In China, the world's biggest smartphone market, mobile commerce
and payments are heating up fast.
When e-commerce giant Alibaba sold $5.7 billion in goods during
its annual 24-hour megasale Nov. 11, 2013, 21% of orders came from
mobile devices. A year earlier, that figure was only 5%.
E-commerce platform JD.com encourages shoppers to use their mobile app (even during Chinese traditional medicine treatment.)
Alibaba, which outsells Amazon and is preparing for one of the
hottest IPOs of 2014, would seem to have nothing to worry about.
Yet it's looking nervously over its shoulder at mobile-savvy rival
Tencent, whose all-purpose phone app WeChat has 272 million monthly active users
and is moving into m-commerce and payments.
The Alibaba-Tencent rivalry – with each making new
investments and encroaching on each others' turfs -- is spurring
along China's mobile commerce and payments industry. It's the
latest sign of China's quick shift to mobile, a change that mobile
advertising is struggling to keep up with.
"Yes, mobile advertising is growing, but the spending is still
behind when you compare it with other channels that people spend
significantly less time on," said Sascha Engel, deputy head of
digital and national head of Digital Lab, Ogilvy & Mather China. For now
display ads and mobile-ready websites are common, but he expects to
see more geo-fencing and location- and time-relevant ads soon.
Figures on mobile's percentage of total ad spend in China vary
– McKinsey & Co. put it at 1% in 2012 and projected it
would reach 3% in 2014. A 2013 eMarketer report blamed long download times
and a lack of reliable tracking data for the lag but said the China
mobile audience has now become too large for marketers to
Low spending on mobile ads is an issue elsewhere too, but the
numbers around China's smartphone usage make it especially
Of China's 618 million internet users, 81% access the Web from
cell phones, according to the China Internet Network Information
Center. About 3 out of 4 first-time internet users go online with a
smartphone. And there's still room for growth – less than
half the country is online.
Those with internet access are devotees of mobile commerce: A
report last year by GlobalWebIndex said 55% of Chinese online users
bought something using their mobile phone in the last quarter of
2012, compared with 37% in South Korea and 19% in the U.S.
In China's less developed cities, e-commerce is popular because
local malls are lackluster. And many people there went straight to
mobile internet, never getting accustomed to desktops. M-commerce
is a great way for brands to reach them.
Alibaba, which runs eBay-like Taobao and Amazon-like Tmall, has
given away free smartphones to vendors as part of a mobile startup
package. It also bought a stake in Sina Weibo, a Twitter-like
social network that competes with Tencent's popular mobile app
WeChat, which blends aspects of Facebook, Instagram and
At times the Alibaba-Tencent mobile wars seem comical: Alibaba
invested in a taxi-hailing app called Kuaidi Dache, while Tencent
backed a similar app called Didi Dache.
There are concerns the rivalry might be affecting campaigns.
Mobile agency Fugumobile created a Tencent Wechat channel for New
Zealand's Anchor milk brand and linked it to Alibaba's Tmall
shopping center – but starting about two months ago, the link
was no longer technically possible, Fugumobile Director Ravi
Shankar Bose said.
Beyond Alibaba and Tencent, other major e-commerce players are
getting in on the mobile action. JD.com, which sells everything
from baby formula to iPhones, ran TV ads highlighting a feature of
its mobile app: shake the phone to get coupons. They show people in
different walks of life -- a hairdresser, an acupuncturist --
getting in on the shaking action.
Advertising Age Player
"So far it's only a campaign to encourage people to download
– we are on phase one," said Gregory Wu, digital marketing VP
of 180China, the agency behind the ads. He can envision mobile apps
encompassing the entire consumer journey – browsing product
info, looking at an item from every angle, discussing it with
friends on social media, buying it. That's still down the road.