A high-level​ ​overview of China digital and advertising landscape

Over the past few months, I have written eight articles about China digital, advertising, e-commerce, mobile games, influencer marketing, OTT subscription landscape, and luxury product marketing. You are welcome to read all of them, of course. But if you are short on time and want to have some high-level overview of the market, this post is for you.

All reference sources are in the individual posts above, so I don’t want to create too many links here.

1. World class, digitally advanced, mobile first consumers

In many ways, in tier 1, 2, or 3 cities in China, people are enjoying a lot more advanced digital services than those in the G7 countries (the US, Japan, the UK, Germany, etc.)

a) China has more internet users 855 million (or mobile internet users 779 million) than India and the US combined.

b) Mobile payment penetration is 80%+ of smartphone users, more than any other countries in the world. The US mobile payment penetration is at less than 30%.

c) Retail e-commerce sales in China (about $1,526 billion) is more than the rest of the world combined (about $1,390 billions).

It doesn’t slow down much either. The China e-commerce growth rate is at 30%+, double that of the US (around 15%) and more than the worldwide average at 24%

The biggest shopping day sales in China, Singles Day (11 Nov), is two times larger than the US Black Friday, and Cyber Monday sales combined.

d) Super app is ubiquitous in China. Unlike in the US where you have one app for messaging, one for social media, one for mobile payment, ticket booking, food delivery, in China, you can do everything and more on WeChat.

WeChat is used by more than 1 billion users daily by the end of 2018 and they all on mobile, of course.

55% of all online time spent by Chinese consumers is within the Tencent ecosystem of companies, according to data from Kleiner Perkins.

e) Baidu, Alibaba, and Tencent (BAT) in China is the equivalent of Facebook, Google, Amazon, CNN, eBay, Epic Games, JP Morgan Chase, Goldman Sachs, Experian, YouTube, etc. combined.

They own most of the internet ecosystem in China

f) New digital services are adopted as quickly in China vs. the US:

  • China has four times more ride-hailing users (340 million users) than the US
  • China has 85 million smart speaker users vs. 74 million users in the US. The reason is partly due to China larger population size.

g) China is the largest video games market in the world, with more than half of the worldwide revenue. North America revenue contribution is less than 25%.

2. Digital first media landscape

a) Total media ad spending per person in China is 1/10 that of the US, so there is a big potential to grow as the Chinese economy continues to grow.

Advertising spend growth rate in China is expected to be 15% this year, and gradually reduces to 10% over the next few years.

b) Digital ad spending in China is at 65% of total advertising, about 10% ahead of the US digital ad spending contribution. More than 80% of digital ad spend in on mobile, and it’s heading towards 90% in the next 3-4 years.

This data point means that every brand needs to be a mobile-first (or only) approach.

c) Baidu, Alibaba, and Tencent (BAT) have more than 60% share of the entire digital advertising market. This percentage is expected to rise to 70% in the next few years. This means strong partnerships with BAT for brands and agencies in China is an absolute Must.

d) With more than 600 million gamers, this is an important area where brands need to explore how to leverage. Nearly 70% of internet users in China watch gaming video content, so we have a very engaged audience.

e) At about $17 billion, influencer marketing industry in China is getting professionalized quickly.

Influencer marketing is becoming a must-have in all social media strategy in China. However, with more than 100,000 influencers with more than 1 million followers each, there is no one size fit all, each brand needs to craft the right approach carefully.

Even for luxury goods, influencer marketing is becoming a norm since key opinion leader (KOL) is amongst the top 3 most trusted source by luxury purchasers in China.

That’s it from me for today.

Thanks,
Chandler

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