Turning on the money (live) stream

Back in 2010, social media gave the average ‘Zhou’ a voice. In 2014, the rise of social commerce gave him or her an income from weishang (micro businesses). Today, livestreaming has become the next step on China’s path to digital progress — and it is bringing regular people both fame and fortune. Credit Suisse predicts the sector will be worth US$5 billion by the end of 2017, which makes it not only huge — half the size of the entire mobile gaming industry — but also extremely fast-growing: the sector was worth US$2.5 billion in 2016. Importantly, industry analysts see this growth as sustainable.

This article is part of a series Digital China: New frontiers in online innovation

The question occupying brands for some time now has been how to jump on the livestreaming bandwagon, with most starting to leverage the platform as recently as early last year. Some have found more incentive to experiment in this arena than others. “We have seen that brands that are on Tmall may be faster to adapt to the trend, as Tmall has been pushing the use of this mechanic as a way to drive more engagement on their platform,” says Elisa Harca, regional director at digital retail consultants Red Ant. “Where brands participate, Tmall may sometimes offer them more profile, such as Homepage Tmall [or] banners throughout the site.”

In contrast to their Western counterparts, most of the 300-odd livestreaming video platforms in existence today in China are monetised, offering viewers the chance to give gifts to livestreamers (with the platform obviously taking a cut of the revenue). But brands can’t simply count on going live and watching the money roll in. First and foremost, livestreaming is a person-to-person platform and authenticity is crucial.

This is proved by the most successful streamers in China, who are doing a combination of four pretty down-to-earth activities: eating — the one-child policy has resulted in many people eating alone, so sharing a meal via livestream results in a simple, profound social connection; singing — an early livestream platform, YY, introduced the concept of bedroom concerts, where aspiring songstresses could perform to an audience of thousands, earning commissions from the comfort of their home; playing computer games or simply chatting, whether to a listening audience of two or 200,000.

Saul Stollery, for example, is a British model and actor who splits his time between China and the UK, who has 50,000 followers on the popular streaming app Yingke. Stollery broadcasts for a minimum of an hour each day, doing little more than singing and chatting with his highly engaged audience. “On Yingke in nine months people have spent £25,000 [US$30,872] on sending me gifts through the app,” says Stollery. “And obviously I can make income via promoting products and taking on advertisements.”

Partnering with KOLs such as Stollery is one way brands have been getting a slice of the action: he has already worked with the likes of Burberry and Harrods. Hilton House Hotels celebrated National Day 2016 by asking each of its branches to work with local KOLs and streaming platforms, to ensure that each hotel’s effort was relevant and effective. KOLs with families were invited to stay at Hilton hotels and film their experiences; they were also given free hotel stays and restaurant discounts to hand out to their followers in lucky draws.

In Hilton’s case, livestreaming offers authentic, third-party verification of their value proposition — thereby adding crucial credibility points. These can skyrocket when celebrities are involved, says Harca. “The benchmark for views of livestreams with KOLs or minor celebrities is 50,000 views. With celebrities you can expect 800,000 views and above, especially if you tie into a hot topic as well as a celebrity.” 

L’Oréal hit the jackpot in this regard when it livestreamed interviews with its brand ambassadors — including Memoirs of a Geisha star Gong Li — at the 2016 Cannes film festival. As the brand invited the celebrities to demonstrate their red carpet makeup application techniques to viewers, it simultaneously broadcast information on where these products could be bought online. The lipstick worn by pop star Li Yuchun reportedly sold out within four hours. 

Celebrity gold-dust may be losing a little of its sparkle, however. “At the beginning, the novelty was such that every livestream with a celebrity received massive attention from both consumers and the media,” says Helena He, general manager, head of digital and social engagement at FleishmanHillard China. “As more and more brands decided to try this platform, attention level for single events decreased. However, the investment by brands in livestreaming has been increasing ever since, and they’ve started to place more effort on the content itself rather than only on the celebrities as previously.” 

Some brands are now trying to use small wanghong — internet celebrities — to save on the cost of hiring bigger names and allow them to invest more into banners on livestream apps and ecommerce platforms like Taobao, she continues. “Recently, [appliance manufacturer] Midea hired only two wanghongs to do a reality show on Yizhibo, partnering with JD. Because of the amusing content, and the discount they offered — not much actually, but in a very smart way — their WeChat account acquired 160,000 more fans on the event day; the peak concurrent users reached
1 million-plus, and huge traffic was directed to their JD store during the livestream.” 

Top live-streaming tips for brands Pick your timing: Peak hour for Chinese social media is 9pm - midnight. Keep them company: Western audiences look for short, action-packed videos; for Chinese audiences it's all about sharing the experience. Many high-earning hosts livestream for three-to-six hours per day. Keep it top quality: Unlike Facebook or YouTube streaming, which allow for professional camera feeds via a computer, Chinese livestreaming apps still use the phone's onboard camera — so you need a recent model for the best quality. Plan and promote properly: Alexis Bonhomme of Curiosity China suggests developing a high-quality H5 microsite to promote your event. This should include the key selling points of the livestream and a link where people can launch the livestreaming app or view the stream. Do your research when picking KOLs: Model and livestreamer Saul Stollery warns: “Lots of livestreamers on the surface look to have a huge income, however they are often from a select two or three followers that have relationships with them in real life.”

The so-called ‘entertainment value’ is crucial for brands to think about if they want to keep audiences engaged. This means getting creative — and possibly letting go of some control, says Harca. “With live, there can be challenges with the quality of the stream in images and audio, and a brand has to be prepared to man this content stream in real time. That might feel far away from their polished social media content, TVCs or editorial content.” 

Of course, celebrities can bring their own problems too. “Sometimes celebrities are hard to handle,” warns He. “They have their own concerns in terms of livestream — being selective on activities, limited interactions, time control and so forth — all make the livestream less entertaining than it is expected to be. A haircare brand hired a top celebrity with a huge fan base and social talkability to do a livestream, but since the celebrity didn’t interact with the fans, the peak concurrent users were even less than for Midea. Examples like this often happen.” 

The brands that are doing well without any assistance from celebrities are the ones offering a unique proposition that customers can’t access elsewhere. The fashion emporium Tory Burch, for example, streamed its New York Fashion Week show this February on a custom-made app running through its official WeChat account. 

Alexis Bonhomme from Tory Burch’s agency, Curiosity China, says the campaign was measured as a PR coup. “It’s nice for a brand to say, ‘We did a livestream of our last fashion show,’” he says. 

Smartphone maker Xiaomi also has its own streaming app. When in May 2016 the company’s CEO, Lei Jun, took viewers through the live launch of the new Mi UAV (unmanned aerial vehicle), the livestream reached 1 million viewers and added hundreds of thousands of new social media followers, according to the Chinese social media guide Chozan. 

Traffic measurements are usually a good enough indication for a brand that their livestreaming projects have been ‘cost-effective’. But livestreaming may be starting to offer more possibilities for direct sales of the same kind tapped into by L’Oréal. Ecommerce channels Taobao and JD are both experimenting with turning their livestreams into shopping channels. Bruneian actor and father-of-two, Wu Chun, for example, recently teamed up with Taobao to present and recommend a baby milk powder to the audience watching live. The stream converted to some Rmb 1.2 million (US$174,000) in sales, according to Chozan’s Galina. 

“‘See now, buy now’ is becoming a popular trend, and it’s expected to grow. Alibaba reports a 32 percent conversion rate on its Taobao live platform alone,” says Harca. “We have worked with one of our clients, The Cambridge Satchel Company, to participate in the ‘Tmall super brand day’, driving immediate sales on their SS16 collection of bags. The impact, especially with super-fans, was strong. Brands need to ensure this direct sales strategy fits within their brand DNA, but from the way the world of retail is moving, the immediate need to see and buy is a trend that is not going away, hence you can leverage it to drive up demand.”

These may seem a relatively simplistic selling technique, almost a return to age-old teleshopping practices. But, as He explains, the livestreaming practices that are winning now may not continue to do so for long. “As young Chinese consumers mature very fast, we can also expect in future brands to offer more comprehensive content that is more sincere than we are seeing currently.”