s vice-president, digital marketing and ecommerce, North Asia, and
as a result over two-thirds of its brands have seen
an increase in revenue and three-quarters saw
above-average campaign engagement.
Eighty percent of the pilots reduced the time
from pitch to execution and 60 percent of the
multinational’s brands have changed their approach
to marketing briefs since working with Unilever
Foundry. Over 40 percent of the pilots resulted in
a longer-term partnership and 45 percent of these
then rolled out into multiple markets.
“Brands are always open to new, innovative ideas
and willing to take a leap of faith but the underlying
tech has to be resilient enough to go to market,”
Lau says. “We look for partners that can provide
solutions for both our brands and our consumers.”
So how can brands not only decide which startups to invest in, but also
ensure their success?
Look before you leap
Kapil Kane, innovation manager of Intel China, says it is most important for
brands to invest in startups that align with their own corporate objectives
and strategies. “Brands cannot understand something that is not their core
strength,” Kane says. Some strategic diversification can help a business to offset
risk, but making random speculative investments should be a no-go.
Most big brands are prudent, setting up venture-capital arms to take care
of their fledgling units. “You are doomed to fail if there is no business unit to
help in managing the investments,” says Kane, who is behind Ideas to Reality,
an accelerator for Intel employees in China.
Barriers to entry are always a key consideration for startups, but that is
especially true in the Chinese market. “If the solution proposed can be easily
copied by other Chinese companies, then it is not a good investment.”
48 November 2016
Innovation station… startups’
Other critical questions that Kane says brands
should think about before investing in a startup:
l Is the startup solving a pain point, and how
significant is that pain point?
l Has the startup identified a gap in the market
they are trying to fill, and how big is the gap?
l What are the startup’s cost structures and rev-
enue streams?
l What kind of partnership should the brand and
startup form?
Judging from the wild success of China’s original
startups — Alibaba, Tencent and Baidu — OMD’s
Foo says the country’s strength in innovation lies in
business models, rather than technology.
“Alibaba did not become successful because
they were innovative
in technology,” he
says. “Instead, they
created this ecommerce
ecosystem, whereas
Tencent tapped into the
lifestyle ecosystem.”
Foo currently runs
OMD Innovation
Fund, the agency’s
joint accelerator with
Chinaccelerator, which
seeks cutting-edge
marketing strategies
among digital-media
startups. Since its launch in April last year, the
accelerator has hosted three batches of startups,
cultivating a group of nine businesses, each
awarded Rmb300,000 in seed funding.
Avoiding culture clash
While brands may be keen to embrace the
startup wave, some may have overlooked how
incompatible entrepreneurial DNA can be with
their relatively rigid structures.
Coming from a startup background himself, Foo
believes that it is nearly impossible to integrate
startups directly into big brands.
“How can you expect someone who wants to
change the world to work in an organisation that
never changes?” he asks.
“ Alibaba … created this
ecommerce ecosystem,
whereas Tencent
tapped into the lifestyle
ecosystem”
Alvin Foo, head of Airwave China,
Omnicom Media Group
9. 2016 November 49Campaignasia.com
C O V E R S T O R YC H I N A I N N O V A T I O N
Ready to launch
“The last thing I want to do as a startup founder
is to report to big companies.”
But partnerships can work well when brands
learn to accommodate startup culture, Kane says,
so brands should shield startups from the rest of the
organisation early in their relationship. “There are
many rules in big corporations,” he says. “Startups
already have their own challenges in getting their
product out, and when you tell them to follow your
way of doing things, they will go mad.”
Operating at arm’s length has other benefits, too.
Although a partnership with a big name can open
up access for the startup company, Foo cautions
that it can also be a liability to them.
“Assuming the startup works with Omnicom,
maybe WPP or other agencies won’t work with
them,” he says. “This is the last thing we want for
the startups when we invest in them, so we don’t
go in as Omnicom but instead invest through
SOSventures.”
Win-win situation
When a good match is made, both partners
benefit. For example, Alibaba’s US$100 million
investment into luxury online sales platform
Mei.com allowed the brand to tap into the luxury
market and address the counterfeit controversy
faced by its ecommerce site Taobao. Alibaba
declined an interview for this article.
Similarly, Apple supplier Foxconn’s investments
in startups such as Chinese taxi app Didi Chuxing
have helped to diversify its market following the
slowdown in global smartphone and PC sales.
Alvin Chiang, founder of IoT startup Bowhead
Technology, which is making a line of smart water
bottles called Gululu in partnership with Foxconn,
says he sought out several world-class brands,
including those in the bottled-water and toy
businesses before inking the deal with the empire.
“Foxconn has strong sourcing capabilities to help
us get durable, safe and BPA-free materials for the
water bottles,” says Chiang. “With the mechanical
engineering support received from Foxconn in
the product’s prototype, we are able to reduce the
number of people working on hardware and allow
our core team to concentrate on the software.”
Invest for the long-haul
Startups can reciprocate benefits for brands, such
as helping them to be perceived as innovators,
but it’s a long-term process. While it usually takes
years before new businesses turn a profit, they can
do important work in the meantime.
OMD taps its accelerator as an idea generator.
“The startups are very likely to help us when
we want to solve difficult problems faced by our
clients,” Foo says. “Investment into startups is a
very painful and long-term process. You won’t see
results until five to seven years. We are only doing
this to get into the innovation space because it is
hard to drive innovation internally.”burning desire to change the world makes them an attractive investment, but they are by no means easy to control
10. O P I N I O N
50 November 2016 Campaignasia.com
PLAYING IT SAFE IS RISKY
The game has changed in China, and it’s no longer enough for agencies to simply stick to their brief:
clients now expect innovative solutions that address their business issues, not just their marketing ones
F
rom messaging to mobile payments to even
filing reimbursements for work, WeChat
has become an inalienable part of everyday
life for millions of Chinese — certainly the
kind of Swiss-Army-knife tool the West hoped it
created, but didn’t quite.
Dubbed a ‘super app’, WeChat is just one
example of how China is marching down its own
self-blazed trail.
So given the strides China has and will continue
to make, what value can agencies bring to clients?
First, close the last mile and deliver commercial
results. A survey of Chinese marketers by R3
revealed that innovation and creativity top their list
of demands from agencies. Their pain points are
business issues rather than marketing ones.
Agencies need to understand this goes beyond
delivering communication solutions. Millions of
hits, views and impressions are nice, but clients in
China measure agency effectiveness by how much
our work is really contributing to the top line.
We are a PR firm, but as a direct consequence of
the environment in China, I have taken on a new
title, covering innovation and creativity, since April.
Second, adopt a management-consultancy
mindset. Responding to the brief will not cut it in
China. We need to address core business problems,
just like the way consultancies go downstream
themselves. As business intelligence drives more
marketing decisions, agencies in China will soon be
expected to deliver the kind of work consultancies
handle, helping clients grow new business lines.
At Weber Shandwick, we have a task force for
each client charged with bringing new ideas to
the table. Once, we proposed a retail marketing
extension to the digital work we were doing for an
auto client without being asked. Impressed with the
initiative, the client found us the budget to do it.
A lot of marketing innovation is not taking
something from the blue sky, but taking something
that already exists and building upon it.
Third, innovate ‘from China up’.
Agencies need to capitalise on country-specific
social trends. In China, influencers are capable
of helping push both impressions and sales to
astronomical heights. Unlike other markets, they
are not optional extras. We invested in a solution
to enable brands to co-create content with local
celebrities, public figures and experts based on their
scores on social impact, credibility and controversy.
All kinds of commerce in China will have some
form of social networking element, but a lot of
MNCs almost resist this. “We don’t do things this
way,” they say, but influencers are crucial to this
trend. This is a ‘China thing’, and Chinese retailers
are now the vanguards for social commerce.
People here have an openness and eagerness to
try new things which has helped Chinese brands
— and Chinese society — leapfrog the rest of the
world into the future. China’s fearlessness makes it
an exciting playground for marketing innovation,
but success here demands agencies always keep
ahead of their game.
If you just want to do safe marketing, no way.
DARREN
BURNS
is China
president and
Asia-Pacific chair
of innovation and
creativity,
Weber
Shandwick
Marathon sprint… China is an exciting marketing playground but agencies have to race to stay ahead of the game
@ShanghaiBurns
“ Millions of hits, views
and impressions are
nice, but clients in
China measure agency
effectiveness by how
much our work is
really contributing
to the top line ”
11. Campaignasia.com
C O V E R S T O R Y C H I N A I N N O V A T I O N
The fast machine-learners
In the battle for the hearts and minds of Chinese consumers, big
data and artificial intelligence are becoming tech-savvy marketers’
new weapons of choice, writes Robert Clark
W
hile AR and VR have grabbed the headlines, 2016 was a
year where both agencies and brands in China harvested
the power of data and marketing automation, opines Calvin
Wong, director of research and analytics, Asia, at Golin.
Firms have been “combining traditional mobile data, public datasets
and new data points from smart IoT devices to improve the targeting and
resonance of their message”.
Big data and its corresponding analytics offer the ability to gain customer
insight by peering through vast volumes of information. This is being
52 November 2016
Cookie data… information
about online consumer
behaviour, ecommerce
habits and preferences
informed Oreo’s
breakthrough campaign
in China
deployed by both brands and online platforms.
For Mondelez, data analytics enabled it to add a
new customer experience to the company’s famous
Oreo biscuits, says Ganesh Kashyap, Mondelez’s
director of ecommerce in Asia. “Customers expect
products that are differentiated. The question is:
how do we deliver that differentiation in our snack
food and deliver a compelling experience?”
More than 10 percent of all Mondelez biscuits
in China are sold online, so Kashyap and his team
came up with a special offer that allowed consumers
to personalise Oreo packets online.
Kashyap brought on board three Chinese
artists who created distinctive designs for each
Oreo packet. The team then set about creating a
Taste
Quality of ingredients
Price
Trusted brand
Convenience
PERCENTAGE CONSUMERS CHOOSE TO
EAT COOKIES MOST OFTEN BY BRANDS
BASED ON:
percentage of consumers
heard about a new cookie
product or brand via a
mobile app
percentage of brand loyalty
is most driven by TV ads
%
12. 2016 November 53Campaignasia.com
C O V E R S T O R YC H I N A I N N O V A T I O N
Spending on data–related marketing services in
China is expected to more than double over the
next year, according to a forecast from Analysys
International Enfodesk, to reach Rmb27.7 billion
(US$4.1 billion) in 2018.
“China does not have legacy issues and can
therefore leapfrog straight to advanced data
analytics and smart technologies to track and
anticipate consumer behaviour,” said Jessie Qian,
partner and head of consumer markets, KPMG
China, in a report the company released recently.
And the industry is developing advanced
technologies to do just that at a break-neck pace.
Tencent last month launched a new WeChat ad
matching system, which a Deutsche Bank analyst
note describes it as a “major set of ad innovations”.
Driven by past data on WeChat official
accounts, the new system allows both advertisers to
view and choose specific accounts to advertise on,
and improves targeting “significantly”, according
to Deutsche. WeChat provides details such as
ad display date, page views and cost, for both
advertisers and account owners.
Baidu, meanwhile, has a deep-learning system
which has been developing powerful speech
recognition for its voice search after ‘listening’ to
hundreds of millions of audio queries. The system
boasts an impressive 97-percent recognition rate,
and was ranked second in MIT’s top-10 list of
technology innovations this year.
Another example of how data-driven marketing
plays out in the field is a location-based campaign
Walmart China deployed in 26 cities of various tiers
to grow in-store traffic and sales during the Lunar
New Year in February. Technology from location-
based specialist xAd, targeted shoppers within 2km
of Walmart stores by partnering with mobile apps
such as WeChat, Weibo, Dianping, Moji and QQ.
According to Bill Wang, xAd China’s head of
sales, this campaign reached 50 million people,
generated 10 million mobile engagements and
drove nearly 2 million shoppers to Walmart stores,
boosting sales by 4.1 percent.
Then there is online wholesaler DHgate.com,
which has built its business around retaining and
understanding the data generated by its own
system and third-party service providers.
It uses those data to create in-depth profiles
of users — everything from age to preferences,
behaviour, history and product interest — to
provide buying recommendations.
“We gather a massive amount of data points
and assign them to machine-understandable
behavioural tags which are then presented to
buyers as recommendations,” said Ella Yang, the
website’s head of business intelligence.
For sellers, the company provides a specialised
data product called Data Wisdom, which helps
them understand their buyers better, Yang says. It
measures performance by the click-to-conversion
rate. “If clicks are low, so is efficiency.” n
campaign to build buzz and awareness, combining online shopping behaviour
data from ecommerce partner Alibaba with demographic data from its own
social media platforms to ensure the effort was “fairly targeted” at millennials.
“They were consumers who were already
shopping in this environment and who we knew
would be interested in those artists’ work,”
Kashyap says, adding that the result was “a
sustainable lift” for the Oreo range, with sales of
the personalised options in China up by 40,000
units over three days.
The campaign is one example of ways marketers
are learning to capitalise on self-generated data and
work with China’s internet giants, Baidu, Alibaba
and Tencent, who have finally begun to inch open
the door to their walled gardens.
These big players are “global standouts” in their
use of big data, according to James Chiu, executive
creative director at Razorfish China. However, due to the way these big players
have siloed themselves off, opportunities have only recently opened up for
agencies to enter into strategic partnerships.
In-store
advertising
NUMBERS OF OREO
CONSUMTION IN CHINA:
CONSUMERS BUILD PERSONAL
CONNECTIONS TO COOKIE
BRANDS MOST THANKS TO…
TV ads
MOST INFLUENTIAL CHANNELS
Free samples TV ads
“ China does not have
legacy issues and can
therefore leapfrog
straight to advanced
data analytics ”
Jesse Qian, partner and head of
consumer markets, KPMG China
