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China 2016: BUILDING BRAND VALUE | 5. DIGITAL COMMUNICATION

Chinese consumers are on mobile, but engaging them can be challenging

China had almost 670 million Internet users and 595 million people on mobile in June 2015, according to the China Internet Network Information Center (CNNIC). Almost double the population of the US, those digital users represent an enormous market opportunity for brands that communicate efectively with digital. Reaching these consumers on the appropriate device, at the best time, with the most efective content can be challenging.


Advertising and marketing communication in China is evolving diferently and faster than in the West. Almost half of all ad spending goes to digital, and just over a third to TV. The proportions are reversed in the US, with less than a third of spending devoted to digital and 42 percent invested in TV, according to GroupM research report, This Year, Next Year. GroupM forecasts digital spending in China will be 4.5 times greater in 2016 than it was in 2010. Digital spending in the US grew just over 60 percent, during those years.

Much of the digital advertising investment in China is spent on videos. Although the annual growth rate of spending on digital online videos is leveling somewhat, it is still expected to increase 41 percent in 2016, which means a rise of 660 percent over the past five years. Chinese consumers prefer to watch these video ads on TV, but that is not the device with which they spend the majority of their time. 
 



 
Chinese consumers spend almost half of their screen-watching time on a mobile device. They divide the balance of their screen-watching time roughly equally between desktop computers and TVs. When on a mobile device Chinese consumers most likely are on a smartphone, where they spend over two hours a day, on average. Chinese consumers do not like watching advertising videos on smart phones, however. They are much more receptive to video advertising seen on TV, according to Millward Brown’s AdReaction Study.
Consequently, there is a disconnection between device and format. Mobile is the preferred device of Chinese consumers. Video is their preferred format. Chinese consumers rather watch video advertising on TV, which occupies much less of their viewing time. Brands have responded to this dilemma in a variety of ways.

 

Many of the fast moving consumer goods (FMCG) brands that typically advertise on TV are shifting to digital for a more favorable return on media investment. The cost is less on digital, and the reach is more focused. When they do spend on TV, Chinese and multinational FMCG brands are more likely to invest in Smart TV because the interactivity appeals to the younger consumers they want to reach.
Ironically, technology brands now are more likely to advertise on TV because they are at a relatively early stage of development that requires building awareness with a wide audience. Often, the technology brands advertise on TV in smaller, less expensive media markets where TV remains an important information source. E-commerce brands that want to sell merchandise online to the residents of China’s rural villages and smaller cities advertise on TV to establish credibility and build trust. 

 

Implications for Brands

Brands need to consider the key points: (1) digital is growing rapidly, so it is important to be in digital; (2) consumers prefer mobile, so it is important to be on mobile (3) consumers like watching video, so clever, persuasive video ads make sense; but (4) consumers prefer to watch video ads on TV (where they spend 22 percent of their viewing time) rather than on mobile devices (where they spend 56 percent of their viewing time).
Many brands resolve the deviceformat disconnection by being present on mobile not with video, but instead with less traditional content. For example, brands often invest in compelling content on Tencent’s WeChat messaging app, which has approximately 650 million monthly active users.
For brands that use video across devices, it is important to create content that corresponds to the consumer mindset, which varies by device. Because consumers are less patient when on mobile devices, videos need to instantly grab and hold attention, a goal that often can be accomplished with humor.
Ultimately, solutions vary by brand and need to be part of an integrated media plan that is well conceived and executed across digital devices, in ways that are appropriate, coherent and persuasive. Brands that succeed will communicate to both broad and targeted audiences of China’s consumers.