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Growing influence

Updated: 2013-04-05 10:45
By Lin Jing and Chen Yingqun ( China Daily)

Growing influence

Growing influence

Multinational firms push Micro Blog marketing strategies to drive sales, growth in China

It is not often that one finds Mercedes-Benz, Starbucks and Nokia sharing the same marketing platform, considering that their lines of business are totally different. But in China these companies share the common goal of being a key influencer in the "virtual town square".

The virtual town square here is micro blogs, a Twitter-like platform that is now an integral part of the China growth strategies of global companies.

No one knows the power of this platform better than German luxury car brand Mercedes-Benz. In January, when it decided to sell a limited edition of its Smart cars, it decided to do it through micro blog. All 666 units of Smart 2013 New Year Edition that were offered though Sina Weibo were sold out in just 490 minutes.

The campaign, announced on Jan 14, also sparked huge interest online. In five days there were over 140,000 re-posts and over 700,000 page views. More importantly, the company was able to achieve in just five days what would have normally taken several months to achieve, a China footprint spread across 59 cities.

"Our collaboration with Sina Weibo is not just an innovative way to sell cars. It is a new approach in consumer engagement and also an opportunity for customers to purchase vehicles on social media platforms," says Mao Jingbo, vice-president of Mercedes-Benz.

Mercedes-Benz is not the only company to have gained from such initiatives in China. Social network service platforms of companies like Sina and Tencent have over the last three years become an important tool for several international companies looking to establish or consolidate their presence in China, experts say.

According to Sina, there were about 260,000 active company accounts on weibo in 2012, with more than 1,000 of them belonging to multinationals like Nokia, Mercedes-Benz and BMW.

Unlike developed Western markets, where SNS marketing still lags behind traditional marketing, micro blogs have proved to be a handy tool for companies to reduce their expenditure on conventional advertising in China.

Since their debut in August 2009, micro blogs have become a huge online Chinese society where people from all walks of life share personal experiences, participate in social activities and voice their opinions on topics as diverse as politics, business and celebrity gossip.

But from a commercial perspective, it is the power they have to influence opinion and ultimately increase purchases that makes them appealing to Western companies.

According to statistics provided by the Data Center of China Internet, companies using Sina Weibo are spread across 22 different industries. A recent survey also indicated that nearly 23 percent of the global companies present in China are keen on using the platform for marketing-related activities like enhancing communications with consumers, launching business campaigns, delivering positive information and brand building.

To understand the potential of micro blog marketing one need to look no further than the success achieved by US-based global coffee chain Starbucks.

The company opened a Sina Weibo account in May 2012 and now has over 700,000 followers. Like many of its peers, the coffee giant initially started off with routine marketing campaigns, but later found that targeted campaigns could be converted into real-time store purchases.

"What the fans have to say about the brand is often critical for a company. News travels fast in the digital world and our efforts are to be more connected with our fans," Marie Han Silloway, chief marketing officer of Starbucks China, says.

Last year, the company started a Frappuccino campaign on its micro blog, which has since become its main sales driver. During the warm-up campaign (May 7 to July 9), Starbucks put up more than 60 posts, which generated 234,541 re-posts and comments, while the actual micro blog announcement of its limited-edition cups generated 80,000 re-posts, making it the brand's best performing post ever. The chain's fans increased by almost 15 percent from 360,000 last year to over 430,000 now.

In terms of quantifiable returns, the company's 500,000-yuan ($80,500, 62,390 euros) micro blog campaign has inspired more than 95 million friend-to-friend recommendations, and sparked a 14 percent year-on-year growth in sales.

Customer interactions

Marketing successes aside, the platforms are also about more customer interactions for some companies.

Durex, a condom brand owned by the UK-based Reckitt Benckiser group, perhaps has the most active presence in China's virtual world. The company has created a humorous character called Dudu, that shares sexual health information and love stories. That the platform is immensely popular can be gauged by its ever-growing fan-base of over 670,000 followers.

Ben Wilson, marketing director of Reckitt Benckiser, says that though Durex's success is largely due to the interesting topic of safe sex and sex education, the friendly and conversational style of the micro blog has helped the company reach out to more fans.

"Social media is all about making friends and engaging people. As a brand, we have realized how critical it is to engage with our friends," he says.

Durex has a dedicated team of professionals and an external associate to manage its micro blog around the clock. The team puts out 10 to 15 posts every day and conducts two to three events for their followers every month.

"It (micro blog) is the place where people who buy condoms spend a lot of time," Wilson says. "What we do is to connect lots of people, who are passionate about the brand, so that they will ultimately choose Durex when it comes to buying. We also do not use micro blog to force consumers to buy our products. We instead use it to build friends," he says.

Micro blogs are also an important tool for many companies to gauge consumer feedback.

Swedish furniture retailer Ikea set up its official account on Sina Weibo in October 2010, when micro blogs were just beginning their ascent in China.

"The main reason for starting the micro blog activity was to ensure that we do not miss the best opportunity to communicate with our consumers," says Jay Lin, a social media specialist from Ikea. "SNS has a dual role for us - listening to suggestions from consumers and giving positive, timely feedback to consumers on their concerns and needs."

Their daily schedule includes answering netizens' questions, forwarding complaints to relevant after-sales departments, supervising key words and sensitive incidents on micro blogs that might influence the company, and coordinating with other internal departments to draft the proper answers, Lin says.

"Many of these incidents can be turned into future business opportunities, especially if we can seize the moment. So it is of utmost important that we discover and grasp these moments with our account, and also publicize our offline activities to draw enough attention," Lin says.

Michael Chu, managing partner of Ogilvy Public Relations, says micro blogs are an option worth considering for foreign companies, especially for companies that are focused on consumers aged above 20, as their target audience spends a lot of time online.

The total number of micro-bloggers in China is believed to have reached 309 million by the end of 2012, a 58 million addition over 2011, says a recent report published by the China Internet Network Information Center, the administrative agency responsible for Internet affairs under the Ministry of Information Industry. During the past year, monthly visitors of micro blogs have exceeded 200 million, not including the number from smart phones.

Latest research from DCCI shows that micro blog users aged above 19 account for over 88 percent of all Chinese netizens. On average, one user has 1.45 micro blog accounts, puts up 2.13 posts and forwards 3.12 posts. Over 70 percent of them surf their account at least once a day.

The number of Internet users in China is around 564 million. The total daily posts on Sina Weibo are more than 400,000, while the number of micro-bloggers is around 300 million.

Compared with traditional ways of marketing such as television or newspapers, significant features of micro blog marketing are the increased interaction it allows with followers and its lower costs.

Eugene Chew, director of digital strategy at JWT, a public relations company, says that micro blog marketing enables conversations across multiple platforms.

Silloway from Starbucks says a micro blog is an excellent tool to gauge customer perception. "Some customers write to us that they want to improve their coffee knowledge, some tell us what they think about our products," she says.

Chew says that big brands are attracted to social media because they are relatively low-cost, compared with TV and print advertising.

"It is like a consumer database, where word of mouth is the most important tool for brand building," he says.

"Lots of brands realize that they need to build online communities for brand lovers, especially new brands that have limited budget for marketing."

Yao Fang, marketing director of Royal Caribbean China, a unit of Royal Caribbean, the Norwegian-American global cruise company based in Miami, says that unlike traditional marketing channels, weibo comes at a lower cost, and serves as a supplementary marketing channel. She says that though it is difficult to quantify exact contributions, there is no doubting the boost it gives to overall turnover.

"Micro blog marketing is the next big thing, as Sina has become a stable platform, with a daily growth in user numbers and viscosity. It is a huge marketing opportunity," she says.

Silloway says that though Starbucks has stores in 16 different provinces, it is difficult to establish a pan-China presence as TV marketing is an expensive affair.

"Micro blog is market-efficient, low-cost and interactive, and also gives us instant feedback on what the general perception is," she says.

According to statistics from eMarketer, a US digital market research firm, social network advertising spending in Asia-Pacific will grow by 48 percent from $1.38 billion in 2012 to around $2.5 billion this year. In the US, it is expected to reach $4.1 billion this year and $5 billion in 2014.

For China, the figures are higher. As the biggest SNS market, the advertisement spending on social media will experience a fast increase of 51.3 percent, reaching $612 million this year, it says.

Chu adds that when it comes to fifth and sixth-tier cities in China, where roadside boards are rare, micro blogs are probably the best or sometimes the only channel to reach people.

Though micro blogs are immensely popular in China, they have also received much flak for their similarity with global SNS platforms like Twitter. Both the websites sport distinctive layouts with similar features for posts, referrals and comments. But micro blog differs from its Western peers in terms of the added features it provides.

Jeremy Webb, a digital strategist from Ogilvy, says that the real difference between the two platforms lies in the low penetration rate of the US-based platform.

Twitter still has a relatively low penetration rate in the US market. Of the 74 percent of American adults who use the Internet, only 8 percent use Twitter, says a recent study by Pew Research Center, an American think tank. In contrast, the percentage of micro-bloggers among total netizens in China has grown by 6 percentage points to 54.7 percent.

From a company perspective, the added features of Chinese micro blogs make them ideal for online marketing campaigns.

On Sina Weibo users can watch videos and see pictures seamlessly. But on platforms like Twitter video and pictures are often in the form of a hyperlink that has to be clicked to access the content.

"Platforms like Twitter have a limitation of 140 letters for one piece of information, whereas Sina Weibo allows 140 characters and various other features like pictures, videos, and hyperlinks. This helps create more vivid marketing campaigns for companies," says Gao Xiang, communications manager of Nokia China.

Apart from the better return on investment, customer retention is another factor that attracts foreign companies to micro blogs.

Companies like Royal Caribbean regard a micro blog as a window for customer services, or a channel for product promotion, and also an option for delivering after-sales services.

"What we value most about micro blog marketing is the increase in user viscosity," says Yao. "Activities on the micro blog will increase interaction with consumers and help increase the influence of our campaign."

The company started its official Sina Weibo account in 2011, and has around 130,000 followers. They also produce four to five interesting topics daily and communicate with followers. The team also initiates marketing campaigns, such as promotion information and vouchers to transfer online traffic to offline sales.

Yao says that on average, about 2,000 to 3,000 of their followers participate in campaigns. Last year, about 110,000 passengers boarded the company's cruises in China, triple the total number in 2011. This year, the company plans to launch more campaigns, she says.

When it comes to a public relations crisis, official micro blog accounts can be quite effective during the feedback and management process.

According to a white paper prepared by Ogilvy called Crisis Management in the Micro blog Era, nearly three major PR crises of last year had their roots in micro blogs, including companies such as KFC and McDonald's.

In March last year, McDonald's was the subject of an expose by CCTV for selling expired food in its Sanlitun branch in Beijing. Within an hour of the exposure, the company announced the suspension of business at the branch, and subsequently apologized on its micro blog, all of which triggered nearly 388,995 posts.

"McDonald's used its official micro blog to help calm netizens and lead the opinion direction, while taking offline measures to suspend the business of the branch in question. In this way, it was able to quickly and successfully resolve the crisis," Chu says.

Ogilvy research shows that brands having an official micro blog account before a crisis can reduce response time by nearly 12 hours, while the average crisis duration can fall to 15 days from 17 days, along with substantial reduction in negative buzz.

"Micro blogs are an important platform base on which brands can monitor public sentiment and respond to crises as soon as possible. As crises are exposed, brands that respond via their official micro blogs can help pacify disgruntled netizens. Coupled with remedial measures offline, it's possible to diffuse the crises in a short time," Chu says.

Wilson says that the most important issue of micro blog marketing is to be open and pay close attention to daily events.

According to Wilson, loyal fans often defend the brand if there is a mistake or misunderstanding.

"Sometimes when consumers charge us with doing something wrong, we don't have to say anything, because we find that our fans often come to our rescue by telling them that was wrong," Wilson says.

Besides Sina Weibo, foreign companies also conduct marketing activities on Renren, the Chinese version of Facebook, and WeChat, an instant messenger app for smartphones. But many like Wilson still consider micro blogs as the most influential platform.

"Companies can use it for collecting feedback, especially when launching new products, and manage their consumer experience and improve their products accordingly," says Jane Zhang, principal research analyst in consumer technology and markets with global research firm Gartner.

"Unlike the traditional ways of marketing, targeted communications and marketing influence on micro blogs can be quantified," she says.

"When you select a celebrity account with 5 million followers for promotional purposes, you can be sure that the post will reach 5 million users."

Zhang from Gartner says that micro blogs in China also serve as a major public media platform, and as a hub for information exchange, rather than just a place to share the joy of one's private life.

Realizing this, many of the major micro blog operators are gearing up to offer better services for companies to optimize their micro blog marketing campaigns.

In October 2012, Sina Weibo launched the micro-task, a tool it hoped would lead to better commercialization of Sina Weibo.

Micro-task, or Weirenwu in pinyin, is the official platform for posting and accepting tasks.

Enterprise users can create tasks and choose some specific accounts to post or re-post advertising campaigns for a certain commission fee. The micro-task platform collects a 30 percent service fee from companies.

According to Sina, micro-task aims to provide more benefits to marketers than ordinary accounts, with added advantages in credibility and transaction protection.

In April, Sina Weibo intends to launch an online payment service called WeiboPay, to translate its online traffic to revenue.

Hong Lizhou, general manager responsible for Sina Weibo's marketing strategy, says the service aims to provide a seamless payment system, and connect merchants that sell goods via their corporate accounts on weibo.

After selecting their products, micro blog users will be redirected to a payment page where they can choose to pay with a credit card or a third-party payment solution provider such as WeiboPay. The service will act as a middleman between the merchant and the bank.

Tencent also started its own micro blog services Micro Space in July 2011. The platform offers companies an SNS channel for customer relationship management.

Xing Hongyu, general manager with Tencent Weibo Business Unit, says the company will integrate its popular services like QQ and Qzone, to help clients create one-stop micro blog marketing platform.

Yao from Royal Caribbean says that micro blog marketing has replaced BBS (bulletin boards) or blogs in netizens' lives. She believes that with better marketing services, micro blog marketing looks set for a promising future.

Contact the writers at chenyingqun@chinadaily.com.cn and linjingcd@chinadaily.com.cn.

(China Daily 04/05/2013 page1)

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