China Online Advertising Market Decrease in 2022 H1

Due to regional COVID outbreaks in Chinese cities, consumer confidence has taken a hit. It’s also reflected in the advertising budget brands invest in the market.

According to QuestMobile, media spend on Chinese internet platforms decreased by 2.3% in the first half of the year.

The advertising market size is estimated to increase again in H2 because of major sales festivals such as the 99 Festival in September, Double 11 in November, and Double 12 in December. To compensate for the lost sales target in H1, brands may move more advertising budget into H2, trying to leverage key sales moments and accomplish the year’s target.

Video Ads and Social Media Ads Continue to Thrive in China

Video Ads and Social Media Ads are still the two biggest channels for online advertising. Short video ads now account for nearly 40% of advertisers’ total budgets in China. Typical short video platforms like Douyin and Kuaishou can quickly capture users’ attention and drive conversion. It’s an effective strategy for cheap products of less than 200 CNY. 

Advertising on social media such as WeChat, Weibo, and Red accounts for 16% of the total ad budget.

We estimate that the domination of short video ads will stay, as, in the short term, there is no new format thWe estimate that the domination of short video ads will stay, as, in the short term, no new format can challenge Douyin’s capacity to capture users’ attention and maintain stickiness. Douyin has 670 million MAU (Monthly Active User) according to data in December 2021. Being the 2nd most prominent social platform after WeChat (1.2 billion MAU), Douyin still has room for improvement, while WeChat and Weibo have reached a growth bottleneck.

For advertisers seeking to reach Chinese audiences, we should first identify your target customers and then decide which platform to invest in.

Need any help with your advertising strategy in China? Let our ads expert help you!

Home appliances industry lead the advertising growth in 2022 H1

Beauty indThe beauty industry usually has the highest ad spend budget (> 5 billion CNY / 740 million USD), but the COVID outbreaks in H1 limited the industry’s consuming scenario and opportunities.

Due to the same reason, verticals such as domestic appliances and remote work equipment seized the increasing needs during H1 and invested more heavily in advertising.

For example, eating well at home is a riding demand. Therefore, consumers are more willing to spend on products such as rice cookers, high-speed blenders, air fryers, coffee machines, breakfast makers, etc, to enjoy better quality while staying home.

Beauty industry: international and domestic brands take different strategy

Due to fierced competition in the beauty industry, international brands and domestic brands have adopted different advertising strategy to strengthen their positioning.

International brands such as Loreal Group and Estee Lauder Group focus on pushing their high-end brands and products with higher price range. Their foreign identity and high R&D spending can justify a higher pricing and brand premium.

Domestic brands such as Perfect Diary and MARUBI are heading towards mass consumer positioning, focusing on more affordable products. Their experience and deep understanding of the Chinese market guarantee smooth navigation of the mass consumer market.

China Online Advertising Estimation in 2022 H2

H2 is typically an essential moment for sales, thanks to multiple shopping festivals such as Double 11 and Double 12.

ECommerce Ads can better fulfill advertisers’ needs for conversion as it’s the closest placement to sales conversion. For example, leading eCommerce marketplaces like Tmall and JD offer effective in-site ads to drive sales.

Social Ads will also likely increase because advertisers need to attract more consumers to their private traffic pool. It’s also a pivotal moment to “activate” their loyal customers and push for cross-selling and up-sell opportunities. A typical example of a private traffic pool is to create a WeChat Group with your VIP customers and keep them engaged.

Nowadays, the cost of new consumer acquisition is rising on all platforms. So it’s crucial to take good care of your existing customers and improve the repurchase rate.

Looking for more information about online advertising? Have a look at these articles!

• China Social Ads: how to run effective ads on WeChat, Douyin, and Red

• Douyin Advertising: a Step by Step Guide

• Tmall advertising – A step by step guide

The post China Online Advertising Report 2022 H1 appeared first on WalkTheChat.

In this article, we will focus on comparing the pros and cons of major social media ads platforms in China, including WeChat Ads, Douyin Ads, and Red Ads. We will introduce: 

• The major platforms for social ads in China
• How to choose the right Chinese social ads platform for your brand 
• How much does it cost to run social media ads in China
• What is a good ROI for your social ad campaigns 

If you want a tailored solution for your brand, please feel free to reach out to us by filling out this simple form: 

Major social ads platforms in China

Short video ads and eCommerce ads are leading the growth of the online advertising market. Traditional social ads (for example, WeChat and Weibo) have not grown much in market share due to short video platforms competition. Search engine advertising (for example, Baidu) has also been shrinking over the years.

Each social platform has its pros and cons. Douyin Ad is best to generate engagement with its fun-seeking active users; Red Ad is great to generate clicks, incredibly potent in product discovery and research; WeChat Ad is a good option for exposure and impression. WeChat, Douyin, and Weibo all allow retargeting campaigns, yielding a positive ROI. 

Which social ad platform should you choose

There are a few dimensions to consider, like your industry, price range, and campaign objectives.

Your industry and price range

Although there is no strict formula, there are a few general recommendations considering the characteristics of each social platform.

WeChat: the largest social media platform

With almost all the Chinese population on WeChat (1.2 billion MAU/Monthly Active Users), you can also find all kinds of industries advertising here. It can range from general fashion, F&B, FMCG to gaming and entertainment. WeChat ads also offer the option to target users by estimated consumption power, based on Tencent Big Data. 

Douyin: ideal for cheaper products

Douyin (600 million MAU) has developed to be another powerful advertising platform besides WeChat. It performs best for mid-low price range products, for example, below 200 RMB (~30 USD). Although some premium brands also do well on Douyin, like jewelry brand Kklue and handbag brand Songmont. Douyin users have a lower average purchasing power compared to Red users.

Red: best to target female consumers

Xiaohongshu / Red (100 million MAU) is the best platform to target female users, with more than 90% of the platform’s monthly active users being women  (source: Qiangua, Active user profile trend report, 2021.04). Users here have high purchasing power. More than half of them are living in top-tier provinces such as  Shanghai (11.39%), Beijing (9.38%), and Guangdong Province (17.83%),. They are actively looking for insights to improve life quality and are open to exploring new brands like fashion, luxury, jewelry, handbags, skincare, etc. 

Objective of your social ads campaign

Before deciding which platform to invest in, brands should also consider the advertising campaign objective. 

Red: best for seeding and discovery

Red is the best channel for upper-funnel objectives, such as branding or discovery. Brands can use Shutiao (similar to boosted content on Instagram) to turn a well-performing post into a potential viral post with the help of ads. However, Red advertising system is still quite basic: 1. the interest and behavior tags are not as comprehensive as Douyin or WeChat; 2. doesn’t have any retargeting capacity at the moment. Besides, consumers are not used to purchasing on Red yet. It’s hard to drive direct in-app conversion, so pure sales-driven ads on Red might not work well. 

WeChat: great for retargeting campaign

WeChat has a comprehensive advertising system. It can yield quite a positive ROI for retargeting campaigns. To do so, brands either have to upload their target audience from company CRM as a seed audience (at least 100,000 contacts) for retargeting or lookalike, or use mini-program store data such as visitors or customers. Without qualified data, it is hard to get a positive ROI on WeChat Ads. However, if you are looking for massive exposure and short-term ROI is not your major concern, WeChat Ad will be a great option; otherwise, Red would be a better channel to invest in for awareness.

Douyin: leverage powerful algorithm

Douyin Ad is easier to get started if you don’t have any first-party data. By analyzing content features, users’ and users’ interaction with content, Douyin’s algorithm generates a tailored content feed (including ads) for each user. It is more effective than WeChat for higher education, real estate, and other advertisers who want to generate leads but don’t have a lot of first-party data. With 700 million monthly active users and an average of 120 mins daily spend time (source: Kantar, Media Reactions, 2020; 36Kr Research, 2020 China Content Industry Research Report, Sept 2020), Douyin is also an excellent platform for exposure.

How much does running social ads cost in China?

In 2021 Q4, we aggregated data from our advertising clients from campaigns on WeChat, Douyin, Red, and Weibo, covering fashion, jewelry, and other retail industries. The results are as follows:

WeChat: lowest CPM / cost of impressions

WeChat has the lowest CPM during this period, making it the best platform for massive exposure. Another typical campaign is to acquire followers for your WeChat official account, with an average of 10 RMB per follower.

Red: lowest CPC / cost per click

If your main objective is to increase interest and encourage people to click, Red will be the best platform with the best CPC. Brands have to pay extra attention to optimizing the first picture (the outside layer of the ads) to meet Red users’ tastes and expectations. In terms of engagement,  Red ad doesn’t allow advertisers to bid by eCPE, so it’s harder to control the cost of engagement, making it more expensive than Douyin and WeChat. 

Douyin: a good middle ground

Ocean Engine (OE in the graph), including Douyin and other apps from ByteDance, has a relatively balanced CPM and CPC. Douyin is slightly higher than Ocean Engine, with a CPM of 15 RMB and a CPC of 0.94 RMB. It has the lowest CPE (Cost per Engagement) of 0.8 RMB, considerably lower than any other major social platform. Douyin in feed Ad is very native and dynamic, just like any short video, so the fun-seeking audience on Douyin are more willing to watch the ad and engage with it.

Weibo: worse overall performance

Weibo has the highest CPC and CPE among all platforms. It’s highly commercialized with many ad placements, so it’s hard to grab users’ attention and get authentic interactions. It’s still good for celebrity collaboration, but brands won’t expect too much genuine engagement with the official brand account on Weibo.

What is a good ROI for your Chinese social ad camapigns

For sales-driven campaigns, revenue or ROI are your primary considerations. The ROI highly depends on your targeting strategy. WeChat is very effective for sales campaigns, and you can get a good ROI if you have retargeting data, such as users who visited your store, added to carts, or purchased recently.

We will further illustrate this with the example of a WeChat ad campaign. To generate sales in the brand’s WeChat mini program store, and measure the performance of different audiences, we separated the audiences into three groups.

The most valuable audience are previous buyers, with a 1254% ROI. However, as the audience size is relatively small, the revenue generated by this audience is not as much as store visitors. 

The store visitor audience group contributed 82% of the revenue, with an ROI of 674%. These audiences are actively considering buying and are very easy to convert. 

However, if we amplify the audience group to new audiences using interest and behavior tags, the ROI quickly drops to 53%. It is hard to convert a new user only with ads. For example, a new user might take time to search for reviews on Red and compare prices in different channels, so they might not convert quickly during the campaign’s attribution window. There are other more effective ways to reach out to new audiences, like KOL seeding on Red and other collaborations. 

Conclusion

In summary, brands should carefully consider which social ads platforms to invest in based on industry, target audience, product price range, and campaign objective. 

Red is the best platform for awareness and consideration, particularly fashion and cosmetic brands.

WeChat sales-driven ads can perform well with quality retargeting data.

Douyin is the most trendy platform to reach your Chinese audience and is the best for cheaper products. 

Want to learn more about Chinese social media ads? You will find these articles helpful:

• Douyin Advertising: a step-by-step guide
• WeChat Advertising: a step-by-step guide
• Little Red Book Marketing: a complete guide
• Tmall Advertising: a step-by-step guide

The post China Social Ads: how to run effective ads on WeChat, Douyin, and Red appeared first on WalkTheChat.