The Winning Argument for Selling into China

Cross Border eComm Pentration

This graph shows that imported goods sold into China via e-commerce grew more than six times in the four years from 2014 through 2017.  Uber-example: In that period, Alibaba’s Tmall Global, the cross-border e-commerce site, “introduced nearly 19,000 overseas brands in 3,900 categories from 75 countries…more than 80 percent of which entered China for the first time.”

Gao Hongbing, president of AliResearch, said, “China is becoming one of the largest consumer markets in the world, and this huge consumer market is still opening up. On the one hand, China’s tax cuts on imported consumer goods are increasing, on the other hand, China’s policy continues to encourage cross-border import e-commerce and other new forms of business,”

In spite of the current economic noise, Yu Min, head of the secretariat of ICC China, sees the long term future when he says, “Despite the impact on the multilateral trading system and rising unilateralism and protectionism, economic globalization is still an irreversible trend in the current environment.”

Blatant Plug: Mobile advertising in support of a Chinese selling effort is key to success.

Sources: China Daily; eCommerce study by China Chamber of International Commerce, Deloitte and AliResearch

Brands and Agencies Bring Their Own Strengths to Programmatic

Challenges for Agrencis -Brands

Data from Dun & Bradstreet’s 2019 Data-Driven Marketing and Advertising Outlook illuminates the strengths and weaknesses of brands verses agencies as the two interacting forces adjust to the new programmatic advertising universe.  Brands know their target audience better than agencies, which are once-removed, but the agencies are clear leaders in data manipulation. These data bear on the ongoing in-house / out-of-house debate in an environment where 61% of the study’s respondents say their programmatic spending will be going up in the near term.

Anudit Vikram, SVP of Audience Solutions for Dun & Bradstreet makes the point, “While buying media programmatically has become the norm, B2B companies are still struggling with how to accurately target, measure and optimize those ads across platforms and channels…Whether you are a brand or an agency, efficiency in executing campaigns is intimately dependent on understanding and activating data and generating actionable insights.”

Since When is 6.5% Growth a Bad Thing?

Chinas GDP Q318

It’s a bad news – good news situation in China.  The bad news is that GDP for the third quarter of 2018 is lower than any quarter since the global financial crisis of 2009.  The good news is that the decline is to 6.5%.   Any Western economy would be considered over-heated if it was growing that fast. The US Federal Reserve would be raising interest rates every month to counter the inflationary threat. But this is China where 6.5% growth is slow.  The causes for the slow down are theorized to be the trade tensions with the US and excess borrowing by local governments. Sources: Trading Economics; National Bureau of Statistics, China

Non-Manufacturing Sector Delivers a Positive 3.1% Swing

Service Sector Oct-18

The outlook based on October’s survey of 400 non-manufacturing companies takes a positive jump well above the 13-month average of 52.8.  This is true, in spite of the inflation and consumer price numbers that have come out of the government in recent weeks.  This sector’s strong 3.1% turn shows that China’s economy is affected, but not overwhelmed, by the trade tensions that exist. Source: Markit Economics

Digital Advertising Insights from Academia

Pre-Roll Ad

In an academic study, with a name too long and too academic to include here, revealed that users were less offended by pre-roll ads than they were by interstitial, in-stream ads.  Interstitials “elicited a strong negative emotional response,” which cannot be good for either advertisers or publishers.

By comparison, pre-roll ads, which do not interrupt the flow of content “elicited more favorable emotional and motivational responses compared with in-stream placement vehicles and participants watched them longer.”  The other thing we know from separate research is that pre-roll prior to video content is least offensive for users when held to six seconds.

 

A tip from the authors, “Users likely will not click opt-in advertisement units unless there is an explicit incentive to do so in return for their time. Incentivized advertisements drive high effectiveness.”  Lessons to live by.  Source: WARC

China Edges US in Ad Spend on Video Streaming

Video Streaming 2018

Almost 70% of this year’s projected ad spend on video streaming is coming from China and the US – China is the world leader by a hair (that’s a statistical term).  By 2023 total ad spending on video streaming is projected to grow slightly more than 100% to $47 billion, at which time we expect the 70% share by the combination of China and the US to drop as the rest of the world catches up.  (Note: video streaming does not include subscription services like Netflix).  Source: CNBC

In-App Games Central to Digital’s Ad Future

In-App Games

Driven by a shared belief among both agencies and brands that in-app advertising “can improve campaign return on investment by an average of 41 percent,” it is expected that budgets will make a significant swing in the in-app direction.  A category of interest for both agencies and brands is in-app games. These data show the underlying reasons: Scale, reach and user engagement are driving a strong commitment in the category.

Overall, in-app ad budgets are expected to grow by more than 25% over the next five years and games will be a significant contributor to that growth.  Source: VentureBeat; Sapio Research

Trade Tensions are Effecting China and the US Differently

Consumer Price Index - Sep-18

The steady climb over the last four months by the basket of goods and services that make up China’s Consumer Price Index is related to the steady rise in China’s inflation rate over the same period. There can be no doubt that the trade tensions between the US and China are having an effect on the general economy in China as they are disrupting the stock market in the US. Sources: www.Tradingeconomics.com; National Bureau of Statistics of China

China’s Mobile Consumer

Carrier Data Sept 2018

Another 12 million new mobile subscribers add their names to the rolls of China’s three major carriers.  This number out-distances the 12-month average gain of approximately 10.7 million and it highlights the utter emersion of Chinese consumers in their mobile world, a world in which modern advertising thrives.  Sources: China Mobile, China Unicom, China Telecom

AI in the Field

AI in the field

We are seeing an increasing set of stories that speak of early AI adaptors such as Microsoft, GAP, The Associated Press and Yahoo and even one inveterate novelist who is using it to suggest language for his coming book.  Advertisers are using it to personalize ads to a demographic and to test phrases for impact while other content creators are using it to generate blogs and specific content like sports reports.

These functions are baby steps. The novelist, for example, is not using it to write his novel, but rather to push through writer’s block. The author starts a sentence, then lets AI finish the sentence.  He reports that sometimes it opens interesting approaches he would have never considered.  The ad writers are using it to make changes on the margins, to adjust a stock pitch to speak to a specific audience.  More to come.  Source: Business Insider