From a boom in independent agencies to a growing need for collaboration and the rise of inhouse creative agencies at tech giants like Alibaba and Tencent, the Chinese industry is alive with change and growth. And this year Chinese agencies, brands and the local association will be in Cannes in force. So what are the hot topics in the world’s most dynamic advertising market?
LBB’s Laura Swinton caught up with Modern Advertising’s Zhao Hua to find out what local brands are looking for, how tech is changing the picture and why size matters.
LBB> What have been the hottest discussion topics in the Chinese industry in the past six months?
Zhao Hua> In my opinion, the hottest topic discussed in the Chinese advertising industry should be how to develop together – in other words, symbiosis. One of the themes of the just-concluded 15th China Advertising Forum was ‘symbiosis’.
In the Chinese market, advertisers are increasingly demanding that their advertising and marketing be provably effective, and in order to meet the needs of their clients, Chinese advertising companies include not only traditional advertising companies but also Internet advertising. Enterprises are beginning to look for innovative ways of making money. The most obvious way of achieving this is symbiosis.
Symbiosis has two meanings. Firstly, it’s about single enterprises that are willing to form alliances with partners. That means they can use the existing business advantages, resource advantages, and service advantages of the parties to start doing business together. This may be related to the relatively small size of Chinese local advertising companies and marketing companies.
Secondly, individual companies are beginning to expand other businesses beyond their existing capabilities in order to better serve customers. The most obvious example is that many advertising and media companies have opened their own media platforms, hoping to replace the communication model of existing media. Some companies have even discovered a new business model in this process.
According to authoritative statistics, in 2018, China’s advertising business reached 799,149 billion yuan, a year-on-year increase of 16%. However, the Chinese advertising market is also facing the real dilemma of increased competition for optimized transformation. Under such circumstances, it is even more necessary for companies to find ways to become warmer with each other, rather than relying on their own efforts to fight alone.
LBB> I’ve heard that there are loads of independent agencies popping up in the market – how is that changing the landscape?
Zhao Hua> In my opinion, China's independent advertising company is a real embodiment of China's economic vitality.
In China, the economic environment in recent years has been buoyed by the government's encouragement of “mass entrepreneurship and innovation”. In such a large environment, the scale of China's cultural and creative industries has grown rapidly. According to statistics, the number of Chinese advertising practitioners has grown from less than 1,000 in 1979 to 5.03 million in 2018.
In addition, since the development of China's advertising industry in 1979, a large number of foreign-funded advertising companies and joint-venture advertising companies have laid the industry foundation for the development of China's advertising industry and cultivated a large number of market talents. These outstanding talents, who have been trained in large international companies, have begun to further their personal abilities and embark on the road of self-employment when the conditions for entrepreneurship are mature. This forms the background for a large number of independent advertising companies in China.
The emergence of so many independent advertising companies is not a bad thing. Objectively, we can accelerate the mechanism of market competition and allow advertisers to get more choice. For example, according to the traditional concept, a project from a brief to insight to creativity to output to execution takes a long period of time, but now, due to the requirements of Internet communication and the emergence of a large number of independent advertising companies, this process has been greatly shortened. It is calculated in days, even in hours.
In this way, the fierce market competition will eliminate the weak, but on the other hand, it can help those truly outstanding enterprises to grow rapidly.
LBB> On the other side of the scale, I’ve read that the big Chinese tech giants like Alibaba and Tencent are building in-house creative agencies – is that to service themselves and their own marketing needs or are they looking to work directly with brands? And what impact is that having on the industry?
Zhao Hua> As I don’t come from those companies, I can only express my personal opinion as a bystander. In my opinion, the internal creative agency must not be established solely for the brand communication or marketing needs of these companies or platforms. I believe that these internal creative agency companies must be based on service customers, that is, brand owners.
First of all, Ali and Tencent are not just brand owners in the traditional sense. Yes, they are massive companies, but the main business of these companies is to give more brand services in their media and make money on their platforms. That could be in the form of ecommerce, or in the form of games or advertising, and more. Therefore, providing the required services to a large number of corporate customers is the core of these enterprises.
For consumers or brand owners in other parts of the world it may not be easy to understand the size of the Chinese market. Because there are hundreds of millions of users, such platforms naturally attract the attention of many optimistic companies. Therefore, companies like Ali and Tencent have thousands of corporate customers who need services. In order to meet the needs of these corporate customers, Ali has even developed a system of AI creative design. Luban is using computers to help customers complete relatively simple poster design. Imagine, in such a market environment, how can there be an internal creative agency team that only serves the enterprise itself and does not serve the customer? Even if the original intention of such a team is to serve the enterprise itself, under the actual market demand, such a team will certainly undertake a large amount of customer service work.
LBB> What is the biggest challenge facing China's advertising and marketing industry in 2019?
Zhao Hua> I believe that the biggest challenge facing China's advertising industry and marketing industry today is how to get out of China's market path. That is to say, Chinese advertising companies and marketing companies should leverage the real needs of Chinese consumers, using China's own methods in the Chinese market to bring practical results to brand customers.
After all, many of the previous Chinese advertising industries followed ideas, methods, experiences that were imported. However, the market practice in recent years, especially when it comes to Internet advertising in China, shows that China can stride out and follow its own path with its own methods. For example, in the way that traditional media is combined with online platforms and new media. There’s a feature of Tencent's WeChat platform that’s seen a second ad slot added to Moments, and an ad slot has been added to another product, the Mini Program. These seemingly simple product features, because the products are deeply accepted by Chinese consumers, give these new forms of advertising a special value.
For example, celebrity endorsement is quite common in China, and there are indeed many brands that rely on this model to achieve amazing sales.
Perhaps the above examples are biased. But this is indeed the status quo of the Chinese market. It may not be appropriate to ask the Chinese advertising industry to copy the Western road.
LBB> What do you think is the biggest misunderstanding in the international advertising industry in China?
Zhao Hua> Following on from the previous question, I feel that the biggest misunderstanding that the international advertising industry has towards the Chinese advertising industry is that they always hope that the Chinese advertising industry should think in terms of international methods, international thinking, and international perspectives.
This can be seen in the treatment of Chinese advertising by international advertising awards. If the work is not built on the thinking and concepts of the West, it will not be universally recognized by various competitions and judges. But it could be that the ad is really effective in the Chinese market. Of course, the concept of peer-to-peer advertising in the world is no problem, and it is worthy of respect and promotion. But perhaps, the current Chinese advertising industry needs more understanding from international counterparts. When you learn more about the Chinese market and Chinese culture, you may find that Chinese advertising is better.
LBB> What kind of technological development trend is most exciting for brands and advertising companies? Can you give a few examples?
Zhao Hua> In my observation, for the development and application of technology, the Chinese advertising industry has not been particularly more active in recent years. A few years ago, there were many technological bursts in a small period of time, especially on mobile, such as H5, Mini Programs, short videos. At the same time, many advertising companies have established their own data monitoring, analysis, and marketing systems. In the past two years, the industry seems to have entered a period of practical implementation after the previous technology boom. More advertising companies are pursuing the use of existing technology or technology products to better realise their value.
LBB> What have been the most personally satisfying or inspiring stories that you guys have featured over the past year?
Zhao Hua> Compared with the success stories of the top talents in the industry, I personally feel that the reports of successful cases are more and more popular among ordinary industry practitioners and advertising companies. Modern Advertising magazine has a dedicated column called ‘Case Library’, which specializes in the most fresh, creative, dynamic and even unique advertising marketing cases on the market in the last three months. This section is the core section of the magazine. Its value lies in passing more successful experiences, methods, and thinking to more readers, helping more readers to emulate success.
LBB> When it comes to creative storytelling and content, what sort of work tends to resonate with people?
Zhao Hua> This question should be answered by Chinese creative creators, and should not be answered by media people who report excellent advertisements, because our identity is the narrator, not the parties themselves.
LBB> If a foreign company wants to cooperate with a Chinese advertising company, what advice would you give to a foreign company?
Zhao Hua> It is always about value. What value can cooperation bring to the current Chinese company?
This value may be the reputation, professional ability, management system or so on of foreign companies earlier, but now, I think the customer, resources, and even actual business needs are more important.
To put it bluntly, only by bringing the most desirable value of Chinese companies, can we better cooperate with Chinese companies.
LBB> How would you characterise the local advertising industry community – is it a highly sociable community where people from different agencies get together or is it quite secretive and competitive?
Zhao Hua> China's advertising circle is too big! It is really impossible to use one or two models to clearly divide millions of people into different traits. Cooperation between different enterprises and different people will not be less, and competition is inevitable. But the Chinese market accepts a common philosophy: a win-win situation.