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This year we hosted our second Digital Cream in Shanghai, and because we liked the venue so much from last year, we decided to hold it again at exactly the same place.
There’s something quite enthralling to be running our Digital Cream senior marketers’ roundtable gathering at one of the top night spots in town, especially when it’s located in mainland China.
There’s the stunning skyline view of downtown Shanghai, the Huangpu tributary of the Yangtze river running through the vibrant metropolis, and the feeling that you’re somewhere incredibly special and, dare I say it, more than a little auspicious.
Few people doubt anymore that China is a hugely important market in the global scheme of things, and tapping into this market via the rapidly burgeoning domestic online channels is becoming the most efficient and de facto way of reaching out to China’s huge and daunting customer base, directly applicable to most of the products made and services offered on the planet.
It doesn’t matter whether you’re running a small or even an extremely large scale business as an outsider entering or operating in this formidable and challenging market, or you’re even a home grown enterprise of scale and substance, there’s a clear and urgent requirement to become web savvy in order to stay competitive and achieve any measure of future commercial success.
Statistics on the Chinese internet market are staggering to comprehend. Here are some fascinating stats from www.chinainternetwatch.com:
- China mobile bank transactions in Q3 2013 reached 3.7 trillion yuan (USD 604 billion), with a 35.9% QoQ increase.
- Take ecommerce by itself, at the end of June 30 2013, China ecommerce transactions hit 4.4 trillion yuan (USD 713.27 billion). This is up 24.3% compared to last year.
- B2B transactions themselves hit 3.4 trillion yuan (USD 551.17 billion), a 15.3% YoY increase.
- Baidu, still China’s dominant search engine although facing stiffer competition these days, announced its third quarter finance report recently, with its Q3 total revenue reaching 8.89 billion yuan (USD 1.453 billion), 42.3% more than in Q3 2012.
This year we ran eight roundtables, which made for an exciting, vibrant and truly ebullient day.
Below are some of the insights shared, based on notes and commentary provided by our moderators:
Challenges and opportunities facing marketers in ecommerce businesses
There were a number of challenges that many at the ecommerce table were currently facing:
Strategies to balance short-term gains on market place and long-term ecommerce strategy (to build one’s own platform).
- How to manage relationships with the ecommerce marketplace? Key channel players make demands that cannot be ignored.
- Low conversion rate although high traffic. Conversion optimisation is generally a challenge in the ecommerce space.
- Global restrictions on Chinese ecommerce sites pose significant barriers to conversion.
- Most ecommerce teams have a digital marketing background which is insufficient to drive channel co-operation or solve supply chain issues.
Here were some of the suggestions in finding ways to improve one’s ecommerce effectiveness:
- Merchandise differentiation: create online-specific product mix through design, packaging and pricing.
- Attribute POS-driven online sales to POS through geo-location technology.
- Build in-house online-sales team.
- Use online store for branding.
- Build strategic alliance with banks to migrate to your own platform.
- Enhance CRM through optimized communication channels (live chat, toll-free etc).
- Use mobile channel which can generate significant revenue.
- Personalisation for online purchases.
- Enhance content (product description) for optimised natural search.
- Platform-specific CRM: encourage customer feedback and ratings.
Strategic content development, curation & marketing
Many of the brands at this table came from B2B, they admitted that brand and marketing teams were facing challenges on content curation for digital and social media marketing.
Some trends in content development:
- Brands are not satisfied with agencies, and some of the brands prefer to use internal social media themselves instead of relying on agencies.
- B2C brands tend to have clearer strategic content plans than B2B, however, in the long run, most social media managers and brand managers were doubting the measurability and ROI of content investment.
- Most managers believed that good content will win in the future, however, it’s hard to keep generating quality in the long run
New media channels are taking off so quickly in China that many brands (especially B2B) need more help and guidance on developing their content strategy.
The undeniable truth about looking for big data and meaning in web analytics
Almost all the participants felt confused with the term 'Big Data'. Advertisers are concerned with big data after spending significant budgets on digital advertising for several years, with the advertising part not having been very insightful in terms of generating tangible results.
Today advertisers want to know more before they decide to spend much on big data.
Big data has three distinguished characteristics, namely Volume, Velocity, Variety. If you don't fall into three of these key characteristics, you might not need to use big data. Among these three characteristics, the most difficult one is variety, because most of the time advertisers don't have control on their data sources to ensure variety.
Big data in itself is not a solution. We have yet to see a solution for big data. Instead, it ought to be seen as an approach. It is the approach of managing various data sources for generating better insights.
In terms of managing data sources, we can define data into structural and non-structural, PII (Personal Identification Information) and non PII. Advertisers need to start planning for their own data bucket.
In terms of developing your own data bucket, think web analytics is a bucket for non PII data because most of the data collected through web analytics is anonymous by nature. To advance the data approach, we can see the CRM solution as a PII data bucket.
So, it is pretty clear that the challenge of data management will be how to connect your web analytics with the CRM for a powerful and holistic data management model.
Data collected through social media can be either structural or non-structural. If the social data model is semantics based such as keywords, then it is easy to analyze or make correlations. If the social data model is conversation-style, then it is non-structural by nature.
It is very difficult to analyse non-structural data. Although there is artificial intelligence to analyse linguistic meaning, it is yet to prove practical and cost-effective for most commercial organisations.
Interestingly and ironically if data is so important for marketing, the majority of the table participants have not even employed a full-time member of staff for handling data analytics work. Most of the work is currently handled by agencies with low satisfaction in terms of generating valuable insights.
Why is mobile marketing becoming so important in China?
Not many brands are doing mobile very well at present, but everybody recognises its importance in China.
Key challenges ahead:
- How to integrate mobile into overall digital strategy?
- How to link mobile to other platforms?
- How to connect online to offline experiences?
- Once you have the app, how to drive traffic to the app?
- How to monetise the app?
Key insights from the discussions:
- An app is not necessarily the right tool for every brand. An app has to have a utility, otherwise you are likely to be setting yourself up for failure.
- In terms of platforms, it's all about WeChat (Weibo is in decline) - e.g. new option to create HTML mini site within WeChat.
- It's crucial to personalise messages to customers in order to not be perceived as spam/annoying.
- In terms of innovation, the next big thing is predicted to be iBeacons / NFC technology, which allows messages to be pushed to users' phones based on their location (e.g. if they're in the supermarket in the wine aisle, they could receive a message about a special promotion from one brand that has placed an iBeacon/NFC there).
Online advertising: what to do next, and does it matter?
Measuring online advertising is still a big challenges for most marketers.
Organisational maturity is very different. Some still measure by impressions, clicks for brand awareness (which most of them agree is not the right measurement to use, but there’s nothing else they can do without technology and research to prove effectiveness for the brand).
For those with hotel or lead generation websites, they tend to be a little more advanced in using technology to measure and optimise conversions (but it is still a challenge in terms of "how" to improve the advertising effectiveness and conversions).
Everyone agrees that the organisation and technology silo is the key barrier for moving forward. However, most of the delegates feel that they are lacking the authority to drive change internally. For those who have the authority to change things, they are lacking in knowledge and skill sets in digital (they’re still at the learning stage, as they don't use many digital channels themselves when compared to the younger generation)
Click fraud and fake numbers provided by publishers is one of the issues preventing progress. Some delegates were asking how to address the problem.
RTB, Ad exchange, audience/programmatic buying are still fairly new 'concepts' for most marketers in China. None of the delegates on the table have heard much about these particular areas, however, the growth in programmatic buying is maturing strongly in the west.
Segmentation and targeting your marketing
There’s a general consensus amongst marketers that it’s crucial for brands to pay attention to consumer research, especially segmentation and targeting.
As we drill down into this topic a little further, we realise that there’s a marked difference between targeting and segmentation for B2B sectors vs. B2C sectors.
In general, B2C marketers places more importance on individual customers' demographics and psychographics, whereas B2B marketers face the challenge of expanding targeting beyond industry or product categories. How to target these B2B customers digitally, especially over social media, adds yet another layer of complexity.
There is also another phenomenon regarding segmentation: Polarisation between companies regarding segmentation is by either segmenting too much or not segmenting at all. The former divides customers into far too many segments, yielding contradicting results and adding to the confusion.
Some corporations decide to scale back on their segmentation. While at the other extreme, some companies have legacy systems or databases that do not allow marketers to do deploy any segmentation or targeting. There is still a job in convincing stakeholders that investment in marketing research and segmentation are necessary to move forward.
Marketers ought to recognize that any meaningful segmentation and targeting is not a one-off exercise. Starting from having a good data source; targeting and segmentation will need to be supported by on-going testing and optimisation before one can fully realise a ROI and the resulting customer loyalty.
Social media in China, the ups and downs
- Every brand has set up its own official Sina Weibo account. But all of them think Weibo's influence is declining rapidly these days, even though Weibo is still considered as the core platform on social media at present.
- Every brand has either launched or is planning to launch its official account on WeChat and they also think WeChat is definitely the 'NEXT BIG THING' to happen across social media.
- The positioning of WeChat towards brands is questionable. The brand has struggled to position WeChat as CRM, Customer Service, Interaction (Two way communication).
- Brands tends not to hire agencies to manage their social platforms, as they think agencies usually don't fully understand their brands' heritage, products & details. On the other hand, brands are willing to employ agencies to help develop ideas for their social campaign activities.
- On KPIs, brands think the mixture of being impacts (outcomes) & numbers focused is important, especially as the 'number' on its own is not too trustworthy in China market, as it can be easily 'bought'.
- On social commerce, many brands have mentioned the latest feature of WeChat, Social Purchase on WeChat, and are very interested in exploring this more in the future.
Customer experience and lifetime value in a digital world
In terms of customer insight, most people were using search trends from Baidu, social listening and customer feedback. There seems to be very little in depth market research being carried out there in terms of customer behavior across the various digital channels.
In terms of who owns customer behavior, there was only one organisation during the whole day who had a dedicated user experience or customer experience person in their team, and very few people had a separate budget for this.
One of the big challenges was addressing global versus local i.e. to what degree for global companies do you have global platforms and templates, versus localised experiences.
When talking about external platforms, it seems to work best with dedicated agencies who specialise in each of these different platforms for executing the customer experience.
In terms of developing richer experiences in digital, there’s a bit of a movement away from investing in mobile apps to more of an investment in responsive design/responsive websites that are better optimised for mobile.
Companies have had success with video in China, but actually better still photography and imagery are pointed out in terms of improving the customer experience at far less cost, and it works well on mobile, plus there are still come connectivity issues with video on mobile. Photography is still a big opportunity for most companies to improve customer experience.
Not many people are doing personalisation and localisation well in China. A big leap forward is tying the customer experience better with CRM systems, and not many people are able to do this well yet. For the future, lots of people have data on past transactional values, but not that many have enough good evidence on how digital is driving longer term customer value or using any form of predictive analytics.
Econsultancy would like to thank and acknowledge the following moderators for their contributions to both the Digital Cream Shanghai event and to this blog post:
- Jane Lou, eBusiness Associate Director, Velvet Group
- Rosemary Tan, Founder & General Manager of MiDou Creative
- Eddie Choi, Executive Director Milton Exhibits Group
- Lawrence Wang, Social Media & Digital Director AIG
- Ken Wong, Co-founder, Director, Precision Digital Marketing
- Melina Ex, CMO at 88tc88.com
- Joni Ngai, Econsultancy Trainer, University Lecturer, Vice Chair China for I-COM, Evangelist, Business Optimization Service Asia, Sitecore
- Ashley Friedlein, Co-founder & CEO, Econsultancy