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Taking Advantage of the Chinese Ecommerce Explosion

On the heels of dynamic economic development and a growing online retail market in China, a rising middle class is doing more shopping online. With more than 2.5 times the number of Internet users in the US, the Chinese ecommerce market is ripe for even further expansion. Total transactions of Chinese ecommerce first hit 10 trillion yuan ($1.6 trillion) in 2013. By 2015, ecommerce transactions in China are projected to exceed 15.5 trillion yuan ($2.5 trillion).

China's affluent group is big and still growing, with more than 100 million entering the middle class. According to research by Bain, 73% of Chinese consumers learn about luxury brands from the Internet. Given the increasing demand for luxury brands, goods, and services, cracking the Chinese market is a top priority for US brands in 2014.

Brands looking to reach the Chinese and larger Asian audience will need to adapt their digital advertising campaigns based on these four unique market characteristics.

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1. Authenticity and brand voice are important, and competition is fierce. Chinese consumers care about the authenticity of the brand and connect to brand messages online more than in the US and Europe. For example, according to a recent study by a leading communications firm, more than 80% of mainland Chinese residents will click on an ad from a brand they like. Consumers do their research, often checking the Weibo page, WeChat account, and other online sources to make sure the brand is authentic before making a purchase. Brands should consider their social media presence as well as establishing, developing, and protecting their brand voice online as they enter the market via multiple channels such as social media or digital.

2. Mcommerce is following in ecommerce's footsteps, so figure out mobile payments now.  Mobile ecommerce, or mcommerce, is growing faster than ecommerce by a long shot — 165.4% in 2013 compared with 35.7% in desktop growth. Nearly 70% of Chinese Internet users have made purchases online compared to 46% for US users. Ecommerce platforms such as Tmall and Taobao collectively have more than 150 million accounts. In order to conduct mcommerce, businesses will need to be able to accept payment gateways like Union Pay or Alipay, the two biggest online payment platforms in China.

3. The players are different, but data is still key. The publishers, search engines, and social media platforms are all unique to the China market. They are massive with hundreds of millions of users. The RTB/Exchange ecosystem in China is still quite small and expanding rapidly — it currently accounts for less than 5% of total display inventory in 2013, while video is less than 1%. Much of the digital media is bought on either a cost per day or site sponsorship with direct IOs. To run effective campaigns across these platforms, data is the most important tool. Even though the players are different, good audience data will guide and lead brands to effective audience buying decisions.

4. Find trusted global partners local to the market. The leading adtech firms from the US/Europe across all categories (exchange, data, adserving, etc.) have not penetrated the Chinese market. Businesses will need strong in-market partners that have three advantages: local knowledge of the market (preferably a Chinese firm); a commitment to ad verification, brand safety, and IAB standards; a global presence and offices in the home market for a global scope. 

As global brands and their digital advertising teams enter into the Asian market, they need good information, clear strategy, partnerships, and effective tactical implementation to succeed.

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