Mr. de Dios took part in a panel about building brands online, including the internet, online video games, viral e-mail messages, mobile phones and other aspects of digital media. Marketers are grappling with new media everywhere, but in China the pace of development is so fast and consumers are leapfrogging stages of development, forcing advertisers and their ad agencies into a fast learning curve to use these new tools more effectively.
It's not just a matter of money or manpower--P&G, for instance, is the largest advertiser in China.
"Online media involves three value shifts that put the consumer at the center," said P&G's Mr. de Dios. "Consumers crave trust. She clicks for self-expression and she's after connections with similar people to herself, for like minds. They also go online to find out what's new, and for the most part, fast-moving consumer goods are not perceived as cool."
Online media is private zone
P.T. Black, a partner at Jigsaw, a consultancy in Shanghai that tracks youth trends, said, "Online media is private, while traditional media is public. Many Chinese would reject standard TV commercials if they saw the spots online but they liked 'MC Farmer,' because it's not something they would expect to see on TV."
"MC Farmer" is a Nokia viral commercial created by Eight Partnership in Hong Kong now appearing on local YouTube-like video sites such as Youku.com. The edgy mock documentary, which humorously claims a Mongolian farmer invented rap music, has become a hit in China since it launched late last month, and was cited by several speakers as one of the most innovative digital media campaigns in the mainland to date. (See "This Mongolian farmer was the world's first rapper?" AdAgeChina, Nov. 28, 2007)
"For some products in the upscale Nseries, we spend about 25% or 30% [of the budget] or sometimes higher on digital," said Dan Wong, Nokia's VP- multimedia sales and channel management, China, during a panel on mobile marketing. Mobile is more advanced in China than in the U.S. but still faces obstacles ranging from low budgets to figuring out how to use a new medium and measure its effectiveness.
After his panel, Mr. Wong said there is interest in the "MC Farmer" concept outside China, with Nokia executives in other countries wondering if they might concoct similar efforts on, for instance, the origin of salsa dancing.
Find the individual who "gets it"
Technology itself has also hindered the adoption of digital marketing in the mainland. The Chinese government has pushed the rollout of broadband media but plans to introduce a more advanced 3G mobile platform have been delayed so long that industry experts like Mr. Wong no longer even speculate about when it will come to China.
"The industry has not done a good job in trying to ensure our products live up to delivery standards. We need to educate the marketing community about the right products they should use in these channels," said Lau Seng Yee, EVP at Tencent, a Shenzhen-based company that created China's popular QQ instant messaging platform.
"In China right now, you can't expect clients or their agencies to come up with ideas for using digital media on their own, it won't happen. We often come up with entire campaigns for them, present the whole picture, and then help them execute it," said David Turchetti, CEO of mobile marketing specialist 21Communications in Shanghai. "Typically you have one individual who gets it ... and pushes the [mobile-marketing] program through. Success depends on how involved we can keep that executive. If it's passed off to a midlevel team or to a traditional agency, typically it falls apart."
Over 600m mobile users, 160m internet surfers
Despite the obstacles, marketers are looking at ways to use digital media in China. With all the advantages of scale, the mainland is on the verge of becoming the world's biggest digital market. China has more than 600 million mobile phone subscribers and is home to more than 160 million Internet users and 30 million online gamers.
The potential for growth is enormous, said Jason Jiang, CEO of Focus Media, China's largest digital media group. "Ten percent of China's total population, about 150 million people, represent 75% of the spending power. In terms of effectiveness, digital media reaches the target market of major advertisers, and it grows in China as the economy expands the size of China's middle class, our so-called baby boomers."
China's online ad market is likely to exceed $1.3 billion this year, according to Nielsen, a 115% jump from 2006. By comparison, 2007 online ad spend in the U.S. is expected to reach $20 billion, up 26% in the first three quarters, according to the Interactive Advertising Bureau.
Digital spending is growing fast as multinationals try out new interactive programs. China still has a vast rural market to tap and city dwellers' appetite for more fashionable, media-rich and web-accessible handsets continues to boom.
Victor Koo, a keynote speaker and CEO of Youku, said that just a year after launching Youku already has reached 80 million video views per day--up from under 5 million daily video views in December 2006, shortly after the site launched.
"China will be the No. 1 internet market very quickly, and online advertising will become a significantly higher portion--8% to 10%--of the market," he said. Speakers estimated that digital advertising accounts for only about 5% of all media spending in China today, but they suspect that figure is skewed by local brands' scant interactive spending.
“Looking just at the major multinational marketers, it’s probably a bit higher,” said Mr. Black.
Putting consumers in charge
Musing on how to evaluate edgy viral efforts, Mr. Wong said, "Is it bringing back the investment, the ROI? You can't measure the halo effect. No one can. Is it building our brand? This could backfire if we're not careful. And by doing a digital campaign, if we then couldn't [afford to] do a product campaign, do we lose sales?"
Marketers in China have been inspired by "American Idol" and its Chinese reality-show imitators. Doing its own version, Pepsi invited Chinese consumers to submit a 200-word script for a spot that would be shot with a pop star. Harry Hui, Shanghai-based chief marketing officer of PepsiCo's beverage business unit in Greater China, said that 28,000 scripts poured in and 5 million people voted for their favorites. A 28-year-old schoolteacher won, and his spot was filmed and aired.
"It was entirely directed by consumers," Mr. Hui said. "The Pepsi Creative Challenge took the whole concept of meetings and storyboards and turned it inside out and said, 'You guys decide.'"
To attract the GenY demographic, you must have cutting edge content, warned Duane Kennedy, CEO of Dai-Biao, a multmedia hip-hop site in China. "These consumers spend money on things that represent their lifestyle, mostly foreign brands. But you have to use relevant content that wakes them up, and also lets them be in charge of saying what's cool."
One major marketer, Lenovo Group, turned its sponsorship of the Olympic Games' longest torch relay--stretching across 31 provinces and 113 cities in China over three months--into a more earnest version of "American Idol." The marketer partnered with Google to invite people to send in nominations explaining why they should get to carry the torch.
More than 6,000 people entered, said keynote speaker Deepak Advani, Lenovo's chief marketing officer and senior VP of e-commerce. "We picked 18 finalists who posted their videos on YouTube on why they should run the torch." One student lobbied his entire university for votes, he said.
"We believe the world is changing and the difference between winners and losers will depend on who's pushing innovation."
Given how rapidly Chinese are turning to the internet and mobile phones for news, entertainment and communication, the winners will likely be major players in the mainland's digital media market.
Contributing: Laurel Wentz, Advertising Age's international editor