SHANGHAI (AdAge.com) -- Faced with limited and pricey TV options, multinational marketers are flocking to popular online video sites to develop branded entertainment series for China, a market in which the most desirable consumers are likely to be online searching for content rather than watching the communal family TV set.
L'Oréal is trying to modernize the dated image of its Chinese makeup and skin-care brand Yue Sai through an eight-part miniseries called "Buzz My Heart" that launched this summer and follows the lives of three young Chinese women. "We wanted to create an online platform that engages women in a new way," said Michelle Kwok, L'Oréal's Shanghai-based marketing director for Yue Sai.
So do plenty of other marketers. Branded drama series and entertainment programs are popping up all over China, funded by companies like Unilever, Burger King, General Motors Corp., Ford Motor Co., Kraft Foods, Beiersdorf, Nokia and Anheuser-Busch InBev.
"The new hot thing in China is to do something viral," said Seth Grossman, Carat's Shanghai-based managing director, China. Branded online programming "helps create connections for brands by making them relevant in environments where consumers have already chosen to visit."
This is especially true for brands catering to young, affluent consumers who seldom turn on TV sets. Chinese households often have three generations living under one roof, with one TV set located in a communal room, usually showing outdated historical dramas and variety shows favored by the elders in the family.
Even in less-crowded homes, teens and young adults seldom have a TV set in their bedrooms, but they are likely to have PCs, fast internet connections, and a user account with China's major video sites like Tudou, Youku, Ku6, Baidu's video channel Qiyi -- and even the video off-shoots of portals Sina and Sohu. (YouTube is blocked in China). And video sites, often notorious for pirated content, are eager to post more legitimate content and make money doing it.
Last year, the number of online video users in China climbed over 32% to 309 million, according to iResearch. The top players say they attract 200 million unique viewers per month.
"Everyone is jumping to capitalize on the growth of the online video industry in China, as they see the trends of consumer media behavior changing and advertising dollars are shifting toward internet video," said Anita Huang, Tudou's VP-product, user and business development in Shanghai.
Ad spending in China's online video category grew to nearly $200 million last year, a 70% increase over 2008, and iResearch predicts it will continue to grow 60% to 80% annually for the next three years.
Younger viewers seek out entertainment online because the programming aired by national broadcaster China Central Television and local channels doesn't appeal to the under-30 crowd, which has easy access to Western series and popular Korean and Japanese dramas. Foreign shows seldom air on CCTV, but are available through pirated discs sold on street corners across China and illegal uploads on local video-sharing sites, where the latest episode of "NCIS," for instance, is uploaded, complete with subtitles, within hours of airing in the U.S.
"Digital media is getting more and more popular. Our goal is to dominate cyberspace," said Shanghai–based Vivian Yeh, new media manager for A-B InBev.
The brewer promoted the launch of BudLime in China last month by sponsoring "That Love Comes," the first drama series produced by Orange Box, a unit Tudou set up to make original programming for that video site, and Warehouse No. 6, an independent filmmakers' incubation program. BudLime is integrated into the plot as a source of inspiration for the sophisticated photographer who builds his career as he romances his small-town sweetheart.
Besides reaching prized consumers, backing branded content deals is a tactic that helps marketers cope with media inflation. TV rates are up 20% to 40% this year, partly because advertisers are creating big-budget campaigns around events like the 2010 World Expo in Shanghai. Those events, and local brands' penchant for national TV, are driving up prices and accelerating the shift to digital and interactive media.
Media buyers were also hit by a regulatory change this year in which China's State Administration of Radio, Film and Television is limiting advertisers' access to prime time, causing ad inventory to drop 13%.
"Unilever will never stop doing TV ads, but cost efficiency is a factor," said Mark Heap, PHD's Shanghai-based managing director, China. His Omnicom Group agency helped develop "Unbeatable," an online series created by Unilever to promote its Clear anti-dandruff hair-care line. The series debuted Aug. 1, and is running on provincial TV stations and the major online video sites. The quality of online programming backed by advertisers is improving dramatically from the early days of branded content in China, and often allows a lot of viewer interaction.
L'Oréal's series for Yue Sai, for instance, was shot with cinema-like quality, "but the real point of the campaign is to drive conversations around the stories," said Bryce Whitwam, Shanghai-based China general manager at Wunderman, which developed the online strategy with another WPP agency, Agenda. "Between episodes, there are loads of ways for girls to get involved."
GM's joint venture in Shanghai took a similar approach with the "11 Degrees" New Media Film Project, a short-film series created by a new Youku unit that develops original content. The GM-backed series brings together 11 up-and-coming Chinese directors. Each film features a Chevrolet Cruze car, and the scripts include ideas submitted by Cruze fans online. Viewers of the online series can earn points by attending offline events related to the film series to win a free Cruze car.