China 2015: THOUGHT LEADERSHIP | Digital
Craig Watts |
General Manager Digital Intelligence
GroupM Interaction China
Consumers now spend more time online than watching TV
China’s ultra-vibrant Internet has already surpassed TV to become the country’s pivotal media, and brands are struggling to keep pace, particularly as China’s Internet goes mobile.
GroupM research shows that last year, for the first time, daily Internet time (2.54 hours) surpassed TV daily time (2.28 hours) in China’s tier one and tier two cities. Those born post-1990 spent 2.85 hours online versus 1.85 hours watching TV – a full hour extra spent online each day. And these figures do not include mobile Internet time, estimated to account for roughly 30 percent of media time spent.
Brand advertisers in China, on the other hand, still devoted a whopping 44 percent of their budgets to TV and just 19 percent to online in 2013. Overall brand ad budgets are still far too heavily weighted to traditional media, so the first step for brands is to align budgets with how their audience consumes media, which often means doubling the digital spend.
Aligning budgets to match digital time spent is the easy half the battle. Over the past few years, brand advertiser spending for online video pre-roll advertising has quadrupled, as a percentage of online ad spending, and now accounts for nearly half of all digital spending by brands, according to GroupM.
While video is arguably the most compelling format for online ads, too many brands in China have simply repurposed their TV ads into video pre-roll ads, poured in big budgets, and then pronounced themselves “digital”.
START OVER IN DIGITAL
Effectively leveraging the Internet to build brands in China, however, requires brands to “start over
in digital” and make genetic transformations in how they address their consumers, rather than to simply subject consumers to ever more pre-roll ads on video sites.
Advertisers with “digital DNA”
are embracing content-based native advertising, while designing campaigns that leverage the dozens of digital platforms to connect with Chinese consumers on their own terms, in targeted, non-obtrusive and beneficial ways.
China’s PC-Internet is taking a back seat to its rapidly rising mobile counterpart. Mobile traffic overtook PC traffic on social sites last year, and surpassed PC traffic on online video sites and search in the third quarter of 2014, according to company estimates.
In response to China’s mobile Internet revolution, progressive brands are starting off their planning with a cross-screen mentality, and building for mobile first, ahead of TV and the PC- based Internet.
Brand spending on mobile accounted for 15 percent of all digital spending by brand advertisers in the first 10 months of 2014, according to GroupM. Mobile spending by brands on video and search already reaches the 20-plus percent range for those categories, and will continue its rapid rise as mobile advertising, which is still priced at a discount to the PC-Internet, delivers scale and improved ROI.
Big Data and programmatic buying – aggregating information to reach target consumers most effectively – have been percolating for years in China’s incredibly dynamic performance ad market. They are now becoming greenfield opportunities for brands looking to extend display and video ad reach at rock bottom prices. Google is likely the only player in programmatic with any scale in China that brands from overseas will recognize, however, as the China performance ad market is a sophisticated homegrown affair.
In addition to launching programmatic buys, brands in China with digital DNA are also building Data Management Platforms (DMPs), warehouses of marketing data. And they are discovering new technologies that enable data-informed performance-based ad buying, particularly as brands begin to push into ecommerce and seek to correlate their online media investment with actual sales.
The few brands that have not yet awakened to China’s ecommerce revolution were surely shaken when Alibaba racked up $9.3 billion in sales during the 24-hour Singles Day online buying frenzy in November 2014. China is leading the world in online shopping; accordingly, China brand teams should be leading (rather than following) their respective global efforts in ecommerce.
With all the newness and complexity, the challenge brands face in remaking themselves digital is daunting, particularly in China where familiar global names such as Facebook and Google
are nonstarters. But brands must realize that Chinese consumers are swapping their TVs for the mobile Internet faster than their peers in developed markets, and the brands these consumers find first and embrace in this brave new media landscape will be the winners.
GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Maxus, MEC, MediaCom, Mindshare and Xaxis. As China’s leading media communications group, GroupM is one of the industry’s biggest investors in syndicated and proprietary media research and optimization tool development.