Internet Marketing is Performance Marketing

No matter if your business follows a sales- and conversion driven marketing approach, or for example as global brands often do, a brand marketing approach. The Internet offers possibilities to smartly communicate to your target group in a sophisticated and interactive way, far away from pure advertising language, and trustable and true for the recipient.

Online performance marketing offers the possibility to closely track all online marketing activities on a daily basis and have a clear overview where the budget is invested and how the response is.

A research (April 2009) from the European Interactive Advertising Association comes up with very similar conclusions. Advertisers say that they will shift marketing budget from offline to online channels.

Asked about which offline channel the budget for online marketing comes from, advertisers state that budget increase for Internet marketing is coming from TV, print and magazine budgets whereas less from DM and radio. This points to a possible focus shift towards media that attributes itself to performance-led targeting as advertisers look to maximise their ROI, reach and cost efficiencies.

The media group’s ‘This year, next year’ forecast predicts that the combined spend for internet and other digital advertising (principally mobile and LCD screens) will reach $3.6 billion this year, and $5.2 billion in 2009. In contrast newspaper adspend is projected to show steady, if modest, growth from US$3.2 billion in 2007 to $3.6 billion in 2009.

The adspend for out of home, meanwhile, is expected to reach $3.1 billion in 2008, growing slightly to $3.9 billion by the end of 2009.

The boom in digital advertising is partly responsible for the declining share of total media occupied by television. While TV will remain the dominant medium in terms of advertising dollars (projected to rake in almost US$20 billion in 2008 and $23 billion in 2009), its share of total media is set to decline, from 65 per cent in 2007, to 63 per cent in 2008 and 61 per cent in 2009.

Source: www.brandrepublic.asia

By Brian Asmus, Special to the China Post
Stefan Schneider, Managing Director of 3digitalminds, spoke to the American Chamber of Commerce Marketing & Distribution Committee June 12 during a luncheon held at the Howard Plaza Hotel in Taipei. Schneider pointed out that Internet Penetration in Taiwan, Japan, Hong Kong and South Korea is approximately 70 percent, while it is only 12 percent in China and 5 percent in India.In China, Schneider explained, 90 percent of consumers do research online but purchase offline when shopping for mobile phones. Similarly, 70 percent do so for purchases of consumer electronics and 50 percent each for financial and automotive.

Chinese consumers begin by searching e-commerce sites such as eBay and taobao, said Schneider, before going to search engines like Google and Baidu. Finally, they may look to word-of-mouth sources such as BBS and blogs.

Schneider recommended that companies that wish to market online first conduct Web-site analysis, including keyword research, structure, linking and duplicate content to optimize the Web site.

Christopher Fay, Co-Chairman of the AmCham Marketing & Distribution Committee and Stefan Schneider, 3digitalminds

In Phase 2, he suggested that they look at Web-site enlargement, adding fresh content, developing blogs and setting up forums. This involves linkbait and reputation buildup, and requires constant tracking and optimization, he said.

According to Schneider blogs are “everybody’s own newspaper.” In South Korea, he said, 92 percent of Internet users read blogs with 72 percent writing them. In China, the figures are 88 percent and 70 percent; in Taiwan, there are 86 percent and 71 percent and; in Japan, they are 84 percent and 47 percent.

When it comes to topics, said Schneider, 64 percent write about their private lives, and 34 percent write their opinion about brands and products.

“How should companies use blogs to further their business objectives?” asked Schneider. “These,” he said, “can be used to advertise, establish relationships within your company’s niche and market products.”

There are several important dos and don’ts when setting up blogs, he stressed. “The consumer is smarter than you think; alternative marketing tactics must be genuine and, in today’s world, transparent.” That means companies should forget about setting up fake blogs. “You will always be found out,” said Schneider.

Blogs, he added, should not contradict, but rather explain the company, its products and services. “It has to live the concept,” emphasized Schneider. “That is why blogs are not suitable for every kind of business.”

Finally, Schneider examined branded communities. The purpose of branded communities,” he said, “is to engage in a conversation with stakeholders and customers.
This enhances product development, while enabling designers to hear consumer voices, particularly creative consumers, while develop brand ambassadors, fans and influencers.

“These individuals,” he continued, “create trust around a brand for new site visitors by the quality of the comments that they make. They act like a host rather than a policeman.”

The incentive is to propel mouth-to-mouth marketing. Schneider cited the Dell Ideastorm campaign by way of an example. “The target group was its customers. Dell executives wanted to come up with new idea. The branded community ended up delivering 8,000 suggestions, 600,000 votes and 64,000 comments.”

Tier1 cities:

• In the Tier1 cities like Shanghai, Peking, Guangzhou and Tianjin live only 6% of the Chinese population. They represent 13% of the gross domestic product.
• These cities are a strong competitions in terms of (foreign) investments and some markets are already close to saturation.

Tier 2 cities:

• In the 300(!!) Tier2 cities live 53% of the urban population. They represent 64% of the gross domestic product.
• Definition of a Tier2 city: Cities with up to 6 million inhabitants and a per-capita GDP of 34,000 RMB in average.
• These Tier2 cities offer a constantly increasing consumer market with a yearly income of 3,000 to 6,000 USD per household.
• Seen as a group, the Tier2 cities grow by 15% per year. 60% of them are located close to the coastal provinces in the eastern part of China.

Offline and online sales:

• Supply chains are far than efficient for foreign companies in China. Only 10% of the turnover is sold directly via retailers, whereas 42% of the turnover reach the consumer through three or more interconnected dealers in the supply chain. The result if a lack of insight into the behaviour of Chinese consumers.
• Only very few companies have direct access to consumers and sell their products online. Examples are Anheuser-Busch or Amway.

Some own thoughts / conclusions:

• 59% of Chinese people live in cities (Tier 1 + 2) representing 77% of the gross domestic product. Reversely, 41% live in rural areas (= roughly 560 million people), they stand for 23% of the GDP .
• The Tier2 cities are of growing importance. More and more companies try to open up this huge potential. From my experience, foreign companies have their headquarters in the Tier1 cities to set up business and gain first experience. But the potential to make money lies in the Tier2 and Tier3 cities. And this is not only true for cost reduction in manufacturing but increasingly for sales and market share growth.
• Parallely, the Internet penetration increases and this will sooner or later also bring online marketing and e-commerce along.
• Interesting will be how search engine market shares will develop. Right now, Baidu has a market share of almost 100% in rural areas. In the Tier1 cities it’s market share is reduced to about 40%, Google holds some 40% as well (I wrote an article before how market shares and demographic development interact in China). Anyway, this is a question about years, I suppose. But also makes clear that search engine market shares in China are not fixed yet. A lot of space to move is still available.
• What a potential for direct sales channels and e-commerce! Anyway, still some problems to solve like nationwide use and acceptance of credit cards for online payment, reliable and quick logistics and delivery services, etc. But with young Chinese generations heavily using the Internet already now, participating in social networking and web 2.0 tools, this is a good basis for the development of e-commerce activities. Not to mention the distances in China…

Yes! Beer is good for the skin, didn’t you know? And for general health condition anyway. Germans don’t eat anymore as 7 glasses of beer substitute a meal. Prost! And there’s more about France and Sweden.

Need for specialist in China marketing

The habits of Chinese consumers were not considered or simply unknown as well as the way of marketing communication in China. Even basic rules were kicked aside. Good marketing in China should be done with a partner who has long-lasting experience in the Chinese markets and knows and understands the Chinese people and their habits.

Creative circle offers China marketing services

Some highly-specialized and skilled agencies from various marketing channels joined together to form a network for China marketing and China advertising. All partners of this marketing and creative network in Shanghai and Beijing are WFOEs (wholly foreign owned enterprises) and offer top marketing services at Western quality. Nevertheless, they all have long-lasting experience with marketing in China and have a deep understanding of the Chinese market and Chinese consumers.

Marketing services cover these creative areas:

• Internet Marketing China
• Web Design China
• Product Design China
• Product Photography China
• TV spot production and image film China
• Direct Mailing China

If you are interested in Chinese marketing services as mentioned above, please write me a short mail via the contact form.

Internet Advertising Trend No. 1:
Using the power of individual expression

It is no secret that users get tired about pure banner advertising more and more. But still banners are an important means to reach a mass of consumers. However, banners are just superficial touchpoints, the deep effect lacks. But there is a way out of this dilemma: Combined with web 2.0 approaches a brand can develop real brand embassadors who deeply engage with a brand and spread it on the Internet.

But how to create these brand promoters? Make use of the power of the human pool of creativity (crowdsourcing), integrate the consumers into your brand by letting them contribute with their ideas and individuality. Interact with the consumers, challenge and reward them. Use these sticky consumers in a clever way, don’t exploit them.

Why should it work? Many people want to express themselves in an individual way, especially true for a society where self-expression has rather been restricted than fostered. This need could be expressed in a personal dressing style, for example, but the easiest and most anonymous way is the Internet.

Which tools and concepts can be used? blogs (especially in China a powerful instrument of opinion building), video contests, creative idea collection (e.g. write songs, texts, design motives or products, etc.), always combined with a poll so that the users themselves can elect the best input and not to forget the reward which needs to be special itself and a real motivation. Special-interest community models where users can design and define their personal page, get answers and exchange with like-minded people.

Internet Advertising Trend No.2:
Measurement and conversion tracking

The return-on-investment (ROI) of marketing spendings will become increasingly important for advertisers. Marketing budgets won’t be spent without fulfilling predefined goals, e.g. increase in brand awareness, lead generation or online sales. Click rates are definitely no conversion, the ROI must be defined as a real value for the advertiser.

Closely related to optimizing the return on investment is the target group matching, which means to buy relevant traffic and not mere reach any more. Quality, not quantity brings your brand conversion and awareness. The target group of the advertiser has to fit to the target group of the media, the product or service advertised needs to fit to the advertising channel.

Internet advertising and website development will be seen as integrated disciplines. Reporting and tracking results will be analyzed and flow back into the optimization of the marketing campaigns and the website funnel.

With the increase of e-commerce and the availability of conversion points on websites (lead form, online sales process), performance marketing will play an increasing role, giving search (SEO and keyword advertising) and affiliate marketing more demand. Banner campaigns and eDM advertising will be based on conversion calculation as well.

Internet Advertising Trend No.3:
Integration of online and offline activities into the marketing and sales strategy

Online advertising is part of the overall marketing strategy. Any marketing activity will pay into the brand value or marketing goal, no matter if online or offline. Using a single online marketing channel is not a comprehensive strategy. Instead, offline sales channels like offices, point-of-sales (POS) are integrated into Internet advertising campaigns in a way that e.g. traffic can be drawn from the customers in the local shops to boost a website. On the other hand, a website can generate leads which will be converted by local sales offices into sales.

Online Marketing Channels
Digital Advertising Metrics
Online Media Formats
web design and web development
domains and hosting
viral marketing
web promotion
Tracking

Articles:

How to do…

How to do…

Before selecting the right online marketing channel there are a some strategic questions to answer. Target group information should be available, the general marketing strategy should be considered and how digital advertising fits into there. Interaction and integration with other sales channels in a company should be looked at and the goals of the online marketing campaigns itself.

Online Marketing Channels:

Search engine marketing / keyword advertising / SEM
Search engine optimization / SEO
Affiliate marketing
E-mail marketing
Banner advertising
Blog marketing

Demographics

According to the CNNIC, 18-to-24-year-olds are nearly four times as likely to be Internet users than the general population. (Source: eMarketer)

In 2006, there were 46.6 million broadband households in China, representing 12.6% of all online households. (Source: eMarketer)

The number of Internet users in China has increased from 22.5 million in 2000 to 137 million at the end of 2006, representing a growth rate of 508%. Chinese Internet users now represent 34.4% of all Internet users in Asia.

China is now only behind the US for the overall number of users online. Prediction – at the current rate of growth, Chinese Internet users will exceed the 210 million US users by 2009. (Source: eMarketer)

User Behaviour

Out of China’s Internet users, around 38 million ofthem play online games. (Source: Palava Digital)

The number of short message service (SMS) users in China is expected to reach 360 million by 2008, with an expected market value of RMB37 billion. (Source: Analysys International)

Email is an important tool for collecting opinions from peers regarding purchase decisions. 75% of Hotmail®/Windows Live Mail users in China discuss music (MP3s, CDs, etc) via email prior to purchase; 61% of men discuss car purchases; 78% of men and 71% of women discuss electronics and gadgets prior to purchasing; 69% of men and 61% of women talk about mobile phone purchases on email before purchase; and 74% of women and 59% of men exchange their ideas on clothes and accessories purchases via email. (Source: Microsoft Digital Advertising Solutions)

In a survey regarding email etiquette, in reply to the question: “which is the most impolite email habit?”, 64% of Chinese respondents said “sending chain emails”, while only 3% said “using a PDA while out with others”. (Source: Synovate)

Electronics and gadgets (74%) is the most talkedabout topic via email in China, closely followed by education (73%), travel (72%) and social arrangements (72%). (Source: Microsoft Digital Advertising Solutions)

In a survey regarding the effectiveness of different mediums, Chinese respondents said they found the Internet was the most effective in “delivering information” and “being a source of entertainment”. The Internet was not seen as being the most effective in “supporting purchase decisions”, “arousing interest” or “drawing attention”. (Source: Synovate)

In a survey regarding the consumption of news, Chinese respondents said that when a major

disaster or news story breaks, only 19% of them turn to the Internet. That’s compared to 60% of people who turn to the TV. In the past week 22% had gone online to read a blog; 18% had received news on their mobile phones; 13% had emailed some interesting news to a friend; 11% had received a regular, subscribed to news email; and 7% had accessed a news Web site that they had paid to use or subscribed to. (Source: Synovate)

Out of all Chinese mobile Internet users, 72.2% of them use their mobile phones for sending or receiving email; 30.9% for reading news and information; 19.4% for downloading ringtones, movies and games; 6.3% for logging on to communities; 5.3% for their banking; 2.6% for their own blogs and 2.3% for watching online videos. (Source: CNNIC, January 2007)

E-Commerce

China’s retail e-commerce revenues were expected to increase from US$504.3 million in 2005 to US$700.1 million in 2006. (Source: Analysys International)

China’s online travel market in Asia is expected to grow by 71% by 2010. (Source: Euromonitor)

Online Advertising

At end 2006, the market size of the online advertisement industry in China had reached

RMB1.324 billion, representing an increase of 9.53% from Q3. Revenues from key word

advertisements were RMB476 million, representing 36% of the total market and an increase of 14.4% from the Q3. Revenues from column-based advertisements were RMB751million, representing 56.7% of the total market size and an increase of 6.68% from the Q3. (Source: Analysys International)

In May 2006, 587 online display advertisers ran nearly 1,500 campaigns consisting of more than 3,700 banners. In July 2006, 817 online display advertisers ran 2,276 campaigns consisting of 5,785 banners. (Source: Nielsen//NetRatings)

During the May-September period of 2006, there was a total of 3,795 online advertisers in China, running 10,136 campaigns (at an average of 2.7 each), posting 25,023 banners and generating 285 billion ad impressions. The total ad expenditure in that period was RMB2.3 billion. Of that expenditure, 26% of it went on automotive advertisements; 23% on computers and electricals; and 10% on FMCG advertising. Just 7% of online ad spend went on fashion; 6% on auctions and classifieds; 4% on media; 3% on entertainment; and 3% on property. (Source: Nielsen//NetRatings)

During the January-June period of 2006, out of the RMB2 billion spent on online advertising, 60% (RMB 1.25 billion) went on display advertising; 33% (RMB 697 million) on search engines; and 7% (RMB139 million) on classifieds and other forms of ads. (Source: Nielsen//NetRatings)

In 1H 2006, Sina.com led the portals, owning 20% of China’s online advertisement market, worth RMB420 million in ad revenues; Sohu.com had 14% market share earning RMB290 million; Netease.com with 6% generated RMB130 million; QQ.com and its 5% earned RMB100 million; while Tom.com had 3% share worth RMB50 million. (Source: iADTracker 3.0, iResearch Consulting Group “China Online Advertising Research Report”)