Advanced Ad-onomics: Economic uncertainty creates opportunity amid challenges

In this new series of articles, Campaign Asia-Pacific is teaming up with Tencent to explore the impact China’s economic restructuring is having on the digital marketing landscape.

The economics of uncertainty

China’s annual GDP growth stood at 6.9 per cent at the end of 2015: the lowest figure in 25 years, while concerns about overreliance on debt-driven property sales leave question marks over whether the country can sustain growth within the crucial target range of 6.5 to 7 per cent this year.

However, projections of adspend remain comparably optimistic—at least in the short term.

GroupM’s This year, next year: China media forecasts (Spring 2016) report, released in March, predicts adspend in the country to grow by 9.3 per cent in 2016, up on 7.8 per cent last year. The report points to digital marketing as the engine of that growth: the ad network expects internet advertising to grow by 30 per cent and account for almost half of the country’s Rmb545 billion media market.

But it is clear that simply throwing money at the market will not produce results. More than ever, marketing in China needs to be strategic, innovative and evidence-based.

“The slower economic growth has caused advertisers to look more closely at ad budgets, with some preferring to spend more on targeted digital formats,” says Steven Chang, corporate vice-president of Tencent. “2016 is primed to be the year for smarter marketing. ‘Convergence’, ‘smart data’ and high quality content are the key areas for marketers to focus to drive marketing performance this year.”

Convergence calls for content to be optimised for each channel to ensure a consistent brand experience, he adds, while stressing the importance of collecting and analysing data in real-time to make it “instantly actionable”.

“It's critical for data and creativity to meet,” Chang says. “Marketers are now faced with the opportunity of employing data for their benefit. Data-driven creativity is actionable.”

Value for money

When the economy was riding high, many brands were happy to adopt the so-called ‘spray-and-pray’ tactic: spending lavishly on content without worrying who it was reaching and whether it was effective; making a noise was all that mattered. The consensus from marketers Campaign spoke with is it is time to hang up the scattergun for good.

“I wouldn’t say that because of the economy we are spending any less; we are just being more careful,” says Howell Wong, regional head of digital marketing for Moet Hennessy Asia-Pacific.

He points to a general shift away from more traditional approaches and passive banner ads, to developing more engaging “active content” that focuses on the experience it delivers to consumers.

“We are working directly with publishers to create tailor-made content,” Wong says, adding that the key to success was to employ sophisticated tracking and data analysis to test effectiveness and the audience’s emotional response. “Knowing what is working and what is not is becoming crucial.”

Connect and identify

One of the most effective tools advances in digital technology have made available to marketers is the use of location markers, which offers great potential for converting casual encounters with consumers into long-term relationships.

“There is a lot of scope to employ location-based marketing in terms of O2O and point-of-sale,” says Ranjit Singh, CEO of Fugumobile. “Brands are making use of beacons and other technology to help convert their interactions with consumers and to help move them into the funnel.”

He says the technology is particularly useful for brands which spend heavily in experiential marketing, particularly auto marques looking to make a return on their investment in car shows.

“They are now trying to maximise everything they can from everything they spend,” Singh says.

Other location markers—such as signing into public wifi services—provide vital clues to place consumers in context without the need for direct contact. This context-marketing approach enables marketers deliver the right content to the right consumers at the right time.

Cross-screen optimisation

With China’s online community increasingly adopting a ‘mobile-first’ attitude, consumers move seamlessly between multiple devices throughout their daily lives. A typical consumer might be reading online content through their smartphone on the way to work, browse on a PC while in the office, and watch online videos with a tablet in the evening—tying data from all those interactions into a single profile is key to making sense of the sea of data.

“Customers expect to access and consume information across platforms, apps and devices to find the ‘best answer’,” says Jason Gao, manager of Lexus China’s digital communications department. “At Lexus we have already increased our investment in this field and adopted a series of innovative, diversified and cross-boundary online marketing strategies.”

Gao adds that this includes initiatives ranging from being highly active on social media to finding partners such as a tie-up with Didi Chuxing which provides the brand’s consumers with a free pick-up service while they are travelling.

Stay on target

All the data in the world is no help if you don’t know how to interpret it, and that is where the analytics come in.

Using ad tech allows brands to take all the information they have built up through these various methods, and target their marketing at those consumers who are most likely to be influenced by their message.

As Moet Hennessy’s Wong says, “Everything is becoming more data-driven.”

Lexus’s Gao concurs, adding that effective data analysis relies on one critical factor: finding the human element. “Online and digital marketing enables us to get closer with consumers, and whatever tools, methods we adopt, the ultimate goal is to focus on people,” he says.

This new series of articles, Advanced Ad-onomics, is brought to you in association with Tencent   Read Part 2: Contain your excitement, content is not child's play