1. Xiaohongshu stores are booming: 6.9x YOY in GMV for Xiaohongshu stores and a 4.2x YOY increase in GMV from live-streaming sales in 2023.
2. Foreign brands are required to localize their content more extensively, driven by a surge in national pride post-COVID
3. Engagement rates are higher on Xiaohongshu than on Instagram; in Q2 of 2024, the average comment-to-like ratio was 8%, compared to Instagram’s 2%. Brands can utilize the rich feedback from comments for understanding niche and affluent groups, offering detailed consumer feedback and enabling effective crisis management.

Learn more about the complete Little Red Book marketing guide here.

Trend #1 Zoom: Xiaohongshu stores are booming as live-streaming picks up

Xiaohongshu has been rapidly expanding its live-streaming e-commerce capabilities as part of a significant pre-IPO effort. In April 2024 compared to the same period last year：

• A 5x increase in brands starting official account live-streaming
• A 12x increase in customers placing orders during these live sessions
• A 7.4x rise in the number of brand stores achieving over 1 million RMB in sales

For the upcoming 6.18 shopping festival, the platform is offering over 0.1 billion RMB in discounts and increased traffic for Red store brands, further emphasizing its commitment to growing its e-commerce segment.

Celebrity live-streaming

The platform’s live-streaming success is largely driven by celebrity influencers who, despite having limited shows, generate impressive sales figures.

For instance, Dong Jie and Zhang Xiaohui, both prominent figures on Little Red Book, achieved average gross merchandise value (GMV) per live-stream of 43 million RMB and 78 million RMB, respectively. These influencers focus on high-value products such as fashion items and skincare sets, which resonate well with the platform’s user base.

However, these Red superstar live-streamers are celebrities, not full-time live streamers, thus their livestreams are rare. For instance, Zhang Xiaohui only did one streaming in the past 3 months, while Douyin’s top celebrity Luo Yonghao’s account had 131 shows in one month. Despite the limited number of shows, these celebrities drive high engagement and sales due to their star power.

While top Red live-streaming influencers are achieving results comparable to those on Douyin, such influencers are rare. On a normal day, fewer than 20 live-streamers on Little Red Book manage to achieve over 100,000 RMB in sales. While on Douyin this number on any given day is way over 100 influencers.

The average order value on Little Red Book is potentially 2 times as high compared to Douyin, emphasizing the platform’s focus on premium products. This makes it an attractive channel for brands looking to market higher-end items.

Brand’s official live-streaming

Brands like Fabrique have started to leverage official live-streaming, beginning in March 2024.

Launched only two months ago, Fabrique’s Xiaohongshu live-streams have already achieved significant traction. In April alone, sales from Fabrique’s official live-streaming on Little Red Book reached 16% of their Tmall sales.

While Little Red Book’s official live-streaming sales currently represent only 9% of Douyin’s overall store sales, there is strong potential for growth.

Tmall typically performs well during traditional e-commerce holidays such as 3.8, 6.18, and Double 11. However, during “off-season” months like April, total sales from social media platforms Douyin and Little Red Book can account for up to 65% of total sales (49.8% for both months). This highlights the potential of social commerce for premium fashion brands, demonstrating that social media channels can significantly boost sales outside peak shopping periods.

Trend #2 Zoom: foreign brands need to localize content for Chinese audiences

In light of the rising wave of nationwide patriotism post-COVID, foreign brands now need to localize their assets more than ever to resonate with cultural norms and nuances.

Luxury brands such as LV and Lewoe are taking a more aggressive China-localization approach in 2024.

To celebrate the Chinese New Year of 2024, LOEWE collaborated with three jade carving masters to create three limited-edition jade pendants (Jade is highly in line with Chinese preferences). Drawing color inspiration from six ancient Chinese jade carvings, LOEWE launched 6 new colors for the Flamenco Mini handbag and invited the global ambassador Yang Mi to shoot branding assets.

The success of Arc’teryx’s localization in the 2024 IWD (International Women’s Day) campaign lies in its deep understanding of its audience. The brand integrates the concept of “softness” with strength in its marketing, resonating profoundly with outdoor enthusiasts who appreciate both the delicate and powerful aspects of nature. 

This approach not only highlights the product’s functionality but also connects emotionally with viewers by reflecting on their personal experiences and values. Compared to previous content, this campaign gained huge engagement and brought social buzz to the brand.

Fendi collaborates with Yi (ethnic minority) artisans: strengthening brand ties to local culture, they also selected a temple as the offline exhibition venue and inviting Yi ethnic craftsmen for live embroidery demonstrations enhances the cultural experience.

AI could play a pivotal role in tailoring global brand assets to resonate with local Chinese cultural nuances. A case study from WalktheChat demonstrates this strategy with Le Creuset’s marketing adaptations for the Chinese New Year and the Dragon Boat Festival. By deploying AI, brands can swiftly modify their global campaigns to appeal to Chinese aesthetic and cultural preferences, enhancing engagement and market relevance.

This is another of WalktheChat’s showcases of AI localization. We helped to put Polène’s Series Eight handbags in a Chinese-style setting, incorporating culturally resonant elements such as Chinese bonsai and motifs reminiscent of dim sum and dumplings. This demonstrates how brands can deeply engage with Chinese culture, blending traditional elements with contemporary design to resonate with local consumers.

Marimekko launched a 60th-anniversary celebration campaign in Shanghai, creating an engaging campaign with the famous Shanghai landmark.

Marimekko’s Unikko Foreveer Pop-up event in Shanghai. Video created by WalktheChat. This asset got over 1 million likes worldwide

Trend #3 Zoom: Leveraging Little Red Book’s Engagement for Deep Brand Insights

Little Red Book’s community engagement significantly outshines Instagram, with an 8% average comment-to-like ratio in Q2 of 2024, compared to Instagram’s 2%.

Comments on Little Red Book offer brands a goldmine of information, especially useful for understanding niche and affluent groups. For example, an analysis of 2,000 posts from Tesla drivers taking road trips during the national holiday provided detailed feedback on their experiences.

In contrast, BYD drivers frequently discuss issues related to maintenance and battery performance. This stark difference underscores Little Red Book’s potential as a crucial resource for brands seeking actionable and detailed consumer feedback.

Little Red Book also serves as a critical platform for crisis management. Brands can effectively monitor and analyze user sentiment, identifying emerging issues swiftly and accurately.

For example, by using WalktheChat sentiment analysis tool Doris, here is the Messi HK crisis visualization to understand the root causes of negative reactions. By analyzing 50k comments, we get a much clearer picture of the anger is coming more from lack of fan engagement than economic impact on fans.

Little Red Book comments are like a gold mine of authentic users’ feedback. It allows companies to proactively address concerns, manage public relations issues, and mitigate potential damage to their reputation. By visualizing user emotions and the underlying causes of dissatisfaction, companies can strategize more effectively, ensuring swift and appropriate responses to maintain consumer trust and loyalty.

Conclusion

Little Red Book’s evolving landscape presents a unique opportunity for brands to tap into China’s dynamic market by leveraging booming live-streaming sales, embracing extensive localization to align with cultural nuances, and utilizing high engagement rates to gather rich consumer insights. By strategically incorporating these trends, brands can significantly enhance their presence, drive growth, and maintain a competitive edge in 2024 and beyond.

The post 3 Trends of Little Red Book Marketing in 2024 appeared first on WalkTheChat.

It captivates a wealthy, young urbanite audience, making it a key destination for luxury and premium brands.

Little Red Book (Xiaohongshu) Overview

Little Red Book mainly targets a specific user group: young, female shoppers living in top-tier cities.

In 2024, Xiaohongshu’s Monthly Active Users(MAU) continuously increased, surpassing 300 million, with approximately 50% of Generation Z users and 50% from 1st and 2nd cities. The platform boasts over 80 million community sharers, with User-Generated Content (UGC) making up 90% of its content.

Little Red Book content has a strong focus on premium position brands, and content containing popular overseas brands usually can get stronger engagements.

Little Red Book’s design is very similar to Instagram: 3 to 6 pictures, with text descriptions usually between 20 to 200 characters. The content style on Little Red Book is usually persona, often with lots of emojis. The distribution of content is algorithm-driven. Users can engage with content via like, bookmark, share, private message, and comment.

Little Red Book’s brand marketing impact

Little Red Book plays an important role in the consumer purchasing process.

• Awareness: Little Red Book is a great channel to discover new brands.
• Interest & Desire: Little Red Book will continue to push relevant content based on users’ browsing habits. It’s a good channel to create multiple consumer touchpoints. Before users make a purchase, some users will open Little Red Book to read product reviews.
• Action: When making a purchase, usually users will go to e-commerce platforms such as Taobao, Tmall, JD.com, and Pinduoduo. Although Little Red Book has a native store system, the majority of brands choose to open stores on marketplaces where they could get more traffic.
• Loyalty: After converting a user into a customer, WeChat Official Account and WeChat groups are the best channels to create a closer relationship with customers. And when you have a loyal customer who would like to share product reviews and advocate for your brand, they could post comments on Little Red Book.

Little Red Book marketing limitations 

Compared to WeChat and Douyin, Little Red Book is a much smaller social media channel. The user demographic is also very skewed toward female and top-tier city users.

The top industries that are promoted in Little Red Book are skincare, baby care, and health and wellness. However, Little Red Book is not the perfect choice for industries like games and 3C (Computer, Communication, and Consumer Electronics).

Below is the amount of promotional posted on the platform in a month, it’s a good indicator to judge if Little Red Book is the right marketing channel for your brand.

Little Red Book Store

Little Red Book has a native e-commerce system. It has a few benefits:

• It enables users to make a purchase without leaving the App
• It supports cross-border payment and shipping, brand can operate a store with an overseas business license (with a Chinese entity as the guaranteed party, email info@walkthechat.com to learn more)
• Low cost: 5% platform commission & no technical fee
• Good user experience especially for Little Red Book live-streaming purchases

The commission on Little Red Book is much lower compared to major marketplaces. Comparatively, Tmall charges a 9,000 USD annual technical fee and a 6 % commission (1% for Alipay and around 5% industry-specific commission). Tmall still rules as it’s the largest e-commerce marketplace in China.

Should you open a Little Red Book store?

Little Red Book store is not for everyone.

Lots of large brands including Adidas, SK-II, and LANCOME, actually don’t have a brand store. Instead, these brands choose to sell on Little Red Book via distributors. You won’t need to have brand Red Store if:

• The brand already has a strong distribution network
• If the brand has less than 5k Little Red Book mentions

For other brands, the Little Red Book store is a cost-effective way to break into the Chinese market and expand the sales channel. You can consider opening a brand store on Little Red Book if:

• You have a strong Little Red Book performance
• Your brand does lots of Little Red Book live-streaming campaigns
• You sell mostly direct-to-consumer (D2C)
• You’d like to test the Chinese market with small investment and with a cross-border store

For example, Perfect Diary and apm MONACO are some of the best performing brands on Little Red Book. Both brands have a strong D2C channel.

On the other hand, a foreign brand can create a cross-border Little Red Book store to test the Chinese market. It doesn’t require a brand to have a Chinese business license, products could be shipped directly from overseas, and payment will be smoothly settled in foreign currencies.

Cosmetics, fashion and skincare brands are the best industries to launch stores in Little Red Book. These are often the high margin products that could easily afford a 20%-30% live-streaming commission.

Little Red Book Live-streaming

According to our source who worked at Little Red Book, 90% of Little Red Book sales come directly from live streaming.

Live-streaming is a very effective way to target sales conversion.

Xiaohongshu, commonly known as Little Red Book, is rapidly expanding its live-streaming e-commerce capabilities in preparation for its upcoming IPO. As of April 2024, compared to the same time last year:

• There has been a 5x increase in brands starting official account live-streaming.
• Customer orders during live sessions have surged by 12x.
• The number of brand stores achieving sales over 1 million RMB has risen by 7.4x.

For the 6.18 shopping festival, Xiaohongshu is offering discounts exceeding 0.1 billion RMB and increased traffic for Red store brands, reinforcing its dedication to growing its e-commerce sector.

The Role of Celebrity Live-Streaming

Celebrity influencers play a pivotal role in Xiaohongshu’s live-streaming success. Even with limited appearances, they generate significant sales.

Dong Jie and Zhang Xiaohui, for example, have achieved average gross merchandise value (GMV) per live-stream of 43 million RMB and 78 million RMB, respectively. These influencers primarily promote high-value products such as fashion and skincare, which align with the preferences of Xiaohongshu’s audience.

Despite their sporadic live-streaming schedules, these celebrity influencers drive high engagement and sales due to their star power. Zhang Xiaohui, for instance, has only streamed once in the past 3 months, compared to Douyin’s top celebrity Luo Yonghao, who hosted 131 shows in a month. Although fewer in number, these celebrity live-streams on Xiaohongshu produce impressive outcomes, contrasting with Douyin’s more frequent high-performing streams.

The average order value on Xiaohongshu is nearly double that on Douyin, emphasizing its premium product focus and attracting brands looking to market high-end items. The best-selling products on Red live-streaming are usually premium fashion and skincare products. While Douyin live-streaming is best for cheap skincare, cosmetics, F&B and electronics.

Brand Official Live-Streaming: Case Study of Fabrique

Brands are increasingly leveraging Xiaohongshu’s live-streaming platform. Fabrique, a retailer of affordable designer clothing, began its official live-streaming in March 2024.

In April, Fabrique’s live-streaming sales on Xiaohongshu reached 16% of their Tmall sales, with an average order value of 1100 CNY.

While Xiaohongshu’s official live-streaming sales are currently only 9% of Douyin’s overall store sales, there is significant growth potential. In off-season months like April, sales from social media platforms such as Douyin and Xiaohongshu can account for up to 65% of total sales, illustrating the power of social commerce, particularly for premium fashion brands.

Little Red Book live-streaming could also effectively promote a brand.

We launched Rouje in the Little Red Book, the content was pushed to the top of the Red page, and the brand is able to grow to 41k followers in just 2 months. Comparatively, a large brand like Pandora which operates in Red for years only has 50k followers.

Live-streaming with one of the top fashion influencers Lu plays an important role in pushing Rouje viral. Lu did a live-streaming for Rouje after the brand launched. It’s also a continuous mention of the brand. Lu posted 2 live-streaming previews, and 5 follow-up videos after 2 weeks for continuous exposure.

Sales conversion on Little Red Book store

The major drawback of the Little Red Book store is it has little organic traffic.

Most users still use Little Red Book as a social media and product review platform. Most users will switch to a marketplace to make an order. According to Quest Mobile, after uses close Little Red Book, 77.1% of the e-commerce purchase goes to Taobao. Thus brands with Tmall flagship store don’t have strong need to open a Little Red Book store.

Little Red Book influencer strategy

A typical Little Red Book influencer spending schedule looks like this:

Display ads: used to promote the most popular influencer post, expand the reach. 10-15% budget allocation.

Gifting/seeding: lots of micro-influencers accept product seeding, it’s a very effective way to work with a large number of influencers with a small budget. 20-30% budget allocation targeting tier 4 influencers with average post view below 10k. Agency and MCN companies provide gifting and seeding services, price ranges between 50 to 150 USD per micro-influencer depending on quality and size. Contact info@walkthechat.com to learn more on product seeding services.

Influencer campaign: larger influencer and more promotional content will require payment. A pyramid style is the most typical model, often working with top tier influencers (10k USD per influencer), then more influencers in tier 2 and tier 3. with 50%-60% budget allocation.

This allocation structure enables brands to work with the most amount of influencers during campaigns. It’s common to work with 50-200 influencers during a couple of weeks for a campaign. Some of the most popular content is created with micro-influencers, thus playing numbers games increase the chance of producing the best content.

Brands could targe a few product/brand-specific keywords during the promotional campaign, thus create a trendy keyword to further attracts traffic.

Recently, Little Red Book launched a new feature: “guaranteed” exposure for sponsored content to help brands and advertisers reach their expectations while working with influencers.

How to find Little Red Book influencer?

Pugongying

Little Red Book provides an official Key Opinion Leader (KOL) platform called Pugongying.

Pro:

• It’s actuatly displays the influncer’s cost
• You can use the platform to find influencers by industry, tags, follower demographic, and price
• It’s the official channel to place an order with KOL

Cons:

• Pugongying charges 10% service fee.
  Little Red Book encourages all KOL collaboration to go through Pugongying, otherwise the post could risk being blocked or limit in traffic distribution. Although brands often take the risk by working with influencers directly to save the 10% platform fee. If the content looks native and personal, it could often fly under the radar. Around 90% of campaign in cosmetics industry goes through Pugongying, and only around 50% of campaign in fashion industry goes through Pugoingying since the content could look more native.
• Some influencers and celebrities are not listed on Pugongying if they do not have an official agreement with Little Red Book.
• Limited level of search query compared to Qiangua

Qiangua

Qiangua is a 3rd party social monitoring platform for Little Red Book.

Pro:

• More search options. For example, it could filter influencers by more specific tags
• More influencers are listed on Qiangua
• Easy to tell amount of active followers, judging by the engagement rate of the content
• Able to give a reasonable estimate cost of an influencer. This could be used as the benchmark against the real price.

Con:

• It cannot display the actuarte price of an influencer.
• Some of the features requires a paid account, cost start from 250USD per month

Influencer seeding process

Seeding means gifting products to influencers in exchange for free posting. It’s an important Little Red Book marketing method. Here is why brands should do product seeding on Little Red Book:

• It is the most cost-effective way to work with influencers and celebrities
• It’s a good way to build a strong relationship with influencers, we suggest brands gift high-quality influencers during every new product launch
• Seeding is a good way to measure the impact of an influencer before official collaboration
• Seeding could increase consumer touchpoint, especially if an influencer is willing to share your brand multiple times
• Influencer seeding is a market survey to define your hero product. The most popular picked product by influencers could be the hero product of the season
• Does not limit to the size of the influencer

This is our seeding process:

For many seeding products, the influencers and celebrities will not include a sales link in the post. Thus using the brand’s social media account to engage with the post as soon as the post is released is the key to bring tangible sales/marketing impact to the brand.

Another key is to reuse the pictures and videos created through seeding. Not directly because seeding photos usually don’t have commercial use copyright. Using other personal accounts to comment under a product or posting on social media is a great way to repurpose the content.

We usually mostly focusing on the quality of the photoshoot during seeding, instead of designing the user conversion path like what we will do in a paid influencer campaign.

Depending on the goal of the brand, we will have different seeding strategies.

Market entry seeding survey

During the first month of brand/product launch, we often seed high-quality and median-size KOL. The goal is to ask the KOL to choose their favorite products, thus giving feedback to the brand which is the most potent product in their Lookbook.

Monthly seeding to product content and create branding

Vitaly is creating great localized content with musicians and rock bands via product seeding on Little Red Book.

Hunter Boots gifts out at least 4k USD worth of products per month, and in exchange KOLs is able to create over 20k USD worth of marketing posts. A sweet deal to create amazing content while minimizing the marketing cost. Especially the product cost is usually a small percentage of the retail price.

Micro-influencer seeding

For skincare brands, cosmetics, health supplements, F&B, or electronics, we will target the micro-influencers, often with around 1000 followers. It’s a lot more difficult to get free product seeding with brands in these industries because if it’s not a product that could fit in with the KOL’s outfit, it will appear a lot more promotional to post this content. Instead, brands can pay a small amount (usually between $30 to $100) to individuals on Little Red Book in exchange for guaranteed posting. The goal will be to focus on the quality of photos and videos. Since if the content quality is high, it’s still possible for a post to go viral even if it’s a small account.

Celebrities seeding

Working with showrooms and stylists is also a great way to work with celebrities. Celebrities often borrow products to style in a photo shoot or going on a TV shoot. Usually, the stylist or showrooms will borrow a lot of products from brands. If we are lucky, brands could get free exposure.

Below are celebrities that wear products seeded by WalktheChat.

These celebrities usually charge between 80k USD to 140k USD for posting just one promotional content. Although they will not post-seeding brands, the fans will usually post on Weibo. In this case, it’s crucial for the brand to use its own official account to engage with the fans.

Note all the collaboration photos and videos are Copywrite protected. The brand is able to use these photos to post on social media channels. However, these photos could not be used in the e-commerce store, or as display ads material.

A smart way to use these copyright-protected photos is to post under product review using a personal or KOL account. This way brand is not directly using these photos, but the content gets to be distributed widely.

Jewelry, shoes, and clothes are easier to be picked for celebrity’s stage styling. Bags, cosmetics, and sunglasses are usually a bit harder. Some other categories such as skin care products are almost impossible for seeding. Consult info@walkthechat.com to learn more about if celebrity seeding is the right service for your brand.

Little Red Book Influencer campaign

Little Red Book influencer campaigns often target building brand awareness and creating engagement. It’s difficult to track the sales conversion from the Little Red Book platform, however, a good campaign can create strong purchase intention, and directly impacting sales.

Unlike seeding which we mostly focus on the quality of the content, when it comes to paid influencer campaigns on Little Red Book, we have much stricter selection criteria.

1. Strong engagement ratio

The engagement ratio is an important indicator demonstrating how active is the KOL account. The influencer profile page shows the total follower amount and total engagement amount. The higher ratio the more engaging are the followers, thus more likely to respond to promotional content. We usually only work with influencers that have a ratio higher than 2.

Engagement ratio = Engagement amount / Followers

2. Identify the real KOL

Little Red Book has quite a lot of fake account and zombie followers.

A real KOL usually receive comments from real users. A real comment usually contains specific product information. The user name and profile picture should also look like a real person.

Another way to check if the influencer has fake followers is by using Qiangua, a 3rd party App. It can provide an estimated % of the active follower of an influencer and % of zombie followers.

We usually choose influencers with over 50% of active followers.

Zombie followers are defined as followers who started to follow the influencer in the last 90 days, and who do not have any activity on Little Red Book. Usually, we choose accounts with less than 20% of zombie followers.

3. Average post engagement should be over 200

For mid-tier and top-tier influencers, it’s important to choose influencers that have strong daily engagement. Internally we prefer influencers with over 200 post engagement, these are often the influencers with strong follower loyalty.

Note for smaller influencers, it’s common to have a very uneven engagement performance across content. Smaller influencers are also more likely to agree to work on seeding basis.

4. Strong follower growth in the last 3 months

In the Pugongying backend, you can monitor the follower growth curve. Make sure the influencer you choose is active in the last 3 months. If the influencer is trending, it will boost campaign performance.

5. Follower demographics

Pugongying also shares the follower demographic. You can compare it with the brand’s own follower demographic to find a good match.

6. Influencer campaign social monitoring

An effective way to choose influencers is to monitor the competitor’s influencer campaign performance. Qiangua enables you to export brand keywords, this way it’s easy to sort through the best performing influencer campaigns of your competitor. You can choose only to work with the influencer with the strongest engagement.

This is export file could contain information such as engagement performance, follower amount, influencer location.

We also suggest brands monitor their own influencer mention. Especially if your brand has a large amount of organic user-generated content. This could help you to identify the most influential customers, and brands could reach out to these fans. Either to gift new season products or to make them the brand ambassador.

Things to do during an influencer campaign

Once you’ve identified the right influencer, it’s important to apply the same checklist that creates great Little Red Book content:

1. Choose the right cover picture
2. Match the content with the influencer’s personal style
3. Make sure throughout the campaign, target 1 or 2 keywords that’s both memorable and specific
4. Monitor the campaign for any viral content, make sure to use display ads to amplify the best performing posts
5. Make sure to communicate with the influencer on posting time, use the brand’s official account to engage with the influencer as soon as the content is posted to attract traffic to the brand’s account
6. If performance is not as expected, communicate with the influencer to try to get more resources. Usually brand can ask for a repost or some soft-exposure

Little Red Book Advertising

In some ways, Little Red Book ads work just like Instagram.

We suggest promoting the best performing content, ads can further enhance the reach to achieve the best result.

However, when it comes to targeting and retargeting, Little Red Book’s advertising system is nowhere as sophisticated as Instagram:

• Little Red Book offers only limited level of targeting category (less than 20 interest groups!)
• No way to retarget or track followers
• No integration with an other platforms, data is limited
• Only 3 types of ads format
• Traffic is also limited since Red only has 100 million monthly active users (WeChat has 1.2 billion)

Due to the limitation, ads are only a supporting feature for brand marketing. Thus we recommend spending no more than 15% of the budget on Little Red Book ads.

3 types of Little Red Book Ads

Newsfeed ads for personal account

These are the only ads available for personal accounts. It’s called Shutiao (薯条). Personal ads are more expensive compared to brand ads. For example, CPM could be 11 USD, almost 5 times more expensive compared to brand ads. Personal ads also only enable leading traffic to a personal account. The upside is Shutiao will not display as “promotional” content, so the content could appear more native.

Newsfeed ads for brand account

Brands can place newsfeed ads on Little Red Book.

Here is the average price for different industries (CPM/USD) as of June 2021:

• Beauty 2.5  
• Cosmetics 2.8
• Mother & baby 2.5
• Fashion 1.9
• F&B 2.2

This is cheaper compared to other channels, Douyin’s CPM is around 3 USD while WeChat Moments Ads could be over 15 USD.

The average click-through rate on Red is strong, between 2% to 5% depending on the industry.

Newsfeed ads have relatively larger traffic compared to other types of ads on Little Red Book. Thus we recommend allocating 70% of your ads budget to this.

The biggest issue with newsfeed ads is the lack of specific targeting options. Brands can only choose from less than 20 interest groups, and the groups are very general. For example, under fashion outfits, users are only separated into 3 categories: All, clothing, shoes & hats.

It’s just embarrassing how amateur the Little Red Book ads backend looks.

Since targeting is broad, ads optimization on Little Red Book is all about optimizing the asset. Make sure to have an attractive title with trendy keywords, and make sure the cover picture is right.

Keyword Search Ads

This is the only type of ad on Red that enables brands to be more specific in targeting since you can bid on keywords.

It’s generally more expensive compared to newsfeed ads. Here are some cost benchmarks in different industries as of June 2021 (CPM/USD):

• Beauty 13
• Cosmetics 17
• Mother & baby 8.7
• Fashion 2.3
• F&B 3

However, due to traffic limitations, it’s not easy to spend with specific keywords. For example, we are only able to spend around 100 USD on the keyword “rain boots” per day.

How to Create Little Red Book Content

Little Red Book is a great channel for medium to long-term marketing plans. Content has a longer lifespan compared to WeChat.

Many Little Red Book post still gets traffic after 1 month. The amount of exposure a post gets is determined by algorithm, which has to do with keywords and the post engagement score.

Comparatively, WeChat’s content lifespan is shorter: usually under 7 days. Content is only pushed to WeChat official account followers, so it’s hard to get organic traffic.

6 ways to increase content performance on Little Red Book

Follow the hot topics and AI trends

The integration of AI in advertising has revolutionized the industry, allowing brands to expand the boundaries of creative planning with AI’s involvement. 

Brands on Xiaohongshu are using AI-generated CGI to create eye-catching ads that blend virtual and real elements. 

This approach sparks discussions, increases brand visibility, and enhances the user experience. By integrating AI into advertising, brands are pushing creative boundaries, making CGI a popular choice for engaging and innovative campaigns.

WalktheChat continuously invests in the latest AI technology and explores emerging trends to ensure brand content remains at the forefront of digital innovation. WalktheChat helped Marimekko to launch its first CGI content on social media. The creative perfectly aligns with the brand’s identity, goals, and audience needs, ensuring content is not only engaging but also deeply resonant.

Choose the right cover picture

Cover picture will strongly impact the click rate of your Little Red Book content.

A clear product picture usually works better compared to a blurry product picture. A picture that looks like it was taken by a real customer can also attract more clicks.

Localized content usually performs better on Little Red Book. It’s a community, thus people prefer genuine content to professional commercial content, such as a professional-looking caucasian model shoot.

A good method to create localized content is by gifting products (instead of paying) to influencers and letting them post content. In general, we find a lifestyle photo will often perform better than a professional model shoot.

Sometimes it’s a bit random, don’t worry, keep testing

You can post an unlimited amount of content in a day, so brands can test out different types of content. In general, a brand account would post 1 or 2 posts per day.

Below are 3 pieces of very similar content, all about matching tips for shoes. We optimized the keyword in the 2nd post, including adding the word “business casual”. The 2nd post performed 20 times better than the first one. We also took a similar approach for another account, and the post went viral.

It’s hard to tell what exactly makes a viral post on Little Red Book, but brands should also keep testing out different content styles. Copying the best-performing content in your industry is not a bad start.

Tip: content sometimes becomes viral due to promotional events. It’s much likely to create viral content when the brand is simultaneously running an influencer campaign.

It’s like a search engine, make sure to optimize the keyword, and avoid censored keywords

Little Red Book content is algorithm-driven, the performance is strongly connected to search volume and post engagement. Thus optimizing the keywords in your post title is a shortcut to success.

First, do research on the best-performing content in your industry. Below is a research we did before working on a French shoe brand. We use keywords like “French style”, “shoes for men”, and “leather shoes”. You can record the top-performing post titles in the last 3 months.

These titles give the best examples of types of content that work best in your industry. You can reuse some of the keywords, and try to create similar content. Examples of good Little Red Book titles are:

• How can short people choose outfit to look skinny and elegant?
• 8 beige colors for French sandals recommendation this summer

Just like a search engine, Little Red Book’s trendy keywords change all the time, impacted by the number of search queries and the popularity of top-performing posts.

Keyword ranking = Number of search queries X Engagement of top posts containing the keyword

You can use 3rd party keyword monitoring tool to find the top ranking keyword in your industry, and use these keywords in your Little Red Book content. The tool we use is called Qiangua. It’s a paid service costing around 500USD per month. For example, the top trendy keywords in the fashion of the day are: OOTD, work outfit, whiten skin, skinny outfit.

Copywriters also need to avoid censored words and forbidden words. These words will impact the traffic.

Words could be sensitive due to many reasons. For example, the Chinese advertising law forbade the use of “best”, “No. 1”, “most” to avoid misleading content. Any political words could cause your content and even the account to be blocked. Any indication of trying to redirect traffic to other platforms, such as WeChat or Taobao is sensitive enough to block the spreading of your traffic.

Here is a free tool to check which are the sensitive or forbidden words in your content: http://ci.lingke.pro/

Lucky draw could bring traffic fast

Little Red Book has an official system for brands to launch lucky draws. Users could participate by following, bookmark, and like the content in order to win a gift. It’s a very good way to quickly push a new account to a larger audience.

The first participating users are usually low-quality users who are only in for the gift. But as more users engage with the lucky draw post, it could easily go viral and eventually reach your target consumers.

For Vitaly, a Canadian jewelry brand, a lucky draw was able to bring over 600 new followers. And since the lucky draw prize is a 500 RMB gift card for its cross-border WeChat Mini Program, the brand also draws attention to another sales channel.

DeMellier is a niche bag brand that just entered the Chinese market. The lucky draw attracted over 2,000 new followers. For a new account, this is quite significant. Over 500 users who were attracted by the luck draw asked how to buy the product.

Since WeChat and Tmall are sensitive words on Red, we used private messages to share the sales channel with the users. The prize was a newly launched bag: a free product is usually more attractive compared to a gift card.

Conclusion

Little Red Book is a great platform for brand marketing and creating multiple consumer touchpoints. Red content can be manipulated via specific tactics just like SEO. An influencer campaign is the most effective way to drive traffic and convert sales. We suggested only a moderate amount of ad investing. E-commerce conversion happens via live-streaming and directing traffic to other marketplaces.

Mastering Little Red Book marketing could be the key to quick raise in the Chinese market.

Other information on Little Red Book 

What is Little Red Book (Xiaohongshu)?

Xiaohongshu, encourages a “safe space” for like-minded consumers to write reviews and share their shopping experiences good or bad.

The App contains an “Explore” section enabling to explore user’s content on topics such as fashion, food and travel. However, the most popular category on the App remains beauty & cosmetics.

The App is often used when a user is investigating a new cosmetic product they would like to try, and are curious about the experience of other customers.

The App also as a “Nearby” section that users can use while traveling. While on business trip to Hong Kong, Little Red Book would point me to food, experiences or shopping opportunities around me.

When reading a post, users usually add “hyperlinks” to the page of the brand which can contain an e-commerce section. There can therefore be a smooth transition between content consumption and e-commerce.

Xiaohongshu change from a social platform to an e-commerce platform

Before becoming today’s social and e-commerce hybrid, Xiaohongshu started out as a drafting tool for Chinese users to make fashion and beauty shopping lists before traveling overseas, with an interface similar to Pinterest. Essentially, it was just a content sharing platform, targeting Chinese shoppers’ unmet desire of discovering and sharing shopping experiences.

Having accumulated a huge amount of social and consumption data from a largely urban female user base, Xiaohongshu has since developed a closed shopping cycle on the cross-border sale of luxury items.

Instead of choosing a marketplace model like most Chinese e-commerce sites, Xiaohongshu maintains partnerships with foreign brands and keep their own inventory for added quality assurance, shipping directly to users from their warehouse.

Xiaohongshu may be the best platform for shoppers to reach a large group of like-minded individuals, who are most likely to engage with their posts (known in the app as Shopping Notes).

Users don’t have to make their personal experience completely public (like on Weibo, China’s Twitter), or visible only to a closed circle like on WeChat. On Xiaohongshu, Shopping Notes are written by and shared with a relevant crowd that also enjoys and are eager to get informed about shopping and lifestyle.

How little is Little Red Book (Xiaohongshu)?

Little Red Book is one of the largest and fastest growing social e-commerce apps in China. The women-focused shopping platform, co-founded in 2013 by Charlwin Mao and Miranda Qu. Xiaohongshu is now:

• Valued at USD 3 billion in its Series D round June 2018
• Supported by the most prestigious investors including Alibaba, Tencent, Genesis Capital, ZhenFund and GGV Capital
• Over 100 million registered users
• 30 million monthly active users, a 40% increase in end of 2017

Xiaohongshu was ranked as the #1 App in the cross-border e-commerce App category with 15.4 million MAUs during Black Friday 2017  according to Analysys. The #2 App Kaola only had 5.3 million MAUs during the same period.

According to a different source, iiMedia, Xiaohongshu makes up for 5.6% of the total cross-border e-commerce market. Notice it’s one of the only platforms that’s gaining more market share in Q1 2018.

Xiaohongshu’s user demographics

In a nutshell, most Little Red Book users are post-90s urban females who value quality, with relatively high consuming power, and premium taste.

It’s one of the fastest growing e-commerce platform.

According to Qianfan, Xiaohongshu has a predominantly female audience (88%). It also has a rather young population: more than 60% of its users are 30 years old or younger.

57% of the users live in top-tier cities, the traditional centers of wealth. In fact, a closer look at their spending behavior reveals a large proportion of the users have relatively high consuming power.

This makes the platform the ideal channel to target young, affluent female shoppers that have the intent and ability to consume branded products.

User content that informs purchase decisions

High-quality shoppers demand high-quality pre-purchase information. Driven by candid product reviews (aka Shopping Notes), authenticity is at the core of Xiaohongshu’s user posts.

It is like an illustrated textbook that teaches you to shop (covering such topics as which up-and-coming brands you need to know, how to spot fakes and the best time of the year to shop for the best deals etc.)

Users can make purchases through a shopping note, ensuring a smooth and efficient shopping process that takes place entirely within the platform.

To maintain quality and effective communication, Xiaohongshu’s recommendation algorithm encourages users to interact with topics they are interested in. Profanity, explicit self-advertisement and verbal abuse are all effectively censored.

Also, it is worth noting that there is no forwarding or sharing features on Xiaohongshu. Users can like, comment on, and add Shopping Notes to their own collection.

This in a way prevents users from getting spammed, and to let Little Red Book organically push to users the content they believe will be most relevant and useful to them.

Celebrities’ favorite sharing platform

Xiaohongshu is one of celebrities’ favorite social media platforms in China, and there are plenty of stars sharing their latest shopping picks and lifestyle hacks there every day, mixing snaps of their not-so-glamorous side of life.

Consumers feel like they share an intimate bond with celebrities through their personal, light-hearted Shopping Notes. This has created a unique UGC (user-generated content) circle made up of well-known influencers with a massive following.

On a platform like Xiaohongshu, celebrity endorsements come with a special authenticity. Fan BingBing is a classic case of quality over quantity. Dubbed “queen of sales” on Chinese social media, she once brought down the server of Xiaohongshu after endorsing a beauty product on the platform.

Currently, with 9.9 million followers on the platform, every face mask she ever endorsed on the platform is reported as sold out. Even the actress joked about quitting the platform, so she can find her favorite products in the store.

Marketing on Xiaohongshu

For products that are listed on its e-commerce platform, Xiaohongshu has different sales campaigns to generate sales, stores and brands can sign up. It also runs a 4-hour count down sales events 3 times per day platform-wide. These discount events are focused on cosmetic product, health product, food, household items, formula. It also runs a “Stylish girl” event which hosts cosmetic product only.

Smaller brands can benefit from Xiaohongshu’s growing network of celebrity users to drive brand recognition through KOL campaigns. A simple way to begin partnerships is to send products to influencers that are within the brand’s niche, and have them authentically post their thoughts.

Is Xiaohongshu a good investment?

So is Xiaohongshu worth the money? It is, but not only as a sales platform: as an information platform.

Chinese Luxury customers make exhaustive research before purchase. They have the largest number of touch points before making a purchase decision, and especially if you’re in the beauty space, Little Red Book will be one of them.

Even niche cosmetics brands can have thousands of mentions on Little Red Book, and customers who see your products on Xiaohongshu might very well end up buying it on Tmall or WeChat a few hours or days later.

In short: Little Red Book is worth it. But with its huge engagement rates and significant organic traffic, you should see it as a marketing channel rather than as a sales platform.

Conclusion

As part of the e-commerce revolution for purchasing better products, Xiaohongshu’s unique positioning as a trustworthy, celebrity-approved distributor of overseas products is a great channel for brands that look to capitalize on the social commerce trend.

The nature of Shopping Notes makes it not only authentic, but also useful to potential consumers. Driving brand recognition and sales aside, a well-established presence on Xiaohongshu allows a business to track customer sentiment over a test period, which can then be used to inform future marketing strategy.

Want to learn more about Xiaohongshu KOL marketing, content trends, and successful cases? You will find the below articles very helpful:

• How fashion brands leverage Red (Xiaohongshu): Content, KOLs, and Strategy
• Red (Xiaohongshu) trends in 2022: emerging trends in fitness, fashion, and beauty
• Red (Xiaohongshu) pushes “Account-Store Integration” to drive in-app conversion
• Little Red Book new feature: “guaranteed exposure” for sponsored content

Have some unanswered questions about your Red/Xiaohongshu strategy? Simply fill out this one-minute chart and we will be in touch with you!

We have also created a webinar on Little Red Book, here is the webinar recording, and webinar slides.

The post 2024 Little Red Book (Xiaohongshu) Marketing – A Complete Guide appeared first on WalkTheChat.

Chinese New Year marketing engagements include both brand and organic content.

Luxury Sector Chinese New Year Marketing Summary Insights 

1. The presence of offline artistic installations have increased significantly compared to last year during this Chinese New Year marketing season, indicating a more substantial investment in physical presence and engagement.
2. Online interactions, especially through WeChat H5 games, have become more prevalent, with innovative red envelope (red packet) mechanisms being introduced to engage consumers.
3. Marketing efforts have become more localized, as evidenced by the use of Chinese New Year-themed short films, which resonate more deeply with the local culture and traditions.
4. There’s a noticeable reduction in collaborations with IP characters, particularly compared to those related to the Year of the Rabbit, likely due to the significant differences between Chinese and Western interpretations of dragons, which often spark discussions.
5. Some brands have opted not to use dragon imagery in their campaigns, a departure from the previous year where rabbit motifs took dominance in Chinese New Year marketing campaigns and products.
6. A deeper exploration of traditional Chinese culture beyond the obvious symbols like dragons and the color red

Offline artistic installations

The recent Chinese New Year marketing campaigns by luxury brands have showcased a significant uptick in the deployment of offline artistic installations, a testament to the brands’ heightened commitment to immersive customer experiences. This year, the venerable Louis Vuitton orchestrated an ephemeral pop-up space for its Spring/Summer 2024 Menswear collection in Shanghai and Beijing, drawing inspiration from the sun element—a central motif of Pharrell’s debut series as the brand’s Men’s Creative Director. This thematic choice reflected in the collection’s warm hues and ornamental luminosity was brought to life through these physical spaces, reinforcing the connection between the brand’s aesthetic narrative and its architectural manifestations.

Simultaneously, Louis Vuitton’s home in Chengdu’s Taikoo Li presented an even more eye-catching installation for the Year of the Dragon. Set against the backdrop of the millennial Daci Temple with its two standalone buildings and an open courtyard, the installation featured a commanding dragon that encapsulated the charm of the “Land of Abundance,” resonating with both cultural significance and contemporary relevance.

Moreover, Italian luxury brand Fendi seized the festive period as an opportunity to launch a collaboration featuring the iconic Pokémon franchise and Japanese streetwear designer Hiroshi Fujiwara’s Fragment. The Fendi x Fragment x Pokémon collection integrated beloved dragon-themed characters from Pokémon with Fendi’s highly recognizable Peekaboo and Baguette bag designs, merging them with the classic FF motif. This creative synergy was celebrated with a unique flash store in the East Square of Chengdu’s Taikoo Li, showcasing the innovative interplay between iconic brand symbols and pop culture elements.

These installations exemplify how luxury brands are increasingly investing in elaborate, tangible art pieces to elevate their in-person engagement, crafting an intertwined narrative of tradition and modernity that not only captures the imagination but also creates distinctive, memorable experiences for consumers.

Evolving digital engagement and WeChat mini-programs

This Chinese New Year marketing season, luxury brands significantly leveraged WeChat mini-programs for heightened user interaction, offering exclusive red packet covers, wallpapers, and emoticons. Unlike the direct claim methods of previous years, more brands now require entry and registration via mini-programs, capturing valuable consumer data for future marketing endeavors (e.g., targeted SMS campaigns). The engagement strategies have evolved, incorporating keyword searches, link sharing, and interactive games to unlock exclusive content, enriching the user experience. WeChat’s latest module template enabled brands to integrate ads, lucky draws, and product promotions seamlessly, maximizing engagement.

Van Cleef & Arpels introduced a Chinese New Year marketing interaction that included dragon-themed emoticon packs, the collection of lucky wallpapers (with a chance to win a hidden red packet cover upon gathering all four designs), and a new year avatar update feature (where users could upload their portrait to generate a themed avatar).

In terms of private domain marketing, after retaining user information, luxury brands like Balenciaga are sending text messages to users, increasing consumer touchpoints.

Other brands, such as Hermès, utilized the limited edition red packet covers as a tool for sales associates (SAs) to connect with clients, with SAs sending them directly to customers via private messages.

This approach not only enhanced direct engagement but also leveraged personalized communication to strengthen brand loyalty and consumer relationships.

Localized storytelling in New Year campaigns

This year, luxury brands have continued the tradition of crafting New Year campaign films, focusing on themes of “hope and expectations,” “prospects and the future,” and “identity,” particularly addressing the existential concerns of contemporary youth. Post-pandemic, these narratives extend beyond the timeless New Year themes of “homecoming” and “reunion dinners,” aiming to resonate emotionally through localized storytelling that simplifies complexity, showcasing respect and sincerity towards cultural nuances.

Bottega Veneta’s “The First Sunrise with You” captures the essence of new beginnings and the relentless pursuit of life’s journeys through the lens of traditional reunion themes, interwoven with the anticipation of dawn’s first light. This narrative not only aligns with the cultural significance of greeting the New Year but also addresses the aspirations and anxieties of modern Chinese society, showcasing a deep respect and understanding of local sentiments.

Though not a luxury fashion brand, Ganni’s campaign, inspired by the traditional “dragon boating,” is a noteworthy one. It connects with Chinese cultural heritage while highlighting themes of female empowerment and collective strength. By depicting athletes overcoming limitations through unity and determination, the campaign resonates with the contemporary Chinese values of resilience and community, reflecting the brand’s commitment to embracing and honoring Chinese traditions and the evolving identity of its people.

Declining IP collaborations and cultural interpretation challenges

In the Year of the Rabbit, fashion brand marketing frequently featured collaborations with designers and iconic cartoon characters, such as Coach x White Rabbit, Chloé x My Melody, Givenchy x Lucky Rabbit Ozwald, and Moncler x Roger Rabbit. This year, however, there’s been a noticeable decrease in such IP collaborations. Even those that have launched face scrutiny, particularly regarding their relevance to the “Chinese Dragon.”

Dior’s partnership with Japanese contemporary artist Otani Workshop produced a green monster TANILLA. Upon release, many criticized it for not representing the “Chinese Dragon,” with feedback ranging from its appearance being “ugly” and “abstract” to outright “ghastly.”

Products featuring this design, including jackets with a burnt color effect, prints that obscure the face, and dragon scarves with an unclear motif, have been particularly disparaged. Some netizens dubbed the design as a “zombie dragon,” neither festive nor auspicious, predicting it to quickly become discounted stock.

This backlash underscores the unique emotional connection Chinese people have with zodiac symbols, expecting the Chinese dragon to embody power and protection, not the characteristics of a “dinosaur” or a “European-style evil dragon.” This mismatch in cultural expectations likely contributed to the reduced number of IP collaborations this year, as brands aim to avoid controversy and more deeply respect traditional Chinese sentiments.

Creative approaches beyond literal dragon imagery

This year, in contrast to the rabbit-themed marketing saturating last year’s campaigns, several brands have strategically refrained from directly incorporating dragon imagery into their Chinese New Year products. Seeking a more creative and thematic approach to zodiac marketing for the Year of the Dragon, these brands have found innovative ways to honor the dragon theme without resorting to explicit depictions.

Bottega Veneta utilized its sophisticated weaving techniques to mimic dragon spines and scales, subtly celebrating dragon culture through craftsmanship rather than literal representation.

Givenchy, in collaboration with Juanzong Bookstore, released the 2024 Dragon Scale Scroll, drawing upon the classical Chinese bookbinding method known as dragon scale binding, named for its pages that fan out resembling dragon scales.

Loewe tapped into the Chinese appreciation for jade and its symbolic meanings. The brand commissioned jade carving masters to create three limited-edition jade pendants. Additionally, each jade-color-inspired Flamenco Mini clutch bag comes with a special pouch containing a jade piece in a matching color, symbolizing good fortune for the new year.

Cosmetics Industry Chinese New Year Marketing Ranking

Compared to 2023 Chinese New Year marketing, most international brand rankings for Chinese New Year do not show big changes. Young cosmetic brands have exhibited remarkable growth, including brands like TIMAGE, First Impression, and JUDYDOLL. The rankings for established brands such as Chanel, Dior, and Giorgio Armani show relatively stable positions with minimal changes.

There is a dynamic and rapidly growing market for brands that are relatively young in the market, which are becoming increasingly competitive and are resonating more with local consumers.

Douyin’s cosmetics sales are growing at a strong rate, with a 111% GMV growth in Jan 2024. Comparatively, Tmall’s cosmetics category has a 12% decrease during the same time, showing that it is losing traction to Douyin.

Shu Uemura plays with Nostalgia Marketing and cultural alignment

In the Chinese New Year marketing campaign by Shu Uemura, contrasting outcomes from collaborations with two distinct celebrities highlight an important strategic consideration. The brand’s engagement with Wang Yibo, a prominent figure with substantial influence among younger audiences, indeed generated significant short-term traffic. However, this approach, often characterized by hefty endorsement costs, may not ensure a sustained interest in the brand itself, as the followers are typically more celebrity-driven rather than brand-loyal.

Conversely, the partnership with Carman Lee (李若彤) tapped into a more profound cultural and nostalgic vein. She is an actress revered for her portrayal of Xiaolongnü, the ethereal ‘Dragon Girl’ from the famed ’90s TV series “The Return of the Condor Heroes”.

Her association with the character Dragon Girl deeply rooted in the cultural fabric, presented an authentic alignment with the brand’s campaign theme, resulting in higher engagement and bookmarking figures. The Little Red Book post featuring her got over 7000 engagements with a much higher comment rate and bookmark rate compared to that of Wang Yibo. This suggests a more enduring connection with consumers. Carman Lee’s influence comes at a likely lower cost, yet it appears to resonate on a more substantial level, potentially leading to a lasting affinity with the brand beyond the campaign’s run.

With a 12% annual decline in China’s cosmetics sales in 2023, the reliance on tier 1 celebrities for quick traffic surges might not be the most prudent financial commitment. Brands should consider a balanced approach that combines the widespread reach of popular figures with influencers who have a more resonant cultural or niche appeal. This dual strategy could optimize marketing budgets while fostering a deeper and more sustainable relationship with consumers, steering clear of transient trends and instead building a loyal customer base rooted in shared values and cultural relevance.

Conclusion

Luxury brands have adeptly navigated the festive Chinese New Year marketing period, unveiling a blend of innovative physical and digital marketing strategies. By emphasizing offline artistic installations, alongside the smart use of WeChat mini-programs for interactive digital engagement, brands have created immersive experiences that establish multi-touchpoints with consumers. Coupled with a shift towards localized storytelling and creative interpretations of zodiac themes, luxury brands show commitment to marrying tradition with modernity, ensuring cultural relevance and fostering deeper consumer connections without leaning on explicit or potentially culturally insensitive imagery.

In the cosmetics industry’s Chinese New Year marketing, a notable shift favoring Douyin’s digital platform. The remarkable growth of brands like TIMAGE and Douyin’s 111% sales increase underscore the changing consumer dynamics. Additionally, Shu Uemura’s nostalgia-driven campaign with Carman Lee highlights the power of culturally resonant marketing.

Overall, Chinese New Year marketing reveals a sophisticated interplay between tradition and innovation across the luxury and cosmetics industries. By integrating artistic installations and digital interactivity, embracing localized and culturally nuanced content, and strategically leveraging nostalgia and celebrity influence, brands have demonstrated a nuanced understanding of the Chinese market, setting a precedent for future marketing strategies that prioritize cultural sensitivity, creativity, and authentic connections, ensuring the continued relevance and appeal of luxury brands in a rapidly evolving consumer landscape.

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WalktheChat is an AI-powered China Marketing Agency supercharged with an industry-leading AIGC and tech team.

Follow us on LinkedIn for more news and insight about China’s digital marketing and luxury landscape.

More reports available upon request.

Contact us at: info@walkthechat.com

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Highlights of China Jewelry Report 2023:

In H1 2023, the fashion jewelry market contracted by -22% to 4.7 billion RMB compared to 2020. Post-pandemic, luckily we are seeing a slow recovery of 1% growth compared to 2022. Chinese firms showed resilience, while international brands bore the brunt of the downturn.

Monica Vinader, Emporio Armani, Lola Rose, Agatha, and Gucci are among the fastest-growing international brands in 2023. Monica Vinader’s beads series has grown 9 times this year. 

Luxury hair accessories have grown 66% YoY, a strong trend lead by brands like Alexandres De Paris, She’s, YVMIN, Parada, Miumiu, and Chanel. 

The widening gender income gap may affect women’s purchasing power, and the decline in feminist terminology in the jewelry sector suggests the need for renewed marketing efforts to appeal to women buyers. Instead of “powerful” and “independent”, consumers’ moods are swinging towards other trends such as self-care, jewelry with healing-effect, Dopamine dressing, and New China Styles. 

Gifting trends have shifted, with fewer people buying jewelry for relationship purposes and a rise in purchases for mothers and babies, indicating a shift towards familial and sentimental motivations.

The post China Jewelry Market Report 2023: Insights, Trends & Key Players – A Focus on Recovery, Fastest-Growing Brands, Luxury Hair Accessories Surge, and Evolving Consumer Preferences appeared first on WalkTheChat.

NetEase uses AI for creating product photoshoots, packaging design, and more

NetEase, a 58 billion USD Chinese tech company, uses ChatGPT and Midjourney to reinvent its e-commerce design. The team is training the system to generate product backgrounds. Designers then edit products into these A.I.-generated backgrounds to avoid distortion of product information.

According to NetEase, creating a high-definition material with a 3D model would cost 800RMB to 1,200 RMB per picture. The same result would traditionally take 2 to 3 working days. Now with Midjourney, the material photos on the left took 2-3 hours to create.

The difference will be even more extreme when we look at model shoots with animals. Instead of spending thousands in creating the setting and animal models for pet food photo shoots, now both the cats and background could be generated via AI technology.

Chinese tech giants use AI to generate billboard ads

Fliggy, Alibaba-owned travel APP, created over 1,000 posters using AI technology. A.I. enabled the platforms to generate impressive and dreamy landscapes in line with their brand image.

These billboards delivered results beyond the offline world: the tech giants’ breakthrough use of AI in advertising created a hot discussion topic on Weibo, attracting over 150 million views.

Meituan, a publicly listed lifestyle APP, also uses AI to generate ads for its food delivery service.

Storyboard for advertising campaigns

AI is disrupting before the production of assets: it starts during the pitching phase. MatChat, a Chinese advertising director, uses Midjourney to create storyboards for brand pitching. MatChat used to create PowerPoint presentations with numerous reference photos and text descriptions to illustrate her idea. Now she’s just a few prompts away from sharing the creative images she’s imagining.

Doris – an AI-powered social listening tool

A.I. also enabled brands to better understand their customers. We developed Doris, a social listening tool sharing real-time insights on how a brand or a product is perceived by consumers.

A.I. fundamentally changes the nature of social listening in multiple ways:

• Analysis instead of just data: A.I. enables to verbalization of consumer insights in much more sophisticated ways than previous analysis tools. Where most previous tools would only provide keywords, A.I. can give a detailed explanation of the meaning behind the data
• Interpretation of trends: if previous social listening tools enabled to identify peaks of traffic, engagement, or positive/negative sentiment, Doris and such A.I. tools can explain the reason behind the trend. Why did negative sentiment suddenly explode? Is it an issue with a batch of products? Or a failed PR campaign? A.I. can answer this question with nuance.

For instance, here’s an example of the feedback given by Doris about Armani’s lipsticks:

“Several comments mention that the actual color of Armani lipstick does not match the color shown on the packaging or online, with some users expressing disappointment with the color and finding it too pale. Eight comments mention that Armani 214 is not suitable for people with dark skin or lips, and that the swatches in the article do not accurately represent the color. Twelve comments express regret for blindly purchasing Armani 214 and finding it unsuitable for their skin tone or lip color. Two comments express disappointment with the color of the Armani Power Fabric Lipstick, which appears too orange or not as expected.”

Sample of analysis from Doris A.I. about Armani lipsticks

This take is directly generated via A.I. The remarkable thing is that A.I. is able to do the work of a junior consultant, delivering insights and interpretations instead of dry numbers.

AI can also find the top influencers associated with your brand and similar influencers for additional collaboration or seeding. By using semantic analysis on the influencers’ posts and analyzing the pictures from different successful campaigns, Doris can directly point you toward your next collab.

AI influencers collaborating with brands

AI-powered influencers are a popular option for brand collaboration. They are just like human influencers. Each has its own personal values and style. Small bonus: they will never get into scandals and risk hurting your brand’s image.

The top AI influencer is Liuyexi, she is a beauty & cosmetics influencer. Most of her videos are short animation films where she uses her superpowers to fight against evil, spreading joy and kindness around her. Chinese audience resonates with Liu also because her video has a unique mix of cyberpunk and Chinese traditional style. CREATE ONE, the team behind Liu, claimed to invest 500 million RMB into Liu’s creation. After 2 years of operating this virtual IP, they have collaborated with some of the largest Chinese brands, including Chinese automotive brand Xiaopeng and top FMCG brand Master Kong.

AI characters are now becoming popular in the live-streaming world. Instead of a person hosting for 15 hours a day, an AI character can work all day and night, selling products on platforms like Taobao and Douyin.

The cost of using a digital live-streaming host ranges from 5,000 to 90,000 RMB per year, but it’s getting cheaper as the technology develops.

More companies are registering as live-streaming hosts, and this trend is expected to grow rapidly in 2023.

AI-designed green dress generating over 300k RMB in sales

An AI-generated dress, referred to as AI Little Green Dress, went viral on Little Red Book. The keyword quickly reached 33k engagements and 1.3k likes from people interested in buying the dress.

Sensing the business opportunity, several stores immediately began producing the wanted Little Green Dress. The first store launched a 10-day pre-sale link only within 2 weeks of the original post. With this first-mover advantage, the store generated over 216K RMB in revenue by selling over 900 dresses. Another store created a similar product and sold over 200 dresses making over 60k RMB in revenue.

Many customers bought the dress and created their own AI-generated picture to repost on social media, creating an additional wave of content that further pushed the sales of the dress.

The success of this seemingly ordinary AI-designed green dress getting popular, creating 300k RMB revenue, may seem too random for brands to use as a marketing case study. But the impact of AI technology in fashion and packaging design is only starting to take shape.

You can already find costume design and product packaging design services on Taobao using Midjourney, Stable Diffusion, and other AI technologies. Most of the services are priced below 50 RMB to start with. Some are even just selling the prompts to create a certain style of costume design.

Other services, such as rice packaging design, product shooting, and illustration design (with free trial) are all available on Taobao. 33 people bought the rice packaging design service so far.

This is only a glance at the near future: integrating AI and China’s world-class supply chain systems represents a paradigm shift in manufacturing, ushering in an era of unparalleled efficiency and quality.

Opening a Taobao store with the help of AI

A 36Kr news reporter created a Taobao store using ChatGPT and Midjourney. He then wrote a story about his journey of using AI tools to create the Taobao store. The post got over 1 million views on Little Red Book.

The reporter even tried to push the design into production, although the difficulty is the factory requires a minimum order of 500, and the gradient-style print is expensive to produce. Some user were concerned that the AI-produced design would be technically hard to reproduce in real life.

The store got its first order shortly after it went live, then the owner took all the products down. Now it’s just an empty store with 2.5k enthusiastic Taobao followers.

How to use A.I. completely wrong: ice cream brand launches a new product line using AI technology:

Chicecream (钟薛高), a well-known Chinese ice cream brand, launched a new low-cost product line Sa’Saa. AI technology is involved in every aspect of creating this new product: naming, flavor development, packing, and poster design.

Chicecream is a premium ice cream brand with an average product price above 15RMB. The brand even got its nickname “ice cream assassin” due to its high price. The Sa’Saa line is priced at 3.5RMB, the first time taping into the low-price market.

During the same time, Chicecream launched DanSheng, an egg-shaped ice cream line with 3 flavors. Below is the Little Red Book’s reaction to the 2 new products. Chicecream sponsored 39 Little Red Book KOL collaborations while only sponsoring 15 for DanSheng. This shows the company spends at least twice the budget on promoting SaSaa. Even though Sa’Saa got 11 times more engagements, most comments are around the surprisingly low price instead of the fact that it was created by AI.

Here’s a quintessential example of a tech-savvy brand hopping on the AI bandwagon just for kicks. The flavors they’ve launched are far from revolutionary, just your regular red bean, green bean, milk, and chocolate. The packaging design is also mediocre. I wouldn’t be surprised if the designer took the packaging directly from a stock photo library. The company seems to catwalk into the chic AI realm while making a product that looks like a joke.

Conclusion

Chinese companies are rapidly leveraging AI technology to optimize efficiency. Imagine AI-powered design factories, and personalized marketing campaigns, combined with low-cost labor. It’s only a matter of time before the social commerce industry undergoes a transformative revolution. Think twice if you are still underestimating the scope and speed of these changes. It is only a matter of time before forward-thinking brands begin to capitalize on this and gain an edge.

The post The AI Takeover in China: 9 Incredible Case Studies in E-commerce and Social Media appeared first on WalkTheChat.

I interviewed clients, other brands, agencies, and platforms to conclude with the following trend:

1. Brands tend to spend 50/50 on Tmall and social

The social vs. Tmall spending ratio varies widely among the brands we studied (from 80% social to 20% social). However, on average, brands spend the same amount on both. The average brand in our study spends 32% of its net Tmall GMV on marketing (16% on social and 17% on Tmall).

1. A higher pricing position means higher spending on social media.

Note the pricing percentile could change a lot based on the Tmall category. For example, the rain boots brand is more expensive compared to 96% of other rainboots but is only in the 41% pricing percentile for outdoor shoes. By competing in the outdoor category on Tmall, the brand gets some pricing advantage which leads to more traffic.

2. The faster the brand wants to grow, the more is needed to spend on social media. Although the correlation between growth rate and social media investment is very weak.

The low correlation is mainly due to the fact that the impact of social media spending on sales varies depending on the goal. Some social-driven sales campaigns can yield high ROI in the short run, but a branding PR campaign will yield a long-term impact on brand perception.

Generally, we recommend brands spend over 100% of Tmall sales during the first 3 to 6 months of Tmall launch.

According to some agencies, during the first 3 years, the social media spending could even be between 30% to 80% if the brand is aiming for over 10 million RMB Tmall sales and a 3-year breakeven period.

3. Larger brands usually spend less as a percentage on social media marketing.

The German sports brand is ranked No.1 in its own Tmall category, thus only spending 1% of its sales on social media marketing. Most new brands need to spend over 20% of their sales on social media marketing when monthly sales are below 1 million RMB.

Categories such as personal care have a much higher margin %, and thus usually have a higher budget to spend on social media. Brands with more functional products usually spend less compared with premium fashion brands.

Interviews

How much to spend on social media is a tricky question. We interviewed 10+ brands and 4 Tmall agencies. The answer also varies a lot depending on the brand.

Here are some answers we get.

Ivy Shen, VP of Azoya (Tmall agency)

The % spending on social media and within Tmall depends on the following factors:

• The less brand awareness the brand has in the market, the higher it needs to spend on social media marketing.
• It also depends on the ROAS (return on ad spend)
• How fast and how much brand awareness does the brand need. Brand awareness revenue

Spending as a percentage of Tmall sales can be influenced by the size of the brand:

1. The brand with 5 million RMB yearly Tmall sales: spend 100% of sales amount on total marketing. 20%-30% goes within Tmall, and 70-80% goes on social media.
2. The band with 5-12 million RMB yearly Tmall sales: total marketing spending could be between 60%-90%. 40% of the total budget goes to Tmall, and 60% of the budget goes to social media
3. The brand with over 12 million RMB yearly Tmall sales: the marketing budget can be adjusted down to 40%-70%. The amount of social media spending depends on the growth expectation. High growth expectation means more spending on social media. Inside Tmall spending could be 40-70% of the total budget, and social media spending would be 30-60%.

Jacob Cooke, co-founder & CEO of WPIC Marketing + Technologies (Tmall agency)

The spending on social media and Tmall depends on how popular is the brand in China.

For newer brands, the split between social and Tmall is 80/20; for more established brands, the split is 20/80. The total spending on marketing and social could be around 70% to 80% of the net sales. More during the launch.

Senior operation manager, Kay Tune (Tmall agency)

Most brands would spend 20% of GMV (gross merchandise value) in social media in the first 3 years…

The % is the balance between profit, GMV, and break-even period…

On the break-even timeline, I worked with 2 kind of brands: 

1. Willing to wait for 3 years
2. Operating in China business as an independent entity. This means the profit and marketing budget is charged to the local entity. The global team is only supporting during the Tmall launch or when sales pick up dramatically. If the China unit has negative EBIT (earning before interest and tax), it will be closed down. A shorter breakeven timeline means lower social media spending and lower sales volume.

Senior operation manager with 10+ years of experience from Kay Tune (a TP agency)

A Tmall Agency

For a mother & baby product that has enough budget, usually we would split the budget between Tmall and social media in a 3:1 ratio.

Since COVID, more brands are hoping for breakeven during the 1st year, which is not always realistic.

The month before any larger Tmall holidays, we suggest brands to invest 100% of GMV into social media marketing.

For fashion brands, most of social media spending is on Red; for brands with more functionality, Bilibili is the major spending channel since review videos help drive sales.

A senior account manager from a median-size Tmall agency

Fashion & lifestyle brand from Northern Europe (Product price: 2,400 RMB)

• 2022 marketing investment within Tmall: 23% of net sales 
• 2022 marketing investment outside of Tmall: 23% of net sales

% social media spending depends on our gloabl target. During the launch, we focused on building brand awareness. In total we spend 2.5 million RMB in Tmall in 2022.

We are planning to increase the spending on Tmall for 2023, since the sales target is 2.5X compared to 2022. And the overall marketing strategy is a lot more focused on performance marketing.

Brand’s marketing manager

Hong Kong premium jewelry brand (Product price: 1,900 RMB)

• 2022 year-over-year change (YoY)%: 54% increase
• Marketing investment: 15%-18% of net sales 
• 2022 marketing investment within Tmall: 5% of net sales 
• 2022 marketing investment outside of Tmall: 13% of net sales 
• Tmall vs. social spending: 30% vs. 70%

We spend 70% of our marketing budget on social media, mainly on the Little Red Book. Our conversion funnel is longer, thus building brand awareness and trust is the key. Especially for new customer acquisition, conversion is higher if the customer first heard of us from an influencer they trust.

We monitor the add-to-cart cost, so the spending split also largely depends on this.

We spend around 2% of net sales on Tmall for doing various tests. Usually, a new product would have a higher add-to-cart cost, but it will decrease as we spend in marketing, until we saturate the market and it will start to rise again.

-The founder

An iconic UK outdoor brand A (Product price: 850 RMB)

• Pricing percentile: more expensive than 41% of outdoor casual shoes 
• 2022 Average monthly net sales: 3.1 million RMB
• 2022 Tmall net sales: 43 million RMB 
• 2022 year-over-year change (YoY)%: 80% increase 
• 2022 marketing investment within Tmall: 17% of net sales 
• 2022 marketing investment outside of Tmall: 10% of net sales 

As the brand’s yearly sales reached over 30 million RMB, the marketing strategy had a complete shift from focusing on sales return to focusing on brand awareness. During the initial growth phase, the brand used to setup KOL target at 200% ROI. Now the brand is large enough to devote budget on celebrity seeding and PR campaigns. Even though the social media marketing budget is kept at 10%, the goal for this budget is nolonger short-term sales conversion, rather on-brand content and celebrity endorsement.

WalktheChat account manager for this brand

Hong Kong premium bag brand (Product price: 3,500 RMB)

• 2022 marketing investment within Tmall: 5% of net sales 
• 2022 marketing investment outside of Tmall: 20% of net sales 
• Tmall spending vs. Social media spending: 3:7

The brand newly launched its Tmall store 3 months ago. The brand took an organic approach to entering China by selling via WeChat cross-border store during the first 2 years. It builds strong momentum via a targeted influencer seeding strategy on the Little Red Book. When the brand finally launched on Tmall during the 3rd year, it already has a strong Tmall search volume and thus it was able to hit over 1 million RMB monthly sales during the first 3 months of Tmall launch.

The brand spends around 20% of sales on social media campaigns and seeding. This creates around 50 Red postings per month with a 50-70% of bookmark ratio (bookmark over like). 50 posts from various fashion influencers is a decent amount of promotion to generate sales conversion on Tmall, and the bookmark ratio is a good indicator of the purchase intention of the viewers. On average, a typical premium bag brand usually gets a 30-40% bookmark ratio. 

French baby personal care brand (product price: 90 RMB)

• Average monthly sales: 0.2 million RMB
• 2022 year-over-year change (YoY)%: 48% increase
• 2022 marketing investment within Tmall: 40% of net sales 
• 2022 marketing investment outside of Tmall: 30% of net sales

The spending on social media is usually much higher as a percentation for personal care brand, it’s an industry with higher margin.

This brand only has 700 Little Red Book mention, with such a low brand awarness, spending 70% of its net sale on marketing is nessessary during the first year of operation. Although for personal care brand, building a strong distribution network is more important than D2C marketing approach.

WalktheChat account manager for this brand

German sports equipment brand (Product price: 550 RMB)

• 2022 Tmall net sales: 111 million RMB (No. 1 in its category) 
• 2022 year-over-year change (YoY)%: 11% decrease
• 2022 marketing investment within Tmall: 3% of net sales 
• 2022 marketing investment outside of Tmall: 1% of net sales 

Although the social media marketing spending is only 1%, this is much lower compared to other brands in its category. The major reason for such low investment is:

• It has a strong competitive advantage in material and non of its competitor can replicate 
• The major celebrity spending is charged to its global unit, thus not counted here 
• The brand has been operating in China for over 10 years and has a 13% market share in its category

WalktheChat account manager for this brand

Conclusion 

The spending on social media in China varies a lot. In general, premium position products, faster growth curves, and smaller brands need to spend a larger percentage of their sales on social media marketing. But it’s not a one-size-fits-all, and the spending amount changes over time for each brand. The things brands can do are:

• Closely monitor your competitors’ spending pattern 
• Keep a clear track of social media spending ROI and compare it to Tmall ads ROI to find an optimal split
• Increase Tmall spending during the event period 
• Spend more on social if you aim for faster growth and a larger GMV goal 
• ​Spend more on Tmall if you want a shorter breakeven time and organic growth

The post How much $ should a brand spend on social media marketing? appeared first on WalkTheChat.

Testing product-market fit via Chinese social media can be a lightweight solution that will save you millions.

Why is testing digitally important?

The Chinese market is unique in every way. You are at huge risk if you launch a brand or a new product without sufficient data. Waiting to get the first months’ sales result might already be too late.

The hero product in China is often very different compared to other markets. One example: Bauerfeind, a professional healthcare equipment brand. Their Sport Knee Sport is their best-selling product on Amazon, selling more than 20 times more than their second best-performing product.

But in China, it is GenuTrain, a different line of products, that represents the bigger share of the company’s sales.

Two different markets, two different hero products!

Product selection is very important because the online sales distribution is often very concentrated on a few hero products. For example, for By Far, a popular handbag brand, 57% of online sales come from the top 3 styles.

The top-selling color for bags in China is also very conservative, either cream or black.

This is partly due to Tmall’s algorithm favoring the top-selling items in search ranking. The bestseller often acts as the lead magnet for the store.

Brands’ marketing strategy should be aligned with their hero-product choice. For example, brands could consider focusing more than 50% of the budget on the promotion of the top-selling item.

How to test product-market fit digitally? 

Ask the influencers 

Social media influencers often understand their market best. There is an easy way to conduct market research with a little marketing budget: influencer seeding. 

Seeding means gifting your product to influencers in exchange for their free marketing post. Many influencers in China require payment to provide significant exposure. Still, influencer seeding remains a cornerstone of brands Chinese strategy for several reasons:

•  Market research: seeding enables to receive feedback on products both from influencers and their followers, thus helping brands understand the specificities of the Chinese market
• Exposure: influencers do occasionally provide free exposure to brands, especially if they can hope for a later paid collaboration
• Relationship building: gifting is a perfect way to build relationship with influencers and set the ground for future paid collaborations

Vitaly is a Canadian jewelry brand, for which WalktheChat provides an influencer seeding service of 40 influencers per month. We are specifically targeting musicians, rock bands, and celebrities, that fit with the brand positioning and image. The brand was able to maintain 20% monthly organic sales growth during the first 6 months of launching in China due to the influencer exposure. 

When you approach an influencer with the new season lookbook, influencers would choose the product that will look best on their social feed. If you approach 20-30 influencers in your industry, this becomes a mini market research. Often time a product, or even a specific color of a product, would stand out: you’ve got your hero product selected.    

Test with display ads

Display ads could be an elegant way to test a product without even launching it to the market. 

Yuanqi Senlin, the fastest-growing Chinese F&B startup currently valued at 6 billion USD, uses this approach to test all of its products before going to market. 

According to Focus Media, one of the biggest Chinese advertising networks, Yuanqi Senlin spent more than 1 year and tested more than 100 different products via Bytedance display ads before launching its signature product in 2018: the peach flavor sparkling water. The Sparkling water product line makes up for 60% of the brand sales in 2020. 

For example, Yuanqi Senlin tested their marketing tagline via a display ads campaign on Bytedance platforms such as Douyin and Toutiao.

The variation of tagline tested includes the flavor, the health benefit, packaging, banner design,  product line, and marketing catchphrase. These testing banners would take users to an empty product page, but during the test, it collects users’ click-through rate, an important indicator for success digitally.  With sufficient data, the company eventually came up with its famous tagline of “0 sugar, 0 fat, 0 calories”, and its peach-flavored hero product.

Test on sales channel 

The actual testing process of Yuanqi Senlin goes beyond display ads. Once a product is tested successfully online, it would then be tested via an online sales channel. For example, this fruit soda sells more than 70k boxes every month on Tmall.

However, you won’t be able to find this product via a convenience store yet. The cost of launching a new product with distributors is much higher compared to online channels, the sales cycle is also much longer. Thus testing a product on Tmall enables to confirm product-market fit before making such a move. 

Social marketing campaign

Running a social marketing campaign with influencers is also a great way to test how the market reacts to a product. 

You can use this method to find the right influencer to run a campaign. By talking to influencers, you can acquire sales data about how competing brands perform compared to yours. 

For example, the brand Mlouye collaborates with an influencer to officially sell its bags cross-border for the first time. The Studio Brow style clearly stand out when we collaborate with Chinese influencers to promote the brand. 

Since money doesn’t lie, this is the most direct way to get market feedback. And based on such results, the brand could then design a marketing strategy around the most popular product, and prepare inventory accordingly. 

Note it’s very important to test with different influencers to avoid biased results.  A 3-6 month testing phase is usually sufficient.  

Conclusion

Digital marketing is maybe the most cost-efficient and lean method to test product-market fit. The key is to analyze the marketing data, modify the product and marketing strategy, repeat the test as you integrate. It could be the thin line that separates success and failure. 

The post How to test product-market fit in China via social media? appeared first on WalkTheChat.

In this article, we will introduce：

• The major Tmall advertising formats
• How to create a strategy for each type of Tmall advertising
• What is a good ROI for Tmall advertising
• How to create a Tmall advertising spending plan in 3 simple steps
• How to find out how your competitors’ ads are performing  

What are the different Tmall advertising channels?

Zhitongche 直通车

Website: https://subway.simba.tmall.hk/

Zhitongche is the key-word search ad on Tmall. The ads will show up if a user searched for the paid keyword. The ads will rank according to the bidding amount.

Zhitongche is one of the most cost-efficient ads to target consumers with specific purchase intent. This ad format can help you get a desirable search ranking. Top-selling flagship stores usually allocate 25% to 40% of their budget on Zhitongche. It also works well for brands with limited organic search traffic, commodity, and flagship brand with many fake resellers. 

Most of the Zhitongche campaign is cost-per-click based. This means you won’t be charged unless users click on the ads.

Zhitongche targeting option

Targeting option Zhitongche offers include:

• Retargeting users who have visited or take an action in your Tmall store
• User’s search and purchasing behavior 
• User demographics 
• User groups with special interest (a specific holiday, specific type of interest)    
• Flexible spending schedule/bidding rate based on time of the day
• Campaign creatives for each product

Note you won’t be able to upload your user database to the Tmall backend. However you could create look-a-like audience based on an existing user group. 

How to select keywords for Zhitongche? 

Always bid on the brand name, since this is usually the keyword with the highest sales conversion. For other keywords, you can monitor the competitor’s product search keywords to get inspiration. 

The 3rd party tool SYCM 生意参谋 offers the opinion to monitor a competitor’s product’s top-performing keyword.

For example, this is Pandora’s hero product, with monthly sales of 2.5 million RMB (290k USD).  

Here we can find the top keywords that are driving traffic to this product. For example, “CK ring” and “DW ring” are among the top 10 keywords that brought search traffic for this product. And “ring high-end elegant” and “dw ring” are among the top keywords that have the highest sales conversion. 

You can monitor closely similar products from a competitor’s stores to create test campaigns. Note it’s best to cross-check the competitors that are close to your brand’s sales volume. Top sellers on Tmall may have a much higher marketing budget for bidding on the hot keywords. It’s important to balance out the keyword relevance and cost.  

For product selection, usually, it’s best to allocate most of the keyword search budget to the top 3 hero products. Sales of a flagship store usually concentrate on the top hero product, which is also the key product that could drive traffic to your store. 

品销宝 Pinxiaobao

Website: https://branding.taobao.com/

Pinxiaobao is another keyword search ad, with the highest search ranking. It’s only available for Tmall flagship stores. Thus the best Tmall advertising channel to standout against fake sellers and distributors.

Pinxiaobao ROI could be extremely high. With some brands, we reached an ROI of 14 during the Double 12 sales festival. 

Pinxiaobao only let brands target keyword containing their brand name. Depending on the search volume of your brand, the cost to purchase this keyword is different. For example, the keyword “Chomel”, a Singapore jewelry brand, costs around 1,200 RMB per day, the daily search volume of “Chomel” is around 6,000 per day. For larger brands, the keyword will be more expensive. 

Tmall also offers a whole-year deal to purchase 100% appearance of your brand’s name with a discount. The brand can launch a couple of test campaign to decide if it makes sense to purchase the yearly deal. 

超级推荐 Super recommendation

Website: https://tuijian.taobao.com/

超级推荐 Super Recommendation ad is the core advertising product Taobao promotes. It’s an algorithm driven system that pushes potential relevant products to users based on their in-app actions. 

According to the podcast Fengtouquan, Taobao’s content-driven traffic (user browsing the App without a clear purchasing goal) has increased to 50%, compared to the traditional key-word-search traffic. And Super Recommendation is the key advertising product that targeting those consumers who don’t have a clear purchasing intention.  

The ad placements are spread around different parts of Taobao. 

You should have a different ads strategy for each ad placement. 

Super Recommendation on the Taobao homepage

The most visible ad placement is on the homepage, appearing after the first scroll. 

This is Taobao’s main newsfeed. Some users spend a lot of time scrolling through the feed for window shopping. Users who browse through the product recomendation fee usually have small purchasing intent and a stronger need for entertainment. 

The cost for “add to cart” from the homepage Super Recommendation is cheaper since users like to add products to their cart while browsing. But the conversion from cart to check out is usually a lot lower compared to key-word search ads. 

On the product recommendation feed, your ad will appear alongside other products in all kinds of categories. Lots of users are seeing your brand for the first time. Thus the goal is not for users to buy your product, it’s to encourage users to click on your ad, enter your store, and start browsing other products in your store.  

This will increase the traffic within your store thus ultimately increase the store ranking and sales. 

The product you push forward under Super Recommendation should not be just the hero product. You should test a different style of product to find the product that maximizes the click-through rate. For the brand with a generic hero product, they can try pushing a more unique style in order to stand out. 

Super Recommendation on the order status page

The Super Recommendation that appears after order status, especially on the payment confirmation page, follows a different strategy.

Here users just made a purchase of another product, and their purchasing intention is stronger. For this ad placement, it’s best to push the product with the highest conversion rate. A lot of times this is also not the hero product.

Companies with lower brand awareness could spend a larger proportion of their budget on Super Recommendation ads to increase the traffic to their store. A larger brand can use the newsfeed to increase marketing touchpoints with users and target sales conversions. 

智钻 Zhizuan

Website: https://zuanshi.taobao.com/

Zhizuan is the banner ad that appears on the Taobao homepage. It is the most expensive ad format on Taobao. The Zhizuan ads usually appear on a holiday promotion landing page. They are visible, bigger, and a lot more expensive. 

Medium-size brands can choose to invest in Zhizuan during the Tmall promotion periods. For example, MISSOMA spent around 16% of their budget on Zhizuan during Double 12, while spending less than 1% during regular sales periods. 

Tmall ususally reward free promotion space for KA brands such as Pandora (NO.1 in Jewelry) and Bauerfeind (No.1 in knee support). It’s possible some top-ranking brands don’t need to spend as much on Zhizuan. 

聚划算 Juhuasuan 

Juhuasuan is a flash-sale channel. The ad placement is on top of Taobao’s home screen. It’s one of the largest traffic pool within Taobao. 

Many brands will compete to signup for 1 ad placement in Juhuasuan. The Taobao team will choose the brand with the best potential to bring the largest GMV for the placement. Thus brands usually will need to offer a deep discount in order to be selected. Thus participating in Juhuasuan flash sales is not always profitable for brands. 

Why do most brands still participate? 

• Brands could use Juhuasuan as a channel to promote their hero product and increase sales. One of the major Tmall tactics is to create a hero product, which is typically a product with a low margin, lower price point, but is the key traffic driver for the whole store. Kinda like the top ranking page on your website, or the “IT” product. 
• Juhuasuan is also a channel for inventory clearance
• Generate traffic for other products within the store that have a higher profit margin 
• Generate traffic for a retargeting campaign  
• Kick-off a new store or re-activate an underperforming store 

For brands, monitoring the medium-term impact of Juhuasuan flash sales and calculating the overall profit and loss will help to define the right long-term strategy. 

淘宝客 Taobao Affiliate Marketing 

Website: https://ad.alimama.com/

Taobao Affiliate Marketing enables setting up commissions reward for individual users or 3rd party platforms that promote the brand. It’s the best tool to use to drive traffic from outside of the Taobao ecosystem. 

For example, this is the platform used to create 淘口令 for influencers. Tmall will automatically calculate the commission and share it with the influencer. It also enables brands to generate shopping cart links on Douyin/TikTok 

The minimal commission from the store is 3%.

The platform also has category-specific events that the brand could signup for in order to push the brand among group-buy leaders.

Brands with higher margins, and require trust to make a purchase usually do well with affiliate marketing. For example, skincare, health supplement, and mother & baby product usually spend a larger amount of marketing budget on Taobao Affiliate Marketing. 

How to create a Tmall advertising strategy in 3 simple steps? 

Tmall’s advertising system is very complicated. It has 16 advertising channels and probably will add more in the future. Each advertising channel has a separate top-up system. This means once you top-up the budget in one channel, you cannot move it to another channel. 

At the same time, the strategy during a sales holiday will be very different compared to on a regular day. So is the strategy for each industry and each sales level. 

How to build a budget allocation plan without all-in on test campaigns on every channel?  

You could follow the 3 simple steps:

1. Analyze the spending plan of the top-performing stores, and close competitors in your industry
2. Create test campaigns based on these results
3. Optimize and create your own spending plan

The simplest way to create an initial plan is to look at how your competitors are spending their budget.

The Tmall App store has many 3rd party tools for monitoring competitor’s performance. The tool that we use at WalktheChat is called SYCM (生意参谋). It offers a competitor listening service that enables you to monitor the marketing spending and performance of 5 stores and 10 products for a fee of 1,188RMB per year.

You can find the list of the top 100 best ranking Taobao/Tmall stores (either by traffic or by sales transaction) in your industry using this link: https://sycm.taobao.com/mc/mq/market_rank

For example, Pandora was the NO.1 performing jewellery store on Taobao/Tmall during the Double 12 campaign.  

With the competitor listening tool, we could graph Pandora’s spending distribution during December 13th (regular period) and December 12th (a promotion holiday Double 12). Note the data given is an index, not the actual spending budget.

Pandora’s spending index during a sales holiday of Double 12 was up by 44% compared to a non-sales day. The advertising channel that has the strongest surge was Juhuasuan (聚划算), the flash-sale channel. 

Now you can check the strategy of your direct competitor that has a similar sales target.

MISSOMA is a premium jewelry brand that just opened its Tmall store in July 2020. They achieved 2 million RMB sales result during the 2nd month of launching on Tmall, mainly by investing in WeChat and Little Red Book influencers. They are a good account to benchmark against if you are operating a new jewelry Tmall store.

According to SYCM, here is their spending index:

MISSOMA spends most of the paid traffic on key-word search ads and product recommendations. It shifted 16% of its budget towards 智钻 Zhizuan (homepage ads) during the sales promotion period.

This strategy can help you decide how to properly allocate budget between all the Tmall advertising channels.

The major drawback of this strategy is we can only look back on past data. Brands should clearly understand the ranking of each Tmall promotion in order to better allocate budget throughout the year. The easiest way to see the competitor’s future spending plan is to acquire this information from Dingding group. The Tmall operation team usually creates groups of brands from the same industry and all the brands are required to share their promotion budget in a shared file.

What is a good ROI for Tmall ads? 

The main purpose of Tmall ads is to generate sales. Thus the return on investment of Tmall ads should be positive, taking into account the cost of goods and operation costs.

Each advertising channels enable to benchmark ROI with other stores. For example, you can check the average ROI of similar stores keyword search advertising (Zhitongchen) on the Qianniu (千牛) App.

ROI can vary widely between stores. For instance, ROI in the jewellery category varies between 1 to 14, depending on the stores, during Q4 2020.

When an ad campaign is performing well, Taobao’s algorithm will allocate additional traffic to reward good sales performance. There is a clear correlation between the ROI of the ads and the additional “free” traffic from Taobao.

In the example below, when the ROI of advertising was above 8, Taobao pushed around 10k organic daily impressions to the brand products. But when ROI fell around 1, Taobao only allocated 2k of daily free impressions.

Conclusion

The right Tmall advertising strategy can help a brand to gain traction. Brands can benchmark the strategy of competitors in order to create a quick budget allocation, then adjust and optimize different advertising formats over time.

The post Tmall advertising – A step by step guide appeared first on WalkTheChat.

More active e-commerce users as a lasting impact of COVID-19

The pandemic has changed the users’ behavior by forcing most people to stay at home. This change is reflected in the latest earning results. Although users are resuming their daily commuting lifestyle, the June 2020 results show that the impact on their online shopping behavior is lasting. 

JD has a positive trend of increasing active customers throughout the year and was able to maintain a positive growth of around 8% in the last 3 quarters.

Pinduoduo’s growth slowed down compared to previous quarters. However, an overall YoY growth of 41% still makes it the fastest-growing major e-commerce platform.

Pinduduo’s accumulated 683 million active buyers by June 2020. With this rate of growth, the number of buyers could surpass Alibaba in merely 4 months!

Alibaba, despite its strong market penetration, is still consistently growing at 2% QoQ, and 10% YoY.

Strong focus on lower-tier city users & high purchasing value customers

JD’s main focus is on less developed areas.

One of the top-performing JD sales channels is its Mini Program Jingxi京喜. Jinxi is an e-commerce Mini Program that focuses on low-priced items (between 1 RMB to 10 RMB) and using group buy cashback as incentives for buyer acquisition. This Mini Program focuses on lower-tier city users who often live in a close community, perfect for a group buy strategy to kick in.

These last quarters’ strong user growth is also due to the strategic partnership with WeChat. Since Single’s Day 2019, WeChat added direct access to JD’s Mini Program called Jingxi on the user’s Discovery tab bringing a surge of traffic. This is reflected in the 8% QoQ customer growth since 2019 Q4.

Jingxi had 7 million daily orders on June 18th this year. 60% of the orders came from tier 3 to tier 6 cities. As of August 2020, the Jingxi Mini program is still listed as the top 6th Mini Program on WeChat, according to aldzs.com.

Just like JD, Alibaba is focusing on user acquisition in lower-tier cities. One of the highlights of this season is the strong performance of the Taobao Deals App.

Taobao Deals (淘宝特价版) was launched in 2018, focusing on heavily discounted products.  The target group is less developed areas, but the App hasn’t got much success until this year. Amid the COVID-19 pandemic, it has grown to 40 million MAUs this June. Starting in March 2020, the strategy of Taobao Deal is to moving away from branded products and instead encouraging 1688 merchants to provide products directly from factories. In March, Taobao deal was ranked the 7th most downloaded App on the Chinese Apple App Store.  

Pinduoduo on the other hand is aiming to raise the spending per buyer.

The average annual spending on Pinduoduo is 1,857 RMB. This is much lower than Alibaba.

According to Alibaba’s annual report ending in March 2020, it’s total GMV on China retail marketplaces is 6,589 billion RMB, divided among 726 million annual active consumers. The average consumer’s annual spending is 9,076 RMB, almost 5 times higher than Pinduoduo. 

Pinduoduo launched a 10 billion RMB subsidy program since Q2 2019. The subsidized products are premium products such as iPhone, Dyson hair drier, and even Tesla. These subsidies encourage new customers to purchase high-value items.

GMV & Revenue

Pinduoduo’s GMV reached 1,269 billion RMB in the 12-month period ended in June 2020. GMV QoQ growth dropped to 10%.

The drop in GMV growth is unusual since June 18th is usually considered as the 2nd largest e-commerce sales season in China.

Pinduoduo chose to spend less on sales and marketing during this June 18th compared to Single’s Day last year. The high net loss from the March quarter could have constrained spending. Moving away from the 618 sales campaign also prevented a price battle against Tmall and JD.

JD has been trying to diversify its revenue from electronic & home appliances to general merchandise. Revenue from general merchandise has increased from 30% in 2019 to 34% in 2020. 

As a retailer business, JD’s net income has grown 30 times to 16 billion RMB compared to the same period last year. But these changes are not entirely due to business growth. The biggest impacting effect is “Other Income”, which increased from a negative RMB 1.0 billion to a positive RMB 7.9  billion, due to “ fair value change of investment securities”. 

Strong focus on live streaming 

Both JD and Alibaba put an emphasis on live-streaming sales.

Taobao’s Live GMV grew over 100% year-over-year. Today Taobao is still the top platform for e-commerce conversion from Kuaishou (Kwai) and Douyin. However, Douyin is starting to build its own e-commerce ecosystem, threatening to compete against Taobao Live.

JD in response launched a strategic partnership with Kuaishou (Kwai). However, the actual impact is debatable.  Taobao is no doubt still the top platform for Kwai’s live-streaming conversion. Of the top 3 live-streaming e-commerce destinations on Kuaishou, 96% of traffic goes to Taobao. None of the products sold links to JD.  

For both JD and Alibaba, the reliance on short-video platforms to drive live-streaming sales traffic is a huge risk.

Douyin, the Chinese version of TikTok, just announced this week that it will stop allowing live-streaming products to link to 3rd party e-commerce platforms such as Taobao or JD. Douyin and Kwai are both shifting focus to support their internal e-commerce system. This will eventually take away a major source of social media traffic from e-commerce platforms.

Expansion of cross-border e-commerce 

The rebound of the Chinese market has attracted lots of premium global brands to Chinese marketplaces. 

Tmall Global GMV grew 40% year-over-year in June 2020. According to isfashion.com, over 200k new products got listed in Tmall Global from January to March 2020, and the new store opening rate has increased 327% YoY.

For example, Luxury group LVMH is collaborating with Tmall to launch new cosmetic brands via Sephora’s Tmall Global store in May. Tmall Global also plans to introduce over 800 overseas cosmetics brand in a year, by collaborating with L’Oréal, Estee Lauder, Johnson & Johnson, Shiseido, P&G, and Unilever.

JD is also actively onboarding global brands this quarter. Some of the newly onboarded merchants including Prada’s footwear brand Church’s, Christopher Kane, Tom Dixon, Sergio Rossi, SJYP, and Daikoku.  

Conclusion

Despite of the COVID-19 Pandemic, the major Chinese e-commerce platforms managed to maintain a steady growth rate.

With a renewed focus on live-streaming and smaller cities, the crisis was actually an opportunity for these marketplaces to broaden their user base and move to new markets.

It is likely that these short-term strategic gains will turn into long-term profits for Taobao, JD and Pinduoduo.

In 2022, JD and Shopify formed a strategic collaboration to help overseas merchants sell via cross-border eCommerce more easily. Check out this article if you are interested:

• JD Group Income Grew by 18% in Q1; Partner with Shopify to capture cross-border sellers

The post JD, Alibaba and Pinduoduo’s Strong E-commerce performance Post-COVID appeared first on WalkTheChat.

Douyin recently started to block a Taobao order management system, Qianniu 千牛, from accessing its Douyin store e-commerce data.

Douyin launched Doudian 抖店, an order management system, similar to Taobao’s Qianniu at the end of 2019. It’s a comprehensive e-commerce system for merchants to create products, manage orders, logistics, customer service, data management, follower status, and ads. Douyin store data used to be available via Taobao’s Qianniu platform but can now only be accessed via Doudian.

This marks the start of a Douyin e-commerce war against Taobao. Although Alimama, Taobao’s affiliate platform, is not affected. Before this, Douyin had already taken small steps that revealed its e-commerce ambitions.

The top 5 best selling products on Douyin are all product links to Taobao. But Douyin is tweaking its algorithm in favor of Douyin stores. The top 2 recommended products for individual users are both from Douyin stores. 

For fruits, Douyin even completely blocked Taobao links. For example, watermelons are only sold via Douyin stores.

For mangos, six of the top-10 ranking results are from Douyin stores, two go to JD.COM, and two go to Kaola.

According to 36kr, Douyin set its e-commerce GMV goal at 200 billion RMB for 2020. To reach this goal, Douyin has been pushing for live-streaming in collaboration with celebrities such as Luo Yonghao. 

Starting in April 2020, Douyin canceled the requirement of 300K-Douyin followers for opening a Douyin store. It also allows account with 0 followers to add product links to a video. Compare to Taobao and JD.COM, Douyin only charges 2k-20k deposit to open a Douyin store. Detail deposit list clicks here.

Most Chinese tech companies love to build enclosed ecosystems. Now that Bytedance is strong enough to stand against Tencent or Alibaba, it’s just a matter of time before it builds its own enclosed empire.

Meituan-Dianping blocks Alipay

Meituan-Dianping, the food delivery, and life service App, started to block Alipay for some of its users.

This created heated debates online, and Meituan’s CEO Wang Xing responded by tweeting: “Why doesn’t Taobao support WeChat Pay? WeChat Pay has more active users than Alipay, and takes lower service fee than Alipay”.  

Both Meituan App and Dianping App do not support Alipay.

Both Alibaba and Tencent have participated in Meituan’s past funding rounds. Alibaba is one of the earlier investors that participated in both B-round and C-round back in 2011 and 2014. Tencent only started to fund Meituan-Dianping in 2017 before Meituan’s IPO.

This block of Alipay is a clear indication that Meituan is siding with Tencent. 

Meituan’s choice of Tencent could be a defensive move as Alibaba backed ele.me. Ele.me is directly competing with Meituan’s main food delivery service, and 57% of Meituan’s revenues are coming from food delivery as of Q1 2020.

COVID-19 had a substantial impact on Meituan. Revenue decreased by 12.6% YoY to 16.8 billion RMB, according to the Q1 2020 financial report. The hardest-hit sectors are Meituan’s travel, hotel booking, and in-store services. This segment made up 33% of Meituan’s total revenues in 2019 and now decreased to only 18%. 

According to the tech news cyzone.cn, Ant Financial’s IPO puts enormous pressure on Tencent and thus pressured Meituan to take action to create a closer collaboration with Tencent against Alipay. Ant Financial is the parent company of Alipay, with an estimated value of 200 billion USD. 

WeChat Losing Content Creators to Bilibili

Many top-ranking WeChat Official Accounts are actively publishing content on Bilibili. Here is the amount of the WeChat’s top 500 accounts are entering Bilibili. 

However, most of these top-ranking WeChat accounts struggle to acquire Bilibili followers. Only 12% of these large WeChat accounts have more than 500k Bilibili followers, and 72% of them didn’t reach 10k followers on the video platform! Comparatively, these accounts all have more than 1 million WeChat followers. 

Driving traffic from WeChat to Bilibili is not challenging: Bilibili videos can be embedded within a WeChat article. However, attracting followers on Bilibili is extremely hard. Most top-ranking accounts have been operating for at least two years, and growing on Bilibili requires a long term investment.

As user preference shifts toward live-streaming and short-videos, the top WeChat accounts are scrambling to diversify toward new platforms. As the data shows, however, this shift is difficult, and many top WeChat influencers might end up being left behind.

The post Douyin stepping up in e-commerce game & 2 other news appeared first on WalkTheChat.