Former advertising executive SY Lau joined Chinese internet giant Tencent in 2006 and now serves as president of the company's online media group.
It is a critical position that oversees Tencent's marketing offer to brands, one that has become particularly appealing with the seemingly unstoppable rise of mobile messaging platform WeChat.
In an interview with the Holmes Report, Lau discusses why mobile platforms require marketers to become 'enablers' rather than advertisers and also explains why Tencent is moving into content in a big way, as illustrated by the brand's strong presence at the World Cup.
(1) How are digital consumers in China changing, particularly in terms of how they use WeChat?
As a country, China has seen the volume of smartphone usage growing. Part of this is due to the huge investment in mobile Internet connectivity across the country, which makes it possible for everyone to get high-speed access to Internet services. The speed of that Internet access is also important: 90 per cent of those surveyed recently plan to take up 4G when it becomes available, for example. This makes it possible to design mobile Internet as a rich experience, ratherthan just being a source of information.
This access has also made it possible for consumers to carry out more research around their shopping, access deal sites over the Internet, and generally give them more choice over how they buy. Around 34 per cent of Chinese consumers check prices via their phone while they are in the store or showroom, for example.
At the same time, social networking via mobile has grown hugely. Online video services not only provide more opportunity for mobile video watching, but there also more ways for brands to create their own content too. Around this, apps like WeChat have grown hugely. For brands, WeChat offers more opportunities to interact in a personal way with people, based on the massive changes that are taking place in how people want to interact. This goes beyond social media and into a much wider range of interactions between individuals, brands and companies.
(2) Given these changes, how is Tencent approaching its digital partnerships with brands?
Mobile has overtaken PC internet, TV, print and radio as the most important media, with consumers in China spending over 40 percent of their time on the platform. Businesses to need to realise that mobile is not just an extension of business as usual, but is disrupting how and where people work, live, interact and consume. We need to break away from traditional approaches to business and marketing and adopt a fresh perspective when developing new products and services.
Mobile has also taken on an integral role in the consumer’s purchase process as a decision-making tool, with nearly 50 percent of Chinese mobile Internet users using the platform to search for dining and entertainment information to support their purchase decisions. This demand has in turn driven the development of mobile lifestyle applications such as DidiDache–a leading taxi service app in China, which meet consumers’ lifestyle needs.
The pervasiveness of mobile technologies has also changed consumers’ payment notions. Chinese consumers are now increasingly adopting mobile payment due to the convenience of technologies such as QR-codes, and in the process, changing their traditionally conservative attitudes towards mobile as a payment method.
Marketing needs to evolve amidst these changes to focus on being an enabler. This is essential to stayingrelevant to the consumer and agile in responding to them throughout the buying cycle as distribution becomes increasingly decentralised.
Mobile technologies have altered the way people connect with information, people and businesses. It is disrupting the way they live and changing the role of marketing. With growing demand for utility-based mobile services, brands need to go beyond simply persuading consumers to purchase a product and instead take on the role as supporters and enablers by providing purchase recommendations and offering a range of services. With advancements in data analytics, marketers can gain deeper insights over consumer behavior and tailor their content according to the consumer’s age, gender and even environment.
Bringing all this information together and deploying it to help brands be more successful is where Tencent sees its market opportunity.
(3) Tencent has a big content presence at the World Cup. Why?
This is one of the biggest sporting events in the world in recent history. It’s also one where second screen content – watching reactions over social media or multiple games at the same time – will play a fundamental role in how people want to experience the tournament.
Being able to interact with friends around the same event is critical here – so being the destination for that interest is an important part of our overall strategy for the games. By offering a varied mix of quality content, Tencent will be the main provider of those experiences for consumers and our brand partners.
We have 55 companies signed up as partners for World Cup marketing campaigns; this includes renowned companies from 13 industries including auto, clothing, cosmetics, financial services, telecom, appliances, e-commerce and pharmaceutical. It’s not only international giants like Coca-Cola, Audi, KFC, Nike and Adidas but also domestic brands such as Wanglaoji, Haier, Beijing Hyundai and JDB.
There are so many ways for people to experience the World Cup via online and mobile channels. At Tencent, we are supporting this with our own content platforms as well as by providing the social networking services for user generated content. This includes our specific apps (Tencent News, Tencent Video, Tencent Game Watching App), social platforms (WeChat, MobileQQ) and online content (from the Tencent website through to online videos, microvideos and microblogging). There is a vast range of ways for people to interact around the World Cup, and providing content through those channels is a necessary investment for us.
Game Watching App is a good example. Friends can interact with each other and have fun while the game is taking place; betting on results and answering questions around football replicates the feeling of being with other people and watching the game together. WeChat can help to recreate that personal experience through mobile.
(4) When I was in China recently, many agencies were excited about how WeChat allows brands to 'close the loop' in terms of digital engagement: from social media relationships to direct sales. Is that an accurate depiction of the platform's approach?
I would agree. WeChat is designed to provide a new type of experience in how people can interact with each other and with brands, while also supporting marketer requirements and additional services. The ability to extend WeChat with apps or payment services within the one platform is compelling, both for brands and for customers.
WeChat does integrate into the wider online marketing channels that brands have to consider, like video; this makes it a great way for brands to achieve that multi-channel approach while also linking to specific sales or payment routes that are part of the app.
(5) With regards to Q4, what is WeChat doing to fulfil this type of digital marketing objective?
We continue to extend what brands and consumers can do with WeChat. At the same time, we monitor what customers are asking for in terms of new services. As we see requests that are useful to the wider population of users, we add these to the development list.
Weishi is attracting interest as well – it is similar to Vine, in that you can create and share short videos. We have started doing this around the World Cup – for example, an exclusive video with Larissa Riquelme at the opening game of the tournament received 100,000 views within five hours.Even before the games began, Weishi was used to feature an influential panel of 43 stars including Wu Qilong and Karen Mok to welcome the World Cup.
(6) Do you think brands are using WeChat well enough? What should they be doing better?
Firstly, WeChat is not simply a social media tool, but an interface with the new economic ecosystem established by the mobile Internet. This ecosystem includes many dimensions, such as media, commerce, community, service and hardware. WeChat aims to provide partnership and co-development opportunities for off-line businesses in this mobile-first world. In other words, it is there to support and supplement brands.
Secondly, it presents an opportunity to combine content with community and commerce. WeChat serves to build up genuine trust in the ecosystem to serve users, a win-for-all between media, brands, and users. Through this platform, consumers put their trust in brands through the services they provide, and a real social connection is formed, followed finally by a transaction.
At the moment, we are seeing brands on WeChat develop their approaches to fit with the way that customers want to interact with brands. This has to be on a case-by-case basis, as each brand will have different audiences. What works well for one vendor would not be suitable for another, and the degree that customers want to interact with a brand will differ too.
WeChat offers a good route into interacting with Chinese audiences in the multi-channel approach – this is more important for customers than the single channel method, as it suits their lifestyles better.
It’s also important to say that mobile marketing in general is still in its early stages: China is already the world’s largest mobile Internet market, but its annual advertising revenue per user (RPU) had just hit USD 5 at the end of 2013; in the US, it is USD 66.The smartphone is the most used tool of Chinese people to access the Internet – around 41 per cent of total time - but mobile marketing only accounted for 14 per cent of total marketing revenue.It is a blunt fact that mobile marketing is still at an initial stage, but it will grow rapidly as consumers spend more of their time using mobile Internet services.