Consumerism and internet word-of-mouth (iWOM)

As the country's growth engine shifts from manufacturing to consumption iWOM changes the game for brands in China

As big data, ecommerce and mobile innovation continue to explode in China, and the post-90s generation gradually becomes consumption’s main engine, the country’s marketing landscape underwent significant revolution during 2014. We’ve seen “end-to-end marketing”, “iWOM-based communication” and the “sales-driven ROI campaign” emerge as popular key terms among both local and multinational companies and agencies.

But behind all that is something deeper. First of all, in China what really matters is peer recommendation. Even for older generations, the most effective way to convert browsers to buyers is not a hard sell as with traditional advertisements; nor is price-driven promotion the big factor. Instead, the linchpin is a personal connection or internet word-of-mouth (iWOM).

Thanks to the advancement of technology, social media and smartphone penetration in China, iWOM ambitions for marketers can be realized. We have observed that more and more advertisers, especially those that demand high consumer involvement for research and purchase decisions (categories that are high ticket or very personal or both, such as autos and baby care) have been dramatically shifting away from traditional TVCs and other ‘forced’ formats to soft communications. Social engagement, vertical channel leveraging and search optimization are becoming far more important. Mead Jonson for example, discovered an insight that ‘moms only believe other moms and doctors’. So the company sought to elevate the role of iWOM in its overall marketing mix to ensure effective message delivery.

A second point to note for marketing in China is that an integrated end-to-end solution is the new key to success, especially for agencies to succeed with their clients. Because of the country’s fragmented and fast-evolving media environment, marketers are often exhausted from pulling every touch point together under one big umbrella idea, once they recognize the need for fully integrated communications.

What they hunger for is an end-to-end solution - from consumer insight to big idea, from holistic planning to execution, from creative process to technical solution, from media supply to content creation. Therefore, an agency equipped with integrated capabilities should easily stand out in the crowded competition. This is particularly true as the boundaries between traditional ad agency, PR agency and digital agency continue to blur in the modern age.

ROI! ROI! ROI! is the third thing marketers need to recognize in China. Brands have always challenged themselves, and their service agencies, to prove how much tangible business each campaign investment can drive. Unfortunately, this used to be hard to demonstrate. But thanks to China’s ecommerce development, big-data empowerment and tracking capability, measuring sales-driven ROI to justify marketing efforts is a reality.

Some auto companies have begun paying agency fees based on hot-lead generation; some FMCG companies have set e-volume KPI targets for campaigns with online retailers. For example, P&G’s China e-commerce team is really a trailblazer in our opinion as the company puts in tremendous effort to create impactful campaigns like Smell Like A Man or the Glee campaign where the brand partnered the TV show’s actress to ultimately drive sales on ecommerce platforms, realizing consumption directly.

Lastly, marketers in China should recognize that experience is king. We used to say ‘content is king’ and while great content remains absolutely important for communication, content itself is part of an overall experience; the idea is much broader than just content. For example, a major trend in China is demand–based O2O services, such as a manicure, transportation or food-delivery. Consumers can easily order these services online through experience-optimized mobile apps and then enjoy a five-star services offline, quickly.

As Chinese consumers place more and more demands on personalized experiences and come to expect convenience and an easy lifestyle, marketers and agencies have to wholeheartedly embrace new technology to deliver on those expectations. Big data and mobile devices play a big role here in helping companies constantly come up with the intelligent solutions that fulfill ever-changing consumer needs.

Technology is the thread that weaves through each of these points.

While innovation has helped drive change in the industry, the transformation is here to stay. As consumption takes over as the engine of China’s market, technology will be the vehicle marketers have to ride to the show.

Richard Jiao (left) is president and Chris Xiong is SVP of BlueFocus Digital Marketing Institute (BlueDigital)