1、CHINA MARKETING&MEDIA TRENDS20232023 BRAND MARKETING&MEDIA PLANNING OUTLOOK China is finally re-opening after three years of tight Covid controls.Once it moves past the current deluge of Covid cases,we should-FINALLY-see a resumption of normal.Brands(and consumers)have been stuck in a holding patter

2、n for the last three years.A lot of damage has been done.Consumer confidence has eroded significantly.Many high profile Global brands have pulled out of the market,while many others are reducing investments in growth.Profit margins have been clipped back.Key staff have repatriated.Many companies hav

3、e started a pivot towards Asia-and a re-balancing of budgets towards growth in S.E.Asia.With all this said,there is still a surprising level of optimism around China growth prospects.While our annual survey of brands acknowledges a decreased level of optimism(from years past),the majority of brands

4、continue to invest into growth.The majority of brands are increasing budgets and expanding long-term commitments;targeting new customer groups,exploring new media and advertising opportunities,and refining localized products and services.Even with reduced growth prospects,China is a massive economy

5、and has a momentum which should allow it to push through some pain.Economist growth forecasts for Chinas economy in 2023 are in the range of 4-to-6%-which has China still out-pacing growth in developed markets like the US/EU.Its middle class continues to expand and its lower tier cities are a source

6、 of new growth prospects.China is in the midsts of a material pivot,which could leave many aspiring Global brands on the outside looking in-after the dust settles.It may be a similar pivot(toward localism)that occurred in the 90s for Japan.Some top brands still thrive in Japan but the bulk of the ma

7、rket is dominated by local players,leaving many international brands as marginal players(novelties,served as the side dish,instead of being the main course).In this context,many brands headed into 2023 will have to make hard choices about whether to follow the China path or divert attention to S.E.A

8、sia(or India).Chris Baker Founder,Totem ABOUT THIS REPORTJan 2023Returning for its 8th year running,Totems China report is designed to help brand leaders stay a step(or two)ahead.We hope that it serves as a template for evaluating and planning brand growth.The report links together wider insights fr

9、om the macro-economy and consumers,with key details of the marketing and media landscape.In this year of transition,we also hope that it provides a spark,to help brands regroup,and set new plans for China and the Asia region at-large.A key ingredient in this report are the collective insights from b

10、rands.We had inputs from 82 marketing leaders in our the 2023 survey(held in Nov 22).This data underpins the overall direction of our analysis.A big thanks to the team at Totem for their dedication to this process.Its a lot of work on-top of some very hectic schedules!TOTEMS 8TH ANNUAL REPORT ON CHI

11、NACONTENTS1THE BIG PICTURE210 CONSIDERATIONS3BRAND SURVEY4MEDIA ENVIRONMENT5GROWTH FRAMEWORKTRAVEL SNAPS BACK33CONSUMER INSIGHTS27AI&WEB331PIVOT TO ASIA32GROWTH PARAMETERS24CONSUMER CONFIDENCE13MIDDLE CLASS RISING16CHINA DIGITAL ECONOMY6CITY TIERS&CLUSTERS17BATB&WALLED GARDENS63FOUR MODES OF ADVERTI

12、SING69AD INFLATION PROJECTIONS58PRIVATE TRAFFIC&CRM75BUDGETING PRIORITIES38INFLUENCERS/KOLS44LIVESTREAMING47BRAND OPTIMISM37CHANNEL PLANNING51BRAND GROWTH FRAMEWORK87CATEGORY CONCENTRATION84STRATEGIES&CASE STUDIES91Chinas rapid re-opening should prompt brands to quickly firm up plans and resume more

13、 comprehensive marketing efforts.This is the moment of truth for the long-term path of China-and the place of brands in the Worlds second largest economy.The duress of Covid,coupled with newer opportunities across the region have lead to many brands pivoting attention away from China-to build the wi

14、der Asia market.Brands that double-down on China need to build more complete,clear frameworks for growth.Growth focused brands also need to consider going deeper into lower tier cities.1Marketing and sales success in China remains firmly connected to social commerce routines.Winning brands are exper

15、t in cultivating customers on social,rallying audiences to buy,via a potent mix of;influencers,livestreaming,social mini-programs and private traffic tactics.CRM and DTC(direct-to-consumer)efforts will expand into 2023,as improved LTV and organic results have become priorities.With private traffic a

16、nd CRM being priorities into 2023,brand are seeking to understand and engage with customers better-and niche-down on more specific customer cohorts.2Offline efforts must expand to catch up with online investments,as brands are heavily over-weight on digital.Assuming the re-opening continues,then bra

17、nds should look to reallocate from online to offline.With 80-90%of budgets allocated to digital(vs only 67%of user time),digital is over-inflated.Offline is ripe for(affordable)investment;(1)out-of-home was down more than 30%in 2022,and(2)the property market is soft(cheaper),with vacancy levels at a

18、ll-time highs in key cities.The opening is there for brands to create high-impact(memorable)experiences offline,in support of brand and customer acquisition.3THREE KEY TAKEAWAYS:CHINA MARKETING IN 2023THE BIG PICTURE1CONSUMER CONFIDENCE13MIDDLE CLASS RISING16CHINA DIGITAL ECONOMY6CITY TIERS&CLUSTERS

19、17China is a resolutely digital environment.Its one billion netizens,average over seven hours per day on a mobile phone.More than 85%are routine users of mobile payments.The result of this concentration in digital is that China leads the World(by a long shot)in retail ecommerce.China accounts for mo

20、re than 50%of all retail ecommerce spending.And,in China,more than 55%of all retail spending is online.By comparison,only 15-16%of retail spending in the US is online.China is years ahead of most developed countries in the shift to online.Marketing innovations have also been occurring at a rapid pac

21、e.New concepts scale more quickly when you have universal adoption of mobile phones(as primary screen),mobile payments and 5G.Livestream commerce,AR/VR,and AI are also omni-present.These technologies are being recombined in exciting and novel ways,with audiences hungry for new things.CHINAS DIGITAL

22、ECONOMYSource:CNNIC 2022CHINA MARKET SCALECHINAS INTERNET POPULATIONTOTAL NUMBER OF NETIZENS IN CHINA CONTINUES TO GROW AT AROUND 5%YEAR-ON-YEAR,AND CURRENTLY SITS AT OVER 1.0 BILLION.THERE ARE 1.05 BILLION MOBILE NETIZENS IN CHINA(MORE THAN 99.6%OF ALL NETIZENS ARE MOBILE).By comparison,there are 3

23、07 million netizens in the US(as of January 2022)-and an 85%mobile penetration rate.3507001,0501,4002016201720182019202020212022Chinas Netizen Pop.(Millions)Penetration(%of Pop)74.4%71%67%61%57%53%50%1,0511,01093985480275171074.4%71%67%61%57%53%50%Source:Questmobile,2022AUDIENCE TIME SPENT-MOBILEUSE

24、R SHARE OF TIME SPENT ON MOBILEMOBILE DOMINATES AUDIENCE TIME IN CHINA,WITH THE NUMBER OF USER HOURS PER DAY IN CHINA TYPICALLY DOUBLE THAT OF THE US.New routines and innovations in marketing are emerging from China.Brands interested in understanding the future of marketing should spend time followi

25、ng whats happening in China.Others31%News7%Online Shopping5%Short Video28%Streaming7%Messaging23%Instant MessagingVidoes(Excluding short-form)Short videosOnline paymentOnline shoppingSearch enginesNewsMusicLive-streamingOnline gamingOnline LiteratureOnline OfficeOnline ride-sharing servicesOnline Me

26、dical2755508251,1003003334614935527167287888218419049629951,027Source:CNNIC 2022NUMBER OF INTERNET USERS IN CHINA BY ACTIVITY(IN MILLIONS)2021-2022%Change in retail ecommerce salesSource:eMarketer 2022RETAIL ECOMMERCE SALES 2022(BILLIONS,USD)$2.78TGERMANYFRANCEINDIAJAPANKOREA11%CANADA$1.06TCHINA MAR

27、KET SCALE46.3%2022 Ecommerce share of total retail sales.32.2%2022 Ecommerce share of total retail sales.36.3%2022 Ecommerce share of total retail sales.UNITED KINGDOM$245.8B$94.4B$117.8B$79.8B$83.7B$143B$169B12%+4.8%USACHINA16.1%2022 Ecommerce share of total retail sales15.9%+2.7%+13%+7.5%+8.5%+26%

28、+10.4%+%+%Rest of World21%UK4%South Korea3%Japan3%China50%US19%$5.5TSHARE OF GLOBAL ECOMMERCE SPEND 2022CHINA MARKET SCALECHINA RETAIL ECOMMERCE VALUE(CNY TRILLIONS)THE VALUE OF ECOMMERCE IN CHINA SAW VERY MODEST GROWTH IN 2022.OVER THE NEXT FEW YEARS,WHILE THE RATE OF CHANGE WILL CONTINUE TO DECLIN

29、E,THERE WILL BE STRONG MOMENTUM FOR ECOMMERCE IN CHINA.Ecommerce growth has been driven by very high mobile payments adoption(namely Alipay and WeChat Pay).Source:GlobalData Banking&Payments Intelligence Center1020302016201720182019202020212022f2023f2024f%Growth RateE-commerce Value19.617.615.713.81

30、1.810.697.2610.9%12%14.2%17.2%10.6%18.1%25.5%19.4%22.7%10.9%12%14.2%17.2%10.6%18.1%25.5%19.4%22.7%Source:Totem EstimatesMOBILE PAYMENTS USERS (MILLIONS)2016201720182019202020212022904892854633600531475CHINA MARKET SCALETHE CHINA DIGITAL ECOSYSTEM IS ORGANIZED AROUND THE CONCEPT OF SOCIAL COMMERCE.TH

31、E VAST MAJORITY OF CONSUMER ATTENTION HAS BEEN CONSOLIDATED BY A FEW LARGE PLAYER(BATB).THE BATB HAVE CREATED “SUPER APPS”WHERE THE DISTINCTION BETWEEN SOCIAL AND ECOMMERCE HAS BEEN ELIMINATED.THE GOAL OF EVERY APP IS TO RALLY SOCIAL ATTENTION TO ECOMMERCE ACTION.INFLUENCERS,LIVESTREAMING,PEER-TO-PE

32、ER SHARING AND PAYMENTS ARE KEY FEATURES OF THESE“SUPER APPS”-THE GLUE THAT KEEPS USERS ENGAGED.In a famously low trust environment like China,consumers do their diligence before buying new products.Where the average consumer in the US might engage with 3-4 touchpoints before purchase,in China that

33、number is 15-20 touchpoints.Successful“Super Apps”create waves of social proof,to keep users inside their walled gardens.Source:1,0002,0003,0004,0002505007501,0002016201720182019202020212022Millions of UsersSpend/Customer(RMB)3,8963,6032,9482,8891,9231,445869087957807136084734183,8963,6032,9482,8891

34、,9231,44586SOCIAL COMMERCE USERS&SPEND(2016-2022)THE CHINA ECOSYSTEM IS DIFFERENTSOCIAL-ECOMMERCE IN CHINA Theres very little hopping from one digital platform to the next in China.Brand activities occur within silos,on platforms designed as“Super Apps.”Instead of one,master funnel(tied to an owned

35、Website)brands in China must concurrently be running 4-6 funnels-one for each“Super App”(WeChat,Tmall,RED,Douyinetc).Advertising as predominant business modelDigital platforms prioritize eCommerce business modelsPURCHASECONSIDERATIONAWARENESSPURCHASECONSIDERATIONAWARENESSENTERTAINMENTENGAGEMENTPAYME

36、NTCHINABrands have points-of-sale on each platform and pay to sustain traffic to each of these platform stores.Customers jump between channels seamlessly.Journeys are Web-first,platform second.GLOBALEach channel has more discrete focus and contributes along a holistic path-to-purchase.Transactions f

37、low to brand“own”Websites.Digital platforms contribute to“DTC”outcomes.Journeys are platform specific.Each platform is its own complete,separate funnel.Platforms operate as“Super Apps”fully encircling users,with a mix of content,social,payments,stores.“Private Traffic”initiatives aimed at moving mor

38、e DTC continue to grow,with brand owned Mini-Programs serving the role of owned sites.See pages 62-82.CONSUMER CONFIDENCEOver the past 30 years,China growth and sentiment has been a one-way bet.There has always been the expectation that tomorrow will be better than today.But,consumer confidence in C

39、hina turned sharply negative in 2022.A number of factors are weighing on Chinas consumer mindset going into 2023:1.Covid insecurities-lockdowns,controls(mobility)and risk of illness 2.Sagging domestic property market-and a resulting negative wealth effect 3.Tighter economic conditions-including layo

40、ffs and credit tightening 4.Concerns for a Global slowdown-which has been(and will continue to)hurt Chinese exporters and brands Thankfully,China has not had much of a concern around inflation over the past year.While inflation rates in developed markets have been surging(US=7-8%,EU=10-14%),China ha

41、s been in the 2%range.CONSUMER SENTIMENTCHINA CONSUMER CONFIDENCE(2010-2022)Source:East Money(2022)6090120150201020112012201320142015201620172018201920202121202288120122127123123116104106102104100100ALIBABA GMV ON SINGLES DAY(BILLIONS OF USD)020406080100111213141516171819202122One-day eventExtended

42、periodAlibaba statementA MORE GENERAL RE-OPENING SHOULD SEE A RELEASE OF SOME PENT-UP SPENDING(ON TRAVEL AND SERVICES)BUT ITS UN-LIKELY TO REVERSE CURRENT CONDITIONS-AND IT MIGHT ONLY START IN Q2-Q3,AFTER THE CURRENT WAVE OF COVID.2023 MAY BE A TIGHT YEAR FOR CONSUMPTION.Singles Day has always been

43、a strong barometer for consumer confidence.All reports(those that were made public)show that Double 11 sales results in 2022 were very modest-with little-to-no increase from 2021.In past years,Tmall(and JD)held massive watch-parties,as they smashed year-over-year GMV totals.In 2022,sales performance

44、 data sharing has been reduced to a whisper.$84.5Source:Alibaba 2022REAL ESTATE WEALTH EFFECTHOUSEHOLD INVESTMENT MIX(CHINA VS USA)Source:Survey&Research Center for China Household FinanceCHINAUSA25%50%75%100%PropertyFinancial AssetsCommercial AssetsOther AssetsQUESTIONS ABOUT FULL IMPACT OF CHINAS

45、HOUSING DOWNTURN ARE NOT YET RESOLVED.IN 2023,THE GOVERNMENT WILL CLOSELY MANAGE A SHAKY PROPERTY MARKET-WITH PRICE CONTROLS,SUBSIDIES AND NATIONALIZATION MEASURES.THE GOVERNMENT WILL MAKE EVERY EFFORT TO SUPPORT THIS INDUSTRY AS IT IS TRULY TOO BIG TO FAIL.THE FATE OF CHINAS ALL IMPORTANT MIDDLE CL

46、ASS HANGS IN THE BALANCE.Consumer confidence in China is strongly connected to the wealth effect enjoyed from investments in property.Wealth increases from property fueled a rapid expansion in consumption over the past 15+years.According to Rogoff and Yang(2021)29%of Chinas GDP is related to real es

47、tate-in the US real estate accounts for 17.5%of GDP.In short,there is a lot riding on continued stability in real estate.URBAN HOUSEHOLDS BY INCOME GROUP(MILLIONS)Source:MGI InsightsCHINAS ALL IMPORTANT MIDDLE CLASSCHINESE CONSUMERS HAVE SEEN A STEADY IMPROVEMENT IN INCOME AND OVERALL WEALTH OVER TH

48、E PAST DECADES.MUCH LIKE THE PROPERTY MARKET,THE MIDDLE CLASS IS TOO BIG,TOO IMPORTANT TO FAIL.THIS GROUP WILL BE A TOP PRIORITY FOR GOVERNMENT POLICY IN 2023.BRANDS(WHO ARE ALSO LINKED TO THE HEALTH OF THE MIDDLE CLASS)SHOULD FOLLOW GOVERNMENT MOVES CLOSELY-SEEKING CLOSE ALIGNMENT WITH POLICY.Putti

49、ng a firm number on Chinas middle class is challenging.Estimates for its size range from 300-600 million,with a very wide range in criteria for what is middle class.A reasonable assumption is that Chinas middle class is near 350+million people(earning between US$15,000-75,000/yr).While low by US/EU

50、standards,the consumption power of the middle class is bolstered by investment wealth(property)as well as family dynamics(inter-generational wealth and savings),which work in favor of higher-than-expected buyer power.2025(e)2021201534138209192144114637363LOWER INCOMEMIDDLE INCOMEHIGH INCOME RMB160K/

51、yr386mLOWER TIER CITIES&CITY CLUSTERSFor brands with the resources(and patience),there is a lot of potential to be un-locked by investing deeper into China.More than 65%of Chinas population live in Tier 3,or lower areas.It is becoming very challenging to balance geographic investments for China.On o

52、ne-hand,there is significant un-tapped potential-and massive resource investments already in place.Optimistically,China looks like a limitless pool of consumersand“we just need the time/budgets to get to them.”On the other-hand,China is signaling some limits to its potential,while(at the same time),

53、other areas of Asia look easier and more accessible.Additionally,not all brands are well adapted to lower tier cities.Many brands simply cannot find a large enough pool of affluent(and internationally minded)consumers in lower tier cities.In this context,it is essential for brands to take a hub-and-

54、spoke approach to China,by investing into leading T1 cities,and then venturing into the surrounding cluster of satellite T2-3 areas,to test-and-learn.Source:McKinsey&CompanyCITY TIER CONFIDENCELOWER TIER CONSUMERS MORE CAUTIOUS Prior to Covid(all the way back in 2019),we were seeing T1 and T2 consum

55、ers become more cautious and more motivated by discounts.At this time,consumers in more mature cities were feeling the pinch from the steep cost of living increases-extremely high costs of housing coupled with slowdowns in wage growth and job prospects.Fast-forward to 2022,and the data shows that co

56、nsumers in lower-tier cities are relatively more cautious-pulling back spending more quickly than counterparts in T1 and T2 cities.Looking back on the previous 10-15 years,there was a period where lower tier cities became the new frontier for investment.After the rapid development of the T1 and T2 c

57、ities,there was a notable shift toward lower tier investments.Real estate speculators rushed into new cities to get-in early before price spikes.Companies setup satellite offices(and shifted manufacturing)to defray operations costs.Chinas new frontiers are potentially more vulnerable to slowdowns.Sp

58、eculative investments and satellites are the first to go in a contraction.CHANGE IN ACTUAL SPENDING IN CHINA BY CITY TIERSHigher tierLower tierRuralHigher tierLower tier32%31%13%14%17%46%47%62%63%62%22%22%25%23%21%Decreased by 5%or moreNo change(-5%to+5%)Increased by 5%or more20222019%of respondents

59、 N=6,715(2022)/5,400(2019)TIER 1CITY TIERSTIER 1(New)TIER 3Bubble size indicates share of national GDP130 Million220 MillionNetizens 2021CITY CLUSTERSCITY CLUSTERSSource:CNNIC,Totem 2022FINDING A MARKET BELOW T1&T2 CITIES For many brands entering China there is comfort in focusing on Tier 1 cities.T

60、here is often much greater product-market fit for higher priced products with consumers in top tier cities.And,its often just too hard to compete against local players into less affluent areas-price competition and margins simply dont add up.But,as growth opportunities in T1 cities become saturated,

61、brands may have to embrace lower tier city strategies.Brands looking at lower tier markets should be very targeted.A blanket approach of all T3 cities would be daunting but an approach that focused on a region like Sichuan or Guangdong,could be very efficient and create defensible audience/brand equ

62、ity in specific areas.Regional cultural attitudes(preferences)should be measured-prior to,and at regular intervals-as brands push deeper into regions.There is a growing tension between whether to invest deeper into China or diversify across Asia.Fast growing South Asian markets such Indonesia,India

63、and Vietnam are building momentum at the same time as China is stuck in neutral.Brands already invested into China need to make careful calculus of moves to pivot away.TIER 2BEIJINGSHANGHAIFUZHOUFOSHANHANGZHOUXIANHONG KONGQINGDAONANJINGWUHANHARBINCHANGCHUNZHENGZHOUSHENYANGYANTAITIANJINSHIJIAZHUANGHE

64、FEIWUHUNANCHANGCHANGSHALUOYANGCHONGQINGGUIYANGSUZHOUCHENGDUSHENZHENDONGGUANNINGBOGUANGZHOUTOP 10 CONSUMER MARKETSDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%SHANGHAIPop.26.3 millionDisposable income/capitaExpenditure/capitaRetail salesTourism Reven

65、ueGeneration Z0%25%50%75%100%BEIJINGPop.21.5 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%SUZHOUPop.10.7 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%CHONGQINGPop.31.0 millionDisposabl

66、e income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%NANJINGPop.8.5 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%HANGZHOUPop.10.3 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGe

67、neration Z0%25%50%75%100%GUANGZHOUPop.15.3 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%CHENGDUPop.16.3 millionDisposable income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%SHENZHENPop.12.6 millionDisposable

68、income/capitaExpenditure/capitaRetail salesTourism RevenueGeneration Z0%25%50%75%100%GUIYANGPop.4.7 millionSource:EIU 2021BEIJINGSHANGHAIFUZHOUFOSHANHANGZHOUXIANHONG KONGQINGDAONANJINGWUHANHARBINCHANGCHUNZHENGZHOUSHENYANGYANTAITIANJINSHIJIAZHUANGHEFEIWUHUNANCHANGCHANGSHALUOYANGCHONGQINGGUIYANGSUZHOU

69、CHENGDUSHENZHENDONGGUANNINGBOGUANGZHOUIts often worth remembering just how large cities and regions in China are;Beijing and Shanghai with 20 million+people are the size of entire countries,Guangdong Province at 126 million is the size of Japan.10 CONSIDERATIONS2TRAVEL SNAPS BACK33CONSUMER INSIGHTS2

70、7AI&WEB331PIVOT TO ASIA32GROWTH PARAMETERS24BIG PICTURE INSIGHTSCONSIDERATIONS1010 CONSIDERATIONSKey economic,cultural and political considerations shaping the China marketing landscape for 2023.BIG PICTURE INSIGHTS6.SIMPLE PLEASURES1.GETTING BACK TO GROWTH9.PIVOT TO ASIA4.RATIONALITY REIGNS5.GENZ C

71、ULTURE CATALYSTS10.TRAVEL SNAP BACK2.CHINESE BRANDS FLEX7.THE SILVER DOLLAR8.WEB3 PRIORITY IS AI3.FORTIFYING CRM1.GETTING BACK TO GROWTH Over the course of 2021-22 a large cohort of brands have been in survival mode.With the slowdown in China and dynamics related to Zero-Covid the majority of brands

72、 have favored sales certainty over costly brand equity investments.In this context,frequency of sales have been more important than penetration.Sales security has trumped expansion efforts.After a couple of years of sales uncertainty,it is time to reset sights on penetration and growth again.The Chi

73、na opportunity hangs in the balance.There was a period of time back in the 90s where global brands got shuffled out of the mix in Japan.Has that moment arrived in China?This may be the point where Global brands look back and realize their position in China was forfeit to local players.We see this ha

74、ppening now with high-profile exits such as;AirBnb,GAP&OldNavy,Forever21,and SuperDry.See page 85 for a list of observed foreign brand de-investments from the past three years.The value equation has worsened for for many foreign brands.Costs have gone up,while long-term potential has narrowed.Resear

75、ch from the American Chamber of Commerce in China show large decreases in optimism and revenues among its membership;83%of its membership are less optimistic about the business environment than it was three years ago.Global brands struggling with decisions about doubling down on China should not ove

76、rlook the depth of potential-a rapidly growing middle class,and array of untapped lower tier cities.The overall economic momentum of China means that-despite challenges-China will continue to grow and mature.There is a growing list of high-profile foreign brand retrenchments.These decisions to give-

77、up on the China market come as the ROI equation in China is shifting.The long term prospect of 1.4 billion consumers has been fading relative to increased short-term obstacles.Digital has been a critical capability in China during the recent string of lockdowns and business interruptions.However,mos

78、t brand are significantly over-invested in digital-in need of a rebalance toward offline.Foreign brands whose connection with local consumers has slipped should make particular efforts to build better offline presence.10 CONSIDERATIONS2.CHINESE BRANDS FLEXChinese brands have made gains when compared

79、 with global competitors in the China market.In the past,short-term declines with foreign brands often came as a result of surging nationalism(together with the related“Guochao”trend).However,in the past couple of years there have been fewer anti-foreign brand boycotts.Data from the Swedish National

80、 China Centre show that consumer boycotts of foreign companies peaked in 2019 and have been much lower in the last couple of years.The decline in foreign brands appears to now be more systemic.On one-hand,foreign brands are struggling in China as a result of management and operational duress from Co

81、vid.On the other-hand,Chinese brands are simply winning with more well adapted pricing,marketing and operational advantages.In short,Chinese brands are making the most of home court advantages.Data from Euromonitor show that foreign brand share of apparel declined from 47 to 40 percent between 2013

82、and 2021.The infant milk formula share dropped from 52 to 35 percent in the same time period.The data also reveal a significant trend toward locally owned foreign brand models.This model combines the skillful capabilities of local management with inherent equity of foreign brand/products.Conversely,

83、chinese brands are themselves struggling with finding success on the Global stage-falling short of their lofty global ambitions.The winning formula they employ at home has not been as successful globally.China brands are currently winning with;lower prices,new editions(rapid iterations),and guerrill

84、a tactics(to short-cut customer acquisition).Margin pressures stand as a barrier to longer-term success though.And,until they can move past these bottom-offunnel tactics to more brand focused strategies,they will find major break-throughs more imposing.Over the long-term,Chinas national champions wi

85、ll become formidable global players.As new growth in China shifts to lower tier markets,it will be challenging for Global brands to keep pace with Chinese brands.With product offerings designed specifically for China,local brands have a natural product-market fit.The further the center of growth shi

86、fts to lower tier markets,the bigger an advantage local players have with pricing,value and operations.10 CONSIDERATIONS3.FORTIFYING CRMIt is clear from Totems 2023 survey and related interviews that brands are focusing attention towards building the systems necessary for customer care and retention

87、.A slow economy,combined with customer data regulations(ie.PIPL)have shifted the focus toward fortifying CRM(customer relationship management)systems,while improving LTV(lifetime value).In short,brands are looking to consolidate customer connections.Brands in China are looking to shift further towar

88、d DTC(direct-to-consumer)strategies,which prioritize owned Mini-Programs and customer touchpoints,together with Private Traffic efforts.Brands are looking to own the relationship with customers more directly-while cutting costs of acquisition and awareness on paid channels.All this comes at a time w

89、hen ecommerce is becoming more fragmented in China.Where Alibaba used to own 80%+of all GMV,it now controls less than 50%of GMV.In this context,brands need to;(1)use more platforms for sales,and(2)have a clear view of customers-cutting across a wide array of channels(online and offline).Brand collab

90、orations(co-branding)have been important in China for many years now.Looking ahead into 2023,look for more brands to band together in an effort to reduce acquisition costs-and the practice of“co-acquisition”to rise.Having a clear picture of databases allows brands to understand the synergies around

91、geography,demographics and identity.Brands will increasingly work together as a way of filling gaps in coverage(such as getting younger/older).They will also look to extend value to customer groups,offering values/benefits(together with brand collaborators)instead of having customers defect to other

92、 brands.10 CONSIDERATIONSIncreased attention on CRM reflects the need for brands to niche-down more with important audience segments.Finding and holding onto core customer groups(and adjacent/aligned groups)can help deflect unwanted noise and disruptors from the market.Winning with the right niches

93、can propel loyalty(LTV),as well as organic reach(user generated acquisition).4.RATIONALITY REIGNSOver the past 10+years,shopping in China had been an important form of entertainment(combining the joys of discovery,with self-exploration and status).A near endless selection of new brands/products on o

94、ffer from year-to-year,together with social-commerce festivities,fueled an electric environment for commerce.2022 has marked a shift to more rational conditions,characterized by;(1)increased interest for product utility and function,with less priority given to novelty and form,(2)slowly increasing l

95、evels of brand loyalty,and less brand promiscuity,and(3)shifts in content consumption,from idle entertainment toward education and learning.The overall environment with customers is one where they increasingly want products that reliably get the job done.In the past,there was much more a culture of

96、trialing and exploring.Some of part of this shift is a result of short-term economic(confidence)declines,but it also part of a secular shift,as more stable,mature conditions take shape in China.2022-23 is likely the plateau of a 20 year bull-run where new advancements were unfolding at a frenetic pa

97、ce(and rapid change was a constant pressure)are giving way to more modest conditions.The environment is now set for a shift toward premiumization and standardization-especially in Tier 1-2 cities and with Chinas upper-middle classes.Data from Accenture show that 69%of consumers in 2021 dont mind buy

98、ing the same things as the majority of people-in 2013,it was only 38%of consumers willing to look-alike.The same data also show that 40%of consumers who bought products on JD during 6:18 in 2021,did not participate in 2022,as there was growing hardening against sales gimmicks and promotions.The leve

99、l of diligence and care in selecting products/brands has increased along with more sober spending habits.Chinese consumers,already among the Worlds most well studied,have increasingly high expectations for brands-quality,value and service matter more in this environment.Brands that pass judgement ca

100、n look forward to more loyalty in this context.10 CONSIDERATIONS5.GENZ AS CULTURE CATALYSTSChinas GenZ have been at the forefront of counter-consumerism for a number of years.As they graduate into prime consumer ages,they will exert greater influence on the overall culture.Their attitudes and habits

101、 will become the dominant norms as they become the“IT”generation in China.Already renowned for laying flat(and sidestepping the corporate treadmill),they are now adopting the attitude of“let it rot”and of“playing dead.”Discontent among Chinas youth has been escalating quickly.Over the course of a co

102、uple years,attitudes have gone from wanting to sit on the sidelines,to actively hoping that the game gets cancelled,and the players get carried off the court.There is deep frustration and apathy about future career and personal prospects.Hobbies and experiences are starting to overshadow shopping in

103、 China.Cool is becoming less about what label of clothes people are wearing,more about what experiences and ideas that person has to share.The GenZ“chill vibe”is creating a safe space to be less fashionable.Where earlier generations were motivated by FOMO anxieties,GenZ is prescribing to more of a J

104、OMO(Joy Of Missing Out)attitude.As this trend matures,its becoming cool to be“uncool.”This cohort is also cynical about those who“blindly follow”KOLs on channels like RED and Douyin.Data from Kantar Worldpanel in 2022 show that GenZ(ages 25-34)are reducing unnecessary expenses at a faster rate than

105、average.The analysis suggests that GenZ are prioritizing value with premium products,offered at affordable prices.And,that they expect to buy fewer products,less often,with expectation of premium products offering better,longer-term value.Authenticity is a key theme among GenZ-for themselves,friends

106、,influencers and brands.In 2022 several Chinese companies were forced to rebrand-to reflect the correct national origin(eg.MUJI look-alike,Mini-So and milk tea brand Nayuki,both of whom implied Japanese roots).While there is some anti-Japanese sentiment involved,its largely a question of authenticit

107、y.10 CONSIDERATIONS6.SIMPLE PLEASURESThe rise of more experience driven,activity-based consumption in China,has been well documented.Outdoor activities(camping),pets,snack foods,health and health foods have all seen major increases in the past few years.While Covid accelerated many of these trends,t

108、hey were also areas which were primed for growth,and not reliant on short-term catalysts.Moving into 2023,simple pleasures,together with other forms of experience commerce will continue to thrive.Lead by GenZ,there is keen awareness for affordable and basic experiences organized around three areas:1

109、.Sensory payoffs;snacks,taste,flavor and food&drinks 2.Connecting;eSports,dating apps(and events later in 2023)3.Health/Wellness;supplements,gym/fitness,food quality While these trends are a boon for brands lucky enough to be in those categories,there are significant opportunities for other brands t

110、o capitalize on related concepts-through marketing,customer service and product merchandising.Louis Vuittons Chengdu restaurant titled“The Hall”is a useful example for how brands can incorporate(sensory)experience into customer marketing(and service)design.The LV restaurant will feature a roster of

111、visiting Michelin-star-with a new pan-European menu every six months.Brands such as Dior,Hermes and Prada have also been very active with similar efforts to connect marketing to these emerging trends(eg.Health/wellness).The opportunities to connect with consumers around simple pleasures are not just

112、 for snack companies.Creating affordable moments of discovery will be powerful levers for all brands in the years ahead.Blind boxes(with hidden surprises)-sponsored by or operated by a range of brands(including luxury labels)demonstrate the potential breadth of discovery/sampling.10 CONSIDERATIONS7.

113、CHASING THE SILVER DOLLARChinas aging and elderly population are an important frontier for marketers-and hold a potential similar to relatively under-served consumers in lower-tier cities.Covid has likely shone a light on this segment of the population.Health concerns for parents and grandparents,co

114、upled with abundant reporting on how China is aging out have turned the silver dollar into a high priority.Chinas seniors are digitally savvy and spend a lot of time online.They are also highly active in buying online.Research from Kantar in 2022 showed that silver consumers outpaced average sales g

115、rowth nationwide,growing:-7.1%in high-tier cities-compared with an average of 3%-4.6%in lower-tier cities-compared with an average of 0.5%They are also well-taken-care-of by younger family members-drawing ironic parallels with the consumer dynamics in the baby(mom)category-where decision making is s

116、upported by prime-aged family members.Audience research has pointed to the fact that users aged-60+spend more time online than the 40+years segment.WeChat,Douyin,Kuaishou and Pinduoduo are among the top platforms for silver users.Taking aim at older users,Little Red Book(RED)has launched a version o

117、f its app for this demographic,called Mei Pian.Look for more media to launch offerings for older segments in 2023.Consumers over the age of 50 in China represent 25.3%of the population(as of 2021)-a whopping 337 million people.By 2035,30%of the population will be aged 60+.The demographic weighting o

118、f China is shifting quickly from younger-to-older.And,as consumers remain healthy longer,new norms/patterns will emerge.10 CONSIDERATIONS8.THE WEB3 PRIORITY IS AIWeb3 had a horrible year in 2022.The hype around the metaverse,NFTs and cryptos has been deflated significantly.All of these initiatives m

119、ay grow to become indispensable but they offer little material impact for marketers in the near-term.AI(artificial intelligence)and the package of advancements from projects like ChatGPT(or Chinas own,GLM-130B protocol),represent important near-term opportunities-initiatives that brands should expan

120、d into for 2023.While flashy campaigns(featuring Virtual Idols or theatrics in the metaverse)steal the headlines,the more foundational gains at stake are with;(1)how brands collect and structure data,(2)improved organization of merchandising information for search,and(3)chatbot and customer service

121、automation.Linking together CRM(customer insights),with third-party data,and search hold powerful rewards for brands.Tech similar to ChatGPT will change the way customers search(how brands are discovered),and the channels used for search(eg.Voice assistance).Making improvements around search and ser

122、vice stand as priorities in light of advancements in AI.Virtual Idols are big business in China,with projections setting its value in the range of US$42.6 billion by 2030.There is a growing number of high-profile virtual idols in China who have large followings on social channels(eg.RED,Weibo),worki

123、ng with a range of brands(LV,Tesla,Tmall)which rival top KOLs(real life influencers).Brands are launching their own virtual idols as ways of better engaging with fans-and representing their brands in more human ways.KFC and McDonalds are two of the more notable launches from 2022.Moving forward,AI i

124、mprovements in language and cognition will enhance the abilities of virtual idols-improving user experiences rapidly.While,less heralded than ChatGPT(GPT-3),Chinas locally developed protocols are very capable-in Chinese and English.Chinas GLM-130B AI-language model,developed at Tsinghua University,h

125、as out-performed OpenAis GPT-3 in many tests.And Huaweis“Noahs Ark Lab and Huawei Cloud have made significant strides with its AI code generator,PanGu-Coder.10 CONSIDERATIONS9.PIVOT TO ASIAMany brands are pivoting away from China and re-investing more widely across the region.India,Indonesia and Vie

126、tnam are among the most favored new targets.Even long-forgotten giants of developed Asia(Japan&S.Korea)are seeing major increases in brand activity.Brands evaluating how to balance investments(focus)for/into China versus the region,need to proceed very carefully-especially if it means pulling out of

127、 China prematurely.The rest of the region does not offer easy opportunities.The region is fragmented,with a patchwork of consumer affluence and attitudes to contend with.And,China,while down-for-the-count right now,could come roaring back(in key segments)While there has been a wave of high-profile r

128、etrenchments from China-with some brands pulling out completely-we expect a range of compromises to be employed as brands de-risk over the coming year(s).Re-structuring solutions will include;(1)shifting management from China to regional assignments,(2)outsourcing key functions/resources,and(3)assig

129、ning distribution and territorial rights to third-parties.Preservation of risk-capital(and management focus)will be prioritized in these pivots.In a recent New York Times article,famed economist Paul Krugman wrote that“Chinas Future Isnt What It Used To Be.”The title of this article sums up the sent

130、iment around China moving into 2023.The costs of winning in China were high before Covid.It is/was the most competitive market in the World,with high-costs of rent,advertising and talent.Added to the high input costs,are;extreme levels of competition(both global and local),and costly(often confusing

131、)government regulations.The promise of 1.4 billion consumers in the Worlds soon-to-be largest economy has made China a MUST,despite the high costs and complications.All China calculus is being re-factored.Dates for when China will supersede the US as Worlds largest economy have changed.Even populati

132、on estimates are being challenged now.At a time where the costs and complications of expanding deeper into China are being examined,other areas of Asia are experiencing heady growth.India and Indonesia are being touted as the next mega-markets(as replacements for the scale of China).Vietnam,Malaysia

133、,The Philippines,together with the rest of Southeast Asia are booming.10 CONSIDERATIONS10.TRAVEL SNAP BACKBrands and consumers are closely watching the resumption of international travel-following the wave of Covid infections in Q1,2023.China has experienced the longest,tightest lockdown of anywhere

134、 in the World,and so,would expect high levels of pent-up demand for travel.When Chinese consumers do start traveling again,the effects will be profound-much as they have been in other parts of the World,with air/hotel surge pricing and busy airports.Prior to Covid-way back in 2019-more than 150 mill

135、ion travelers ventured abroad,spending$255 billion.It is expected that travel will go from 5%of this volume up to 50%by summer 2023.Busy airports and travel hotspots may prove to be incredibly powerful channels for sales and brand impact into the second-half of 2023.While sales will be important,the

136、 opportunity to create renewed brand impact may prove to be more important.Brands that nail their timing and messaging,will be able to form important new(and renewed)bonds.These bonds have the potential to reverberate Globally,back to China.With a re-opening in the works,foreign brands should be thi

137、nking about how to coordinate messaging around travel,discovery,country/region of origin into both onshore and offshore messaging.Foreign travel starting back up again-unfortunately-also holds fresh potential for geo-political tensions-at a consumer level.With Covid cases surging in China,a number o

138、f countries have already placed restrictions on Chinese travelers.Boycotts of brands from restrictive nations are likely to increase in this context.Ironically,some brands pivoting away from China to Asia,may be able to have their cake and eat it as a result of well placed retail in Asian-based trav

139、el destinations.Much like before Covid,Asia will be the main destination for Chinese international travelers(and Daigou).Hong Kong alone averaged 45 million visits from mainland tourists between 2013-2019.10 CONSIDERATIONS*As of writing this report(Dec 22),the timeline for full resumption of travel

140、is still unfolding.BRAND SURVEY3BUDGETING PRIORITIES38INFLUENCERS/KOLS44LIVESTREAMING47BRAND OPTIMISM37CHANNEL PLANNING51Coming off the back of a very challenging 2022,brands are cautiously optimistic about 2023-hoping for a resumption of growth,and greater openness.As marketing in China shifts subt

141、ly toward being more direct(DTC)-and less dependent on platform sales-much more effort is going into improving CRM and customer success initiatives.These systemic investments are coming at the expense of brand and awareness building costs.Looking across several years,sentiment,budgets and overall ac

142、tivity has slowed in China.Notable in our survey this year,is a drop-off in market participation-with some brands and marketing leaders exiting.So,there is a degree of selection bias,in that we are measuring active,successful participants,and cannot fully account for withdrawals.About the Survey:At

143、the end of 2022,Totem surveyed marketing leaders from a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross-section(of mostly global)brands,ranging from very large to medium sized-most of which have more than 10 years experience in China.TOTEMS 2023 BRAND S

144、URVEYBrands remain generally optimistic about growth prospects in China.Looking at the historical context,brand investment levels are at a low point(when measured year-over-year).Brands are also(rightfully)cautious headed into 2023.Despite the uncertainty,brands are moving forward with new initiativ

145、es and maintaining-expanding growth efforts in China.There is also a sense that the worst is over and that 2023 must be better.Investments into social commerce and CRM are leading priorities for brands.There is a strong interest in(1)connecting with customers and building loyalty/engagement,and(2)ta

146、ctics which more closely connect marketing to sales performance.“Private Traffic”is the defining activity of brands moving into 2023.In this context,top-of-funnel(brand)investments have taken a step backwards,with shifts away from the mostly costly forms of media.Among social channels,RED is setup f

147、or the biggest gains into 2023.RED ranks at the top of the list for increased investments.As a compliment to the“private traffic”imperatives of most brands,WeChat continues to be a consistent favorite.DOUYIN is the other stand-out channel.As it continues to put the pieces together with its ecommerce

148、 capabilities,it will be a focus channel for brands sales performance.123THREE KEY TAKEAWAYS:BRAND SURVEYHOW WOULD YOU DESCRIBE YOUR OVERALL OUTLOOK FOR NEXT YEAR?BRAND SURVEY FOR 2023Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)6%27%37%19%11%VERY OPTIMISTICSOMEWHAT OPTIMISTICNEUTRALSOMEWHA

149、T NEGATIVEVERY NEGATIVE2%34%27%17%20%202220232%BRANDS REMAIN OPTIMISTICDespite challenging conditions in 2022,marketing leaders remain generally optimistic headed into 2023.The total number of brands with neutral-to-optimistic outlooks for 2023 is equal to 63%.By comparison,in 2022,70%of brands were

150、 neutral-to-positive.Headed into 2021,79%of brands were neutral-positive.So,over the past three years,weve seen a 16 point swing toward a negative outlook.And,headed into 2023,the number of brands reporting a negative outlook has nearly doubled from 11%in 2022,to 20%in 2023.About the survey:At the e

151、nd of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly global brands)from very large to medium sized-most of which have more than ten years experience in the market.BRAND SURVEY FOR 2023WHAT MARKETING GOALS A

152、RE PRIORITY FOR 2023?SALES CONVERSION,LOYALTY AND REPEAT PURCHASE LEAD THE WAY AS GOALS FOR BRANDS HEADED INTO 2023.MUCH LIKE 2022,BRANDS ARE CONCERNED WITH IMPROVING LTV(LIFETIME VALUE).THE VALUE CUSTOMER OF DATA(AND CONNECTION)HAS INCREASED.AS CHINA MARKETING SUBTLY SHIFTS TO MORE A MORE DIRECT MO

153、DEL,BRANDS ARE TRANSITIONING FROM ACQUISITION TO RETENTION STRATEGIES.CUSTOMER SERVICE AND SYSTEMS(CRM)ARE VIEWED AS REMEDIES FOR HIGH MARKETING COSTS AND CHURN RATES.Brand AwarenessSales(Conversion)Customer Loyalty(Repeat Purchase)Improve Customer ExperienceCustomer Insights/DataOperations Efficien

154、cyBrand Image5%5%15%16%26%24%10%12%2%12%10%21%24%18%20222023Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)HOW DOES YOUR BRAND PLAN ON ADJUSTING OVERALL MARKETING SPEND IN 2023?BRAND SPENDING IN 202210%7%13%11%28%28%22%33%18%11%9%10%Decrease of 10%Decrease of 10%No ChangeIncrease of 30%202220

155、23Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)MARKETING SPEND IS SLOWING2022 was a slow year,which resulted in a lot of initiatives reduced,eliminated or slowed down.Very few brands operated full speed ahead.In this context,budget plans for 2023 demonstrate a divergence of approach,with a

156、greater number of brands moving away from neutral(un-changed)year-over-year budgets.When compared with years past,a greater number of budgets appear to be more sharply positive or negative.Despite a poor year in 2022,many leading brands are planning for increases headed into 2023,anticipating improv

157、ed conditions.Looking back over the past three years,there is also a growing number of brands with negative(year-over-year)adjustments for budgets:2021-18%planned decreases 2022-21%planned decreases 2023-27%planned decreases Prior to 2020,very few brands reduced budgets in China,as revenue and marke

158、t promise always tended to support increased investments.Note about the survey:These data are collected about the year ahead from the previous year.For example,the 2023 sentiment is gauged in Nov 2022 about the year ahead.In this context,sentiment about the next year has been steadily declining over

159、 the past three years.HOW DOES YOUR BRAND PLAN ON ADJUSTING DIGITAL MARKETING SPEND IN 2023?7%11%27%15%22%29%26%28%6%10%12%7%Decrease of 10%Decrease of 10%No ChangeIncrease of 30%20222023BRAND SPENDING IN 2022Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)OVER-INVESTMENT IN DIGITAL?Digital co

160、ntinues to trend higher than overall budgets,but the rates of increase are slowing.In fact,there is little room to increase the percent of marketing budgets further into digital.Data from GroupM show that more than 90%of branded media investments already flow into digital.Brands in China likely need

161、 to diversify away from digital-both to improve effectiveness and achieve lower CAC(Customer Acquisition Costs).For investments in digital,the hope moving forward is that LTV can be improved with enhancements to customer retention and direct engagement channels(such as Mini-Programs)and private traf

162、fic.These investments into more direct success come at the same time as;(1)digital marketing costs continue to inflate,and(2)digital audiences are becoming more fragmented.In the past,investments into Tmall and WeChat were absolutely necessary.Looking ahead to 2023 and beyond,brands will shift more

163、budgets to fast growing players like RED,Douyin,Kuaishou,BiliBili-while building the systems to integrate a multi-channel,DTC approach.About the survey:At the end of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(

164、mostly global brands)from very large to medium sized-most of which have more than ten years experience in the market.HOW DOES YOUR BRAND PLAN ON ADJUSTING SOCIAL MARKETING SPEND IN 2023?16%15%26%21%18%26%28%23%7%9%5%7%Decrease of 10%Decrease of 10%No ChangeIncrease of 30%20222023BRAND SPENDING IN 20

165、22Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)A SOCIAL COMMERCE HALOMuch like digital at large,social out-performs average budget adjustments.Even with brands that plan to decrease overall budgets,social media investments tend to be up-held.Success in China is closely linked to the effecti

166、veness of brand social commerce strategies.Mini-programs,private traffic,influencers and live-streaming-as key characteristics of social commerce-are viewed as mission critical investments.Despite the overall rising costs of digital(and concurrent budget tightening),many of the key social channels o

167、ffer affordable advertising systems,where smaller,more bottom-up ad programs can be maintained and adjusted incrementally,based on measurable performance.In sum,social investments can serve both top-down social commerce imperatives as well as bottom-up,value-focused tactics(in the case of incrementa

168、l ads).About the survey:At the end of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly global brands)from very large to medium sized-most of which have more than ten years experience in the market.BRAND SURVE

169、Y:GOALS FOR 2022WHAT MARKETING TACTICS ARE PRIORITY FOR 2023?MOVING INTO 2023,THERE IS A NOTABLE SHIFT AWAY FROM HIGH-COST AND EXPERIMENTAL TACTICS;OTV,TVCS&OTT,GAMING AND OUT-OF-HOME.BRANDS ARE INSTEAD FOCUSING EFFORTS TOWARD COST-EFFECTIVE SOLUTIONS LIKE;SHORT-VIDEO,PRIVATE TRAFFIC,MINI-PROGRAMS A

170、ND ECOMMERCE.IN THIS CONTEXT,BRANDING EFFORTS ARE TAKING A BACK-SEAT TO TACTICS THAT PUT BRANDS IN MORE DIRECT CONTACT WITH CUSTOMERS.While larger,more established brands can maintain a large number of tactics/formats,FOMO(fear of missing out)leads to a situation where many(smaller)brands maintain i

171、nvestments in too many formats.As goals shift more toward performance and CRM success,brands in 2023 would be wise to concentrate greater effort into a more narrow set of channels/initiatives.Social CommerceShort VideoInfluencersLivestream VideoPrivate TrafficMini-ProgramsVertical Media ChannelsECom

172、merceGamingAds on Tmall/JDDisplay AdsSponsorshipsSearch MarketingPodcasts-Audio AppsNews Channel/PortalsOTV AdsOOHLong VideoTVC AdsOTT4%1%5%2%5%1%11%5%7%2%4%9%21%2%11%17%12%20%28%17%7%7%10%11%12%13%13%18%28%23%27%11%18%39%33%34%44%34%37%62%46%45%39%54%41%51%40%66%26%40%33%59%37%40%33%28%24%12%18%16%

173、26%28%38%13%19%20%16%10%15%24%29%22%20%16%21%6%12%24%12%4%17%18%9%20%22%15%20%1%24%10%7%5%2%2%15%7%10%5%1%Large DecreaseSmall DecreaseNo ChangeSmall IncreaseLarge IncreaseSource:Totem Media 2023 China Brands Survey n=82Influencer MarketingBrand-Level Media InvestmentsTechnology&Data SystemsAgencies&

174、VendorsBranded Content&CreativePerformance AdsInternal Staff&Resources13%6%5%20%15%20%17%12%5%8%12%13%14%18%20222023WHAT AREAS(IF ANY)ARE BUDGET CUTS PLANNED FOR IN 2023?BUDGET PULLBACK?Source:Totem Media Brand Survey(2022 n=89),(2023 n=82)BUDGET CUTS COMING IN 2023Planned budget cuts for 2023 are t

175、rending higher overall than those projected prior to 2022.Brand-level media and advertising,as well as agencies&vendors are noted as the areas with highest potential for budget cuts in 2023.Across the entire survey of brands there is a clear shift from brand building and awareness,with more effort t

176、oward performance and CRM.Bigger budget initiatives,with longer-term time horizons face the highest potential for further cuts,as brands look to concentrate budgets on re-starting growth and consolidating customer data/engagement activities.About the survey:At the end of 2022,Totem Media surveyed a

177、group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly global brands)from very large to medium sized-most of which have more than ten years experience in the market.BRAND SURVEY:INFLUENCERS(KOLS)WHAT CONCERNS DO YOU HAVE WITH USING KOLS?INFLU

178、ENCER MARKETING CONTINUES TO BE A KEY PIECE OF THE CHINA PLAYBOOK.HIGHER PROFILE KOLS HAVE FACED A WAVE OF SCRUTINY IN THE PAST FEW YEARS,WITH LEADING PLAYERS SUCH AS AUSTIN LI AND VIYA BEING SERIOUSLY DISCIPLINED.WHILE THIS HAD A CHILLING EFFECT,THE INDUSTRY MOVED PAST MANY OF THESE CONCERNS DURING

179、 THE SECOND HALF OF 2022.AUSTIN LI-AS TORCHBEARER FOR THE INDUSTRY-IS BACK TO WORK.BRAND CONCERNS HAVE SUBSIDED AND MOST COMPANIES ONLY HAVE SMALL CONCERNS ABOUT WORKING WITH INFLUENCERS.Risk of Association w/KOLGovernment RegulationsWeak Effect/Low ROIRising CostsDifficult Relations w/KOL10%39%26%2

180、6%32%62%55%66%44%57%28%6%9%31%11%No ConcernSmall ConcernLarge ConcernSource:Totem Media 2023 China Brands Survey n=82The growth of virtual idols in China underscores the dynamic of the KOL industry.Brands need influencers to build reach and spark interest with audiences but costs,compliance and cont

181、rol are major concerns.Virtual Idols-especially those owned by brands hold the promise of reducing many of these challenges.DOUYINWECHATREDBILIBILIWEIBOTMALL LIVEKUAISHOUZHIHU030609012057%48%35%29%23%22%13%6%2%5%16%34%9%9%13%11%12%15%29%9%16%26%22%17%11%29%6%16%17%16%37%42%17%4%13%12%35%28%15%24%Sma

182、ll KOLs/KOCsMid-Tier KOLsLarge KOLsOthers(Celebs,Media)N/A(Not Using KOLs)KOL USAGE PER CHANNELWHAT SIZE/PROFILE OF KOL DO YOU MOST COMMONLY USE PER CHANNELSource:Totem Media 2023 China Brands Survey n=82BRANDS FAVORING SMALLER KOLS With the growth of private traffic efforts in the past several year

183、s,usage of smaller KOLs and KOCs(Key Opinion Consumers)have gained considerable traction across a range of channels.KOL/KOCs are used intensively,in order to activate sales promotions and user-get-user schemes within discussion channels particularly on RED and WeChat where private traffic efforts fl

184、ourish.Despite the growing bias toward KOCs,larger KOLs and celebrities are still used widely.Large KOLs are used in support of annual campaigns and selling events/festivals-particularly on Douyin,Tmall Live,Weibo and Kuaishou.In the survey,brands were not provided with definitions for KOL size/prof

185、ile.The size/profile can be vastly different depending on the channel(eg.a small KOL on Weibo could be a mid-large KOL on RED).In other words,brand respondents used their own judgement for KOL size/profile.Therefore,this data serves a rough guideline,not an apples-to-apple comparison.HOW DO YOU PLAN

186、 ON ADJUSTING TOTAL KOL INVESTMENTS BY CHANNEL IN 2023?-80%-60%-40%-20%0%20%40%60%80%-22%-26%-7%-9%-21%-27%-40%-22%24%9%76%24%40%61%26%56%IncreaseDecreaseKOL USAGE PER CHANNELSource:Totem Media 2023 China Brands Survey n=829%WECHATWEIBODOUYINBILIBILIKUAISHOUREDZHIHUTMALL LIVEBUDGETS ARE FLOWING TO K

187、OCSThe largest budget increases are aimed at KOL/KOCs on WeChat,Douyin and RED.Influencer investments into WeChat and RED are closely linked to the increase in private traffic(and related sales)programs.KOCs support the growth of customer acquisition,reviews and advocacy.They are both cheaper and mo

188、re linked to performance(sales)goals.At the same time these KOCs are accessible to a much wider range of brands-including start-ups trying to kickstart growth.By contrast,the costs(and related risks)of working with big KOLs are imposing.Larger KOLs are the domain of large brands-still mostly used in

189、 support of large annual and festive campaigns.Weibo and Zhihu standout as channels where KOL budgets are decreasing into 2023.About the survey:At the end of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly g

190、lobal brands)from very large to medium sized-most of which have more than ten years experience in the market.BRAND SURVEY:LIVESTREAMINGHOW DO YOU PLAN ON ADJUSTING LIVESTREAM PRIORITIES FOR 2023?LIVESTREAMING HAS BECOME ANOTHER KEY PIECE OF THE SOCIAL COMMERCE PLAYBOOK.AS SUCH,BRANDS ARE USING IT TO

191、 ACHIEVE A RANGE OF GOALS.WHILE SELLING IS STILL THE MAIN USE,BRANDS ARE ALSO USING IT FOR AWARENESS,BRAND STORYTELLING AND CUSTOMER SERVICE.Brands are cooling on outsourcing livestream sales initiatives to KOLs,while ramping up in-house capabilities.Data from iResearch shows the percentage of lives

192、treams by KOLs vs Brands will drop from 68:32 in 2020 to 50:50 by 2023.-80%-60%-40%-20%0%20%40%60%80%-13%-21%-20%-24%68%43%54%60%IncreaseDecreaseKOL SALESAWARENESSSERVICEBRANDINGSERVICEBRANDINGAWARENESSKOL SALES16%26%19%39%WHAT MAJOR GOAL DID YOU SERVE WITH LIVESTREAMING IN 2022?Source:Totem Media 2

193、023 China Brands Survey n=82Source:Totem Media 2023 China Brands Survey n=72BRANDS MUST DO MORE WITH LIVESTREAM VIDEOHIGH EQUITYCONVERTLOW EQUITY(Rent Audience)(Retain Audience)SALESGROWTHBRANDAustin Li,using his own channel to sell to his audience,helped create a hero product for Florasis.He is a t

194、rue advocate for this brand but for most brands,it can be coldly transactional.Livestream brand introductions and product demos from KOL accounts can boost overall product awareness and improve credibility.Institutionalized broadcasts by brands(customer service,product demos)-elevates consideration,

195、re-enforces trust.3rd Party KOLs/Media can kick-start awareness,interest in(a new)brand,product and/or widen appeal to new segments.KOL Livestream sales spark the link between attention-action,to generate quick sales and ideally establish“hero products.”Brand storytelling,entertainment,interest-base

196、d content creates meaningful,lasting engagement with audiences.“Gucci Live”(left)is a livestreaming program for personal shopping and product Q&A.Beauty brands have institutionalized daily Q&A,demos and service from“owned”accounts.Brand“moments”and digital events,improve equity and DTC metrics.LVs S

197、S21 mens fashion show was live-streamed on Douyin,with 52m+viewers.REACHBRAND STORYKOL SALESSERVICELIVESTREAM CHANNELS X MARKETING OBJECTIVESHIGH EQUITYCONVERTLOW EQUITY(Rent Audience)(Retain Audience)SALESGROWTHBRANDService staff and“bosses”are taking to“owned”livestream channels to talk about prod

198、ucts,provide service.With its CRM slant,WeChat could be primed for“service”streams.Tmall Live,Douyin and Kuaishou hold the lions share of GMV for livestream sales.BiliBili,WeChat and RED also hold some promise in this space.Brands looking to build equity are doing so with their own channels(and host

199、s),while“guest KOLs”increase viewership.RED may emerge as a priority channel for brand storytelling.Douyin leads in terms of current viewer momentum.But for boosting brand awareness,companies should prioritize the KOL first,and the channel second.Institutionalized broadcasts by brands(customer servi

200、ce,product demos)-elevates consideration,re-enforces trust.3rd Party KOLs/Media can kick-start awareness,interest in(a new)brand,product and/or widen appeal to new segments.KOL Livestream sales spark the link between attention-action,to generate quick sales and ideally establish“hero products.”DOUYI

201、NREDWECHATBrand storytelling,entertainment,interest-based content creates meaningful,lasting engagement with audiences.TMALL LIVEREACHBRAND STORYKOL SALESSERVICELIVESTREAM COMMERCELIVESTREAM COMMERCE CONTINUES TO GROW BUT IS SHOWING SIGNS OF SLOWING DOWN(SLIGHTLY).TMALL LIVE AND DOUYIN ARE THE TWO L

202、EADING CHANNELS-WITH KUAISHOU SLOTTED IN BEHIND THE TWO LEADERS.DOUYIN WILL LIKELY OVER-TAKE TMALL LIVE AS LEADER IN 2023 While Tmall Live,Douyin and Kuaishou are leading in livestream selling,there are a host of other relevant channels.WeChat,RED,Weibo and BiliBili all have livestream channels whic

203、h are important players in the space-each one with slightly different(relative)advantages.Source:eMarketer14028042056070020192020202120222023(e)Livestream GMV%of Total Retail GMV19.4%16.5%11.7%7.5%3.5%623.3479.5299.7161.962.319.4%16.5%11.7%7.5%3.5%CHINA LIVESTREAM ECOMMERCE MARKET SIZE(BILLIONS RMB)

204、DOUYINKUAISHOUTMALL LIVE34%29%37%2022 SHARE OF LIVESTREAM REVENUE BY CHANNEL(GMV)Source:Totem ResearchGMV SPLIT(%)OF TOP THREE LIVESTREAM CHANNELSIN 2022,HOW WOULD YOU CHARACTERIZE YOUR ROI,PER CHANNEL:RESULTS WITH SOCIAL CHANNELSREDTMALL LIVEWECHATDOUYINBILIBILIKUAISHOUWEIBOZHIHU5%5%7%7%7%10%15%13%

205、1%10%9%11%16%18%15%35%79%60%73%68%51%46%38%37%15%13%10%11%19%17%18%11%12%1%2%6%9%15%4%Large LossSmall LossNeutralSmall GainLarge GainSource:Totem Media 2023 China Brands Survey n=82RED HAS WIDESPREAD TRACTIONLarger brands are generally very happy with returns on mature channels(namely WeChat).For ne

206、wer,smaller brands the potential to break-thru on more mature channels is limited(as they are busier and higher cost).RED was perceived as the top channel for ROI in 2022.For retail labels,RED offers a unique dynamic where brands and consumers are more closely connected to the grassroots of product

207、discovery,and social shopping.Both smaller and larger brands can find success with private traffic,KOCs and related tactics on RED,working bottom-up,in a cost-controlled manner.Douyin has been superb for quickly building audiences but,for many brands,it is becoming too crowded and costly.The Douyin

208、algorithm which favors quality content over scale does however,level the playing field for smaller brands,with compelling,entertaining content.Tmall Live has been hit-and-miss.Some brands have been wildly successful with livestream selling,while for others,costs simply outweigh the impact.About the

209、survey:At the end of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly global brands)from very large to medium sized-most of which have more than ten years experience in the market.INVESTMENTS IN KEY CHANNELSR

210、EDDouyinWeChatTmall LiveBiliBiliTmallJDKuaishouWeiboZhihu2%9%10%11%18%22%23%40%45%49%70%38%78%46%31%56%38%35%35%37%28%54%12%43%51%22%39%24%20%15%DecreaseN/AIncreaseHOW DO YOU PLAN ON ADJUSTING YOUR BRANDS CHANNEL SPEND IN 2023?Source:Totem Media 2023 China Brands Survey n=82RED TO CONTINUE MOMENTUM

211、Brand channel plans for 2023 favor the channels which have firmly proven results from 2022.Where in past years,some more experimental channels received a lot of interest,this years favorites are skewed toward more proven options.RED leads as the channel for planned new spending by brands in 2023.Its

212、 blend of social discovery(ratings and review),together with affordable influencers make it an attractive platform.With its rapidly improving ecommerce capabilities,Douyin comes in at number two.Despite the quickly rising costs of Douyin,the ROI is still attractive.Livestream and ecommerce results o

213、n Douyin were exceptional for many brands in 2022.WeChat comes in at number three.Its high rank is an impressive vote of confidence given how long(and how intensively)brands have already invested into it.While there may be a degree of sunk cost fallacy involved,WeChat does still deliver results-espe

214、cially for well known brands that have their own traffic/audiences.About the survey:At the end of 2022,Totem Media surveyed a group of 82 brands on their advertising plans for 2023.This group of brands represents a cross section of(mostly global brands)from very large to medium sized-most of which h

215、ave more than ten years experience in the market.INVESTMENTS IN KEY CHANNELSWeChatTmallREDDouyinTmall LiveWeiboJDBiliBiliKuaishouZhihu12%20%26%32%35%38%61%63%84%88%VERY CONFIDENT THE CHANNEL WILL PLAY A KEY ROLE IN MARKETING PLAYBOOK -THREE YEARS FROM NOWSource:Totem Media Brand Survey(2022 n=89),(2

216、023 n=82)WECHAT&TMALL ARE FOUNDATIONALWeChat and Tmall still rank as the most consistent,foundational channels for brands in China.RED and Douyin have made massive jumps in the rankings over the past couple of years.The top channels all have considerable“staying power”and are viewed as safe investme

217、nts,where an investment in building critical scale today will not be lost in the next three years.Confidence in the top(most mature)channels remains mostly unchanged from previous surveys.The most obvious exception to this is Weibo which is starting to loose confidence as a top channel with staying

218、power.Newer channels highlighted by survey participants headed into 2023 include;Dewu(Poizon)and Mei Pian.Note about this survey;brands tend to vote in favor of channels where large investments have already been made.For channels like Weibo that did not have large investments in 2022,there is a corr

219、esponding drop in confidence from brands.As investment levels continue to drop in 2023,Weibo may fall further out of the spotlight.BRANDS MUST DEVELOP STRATEGIES TO BALANCE FOUNDATIONAL CHANNELS WITH EMERGING,EXPERIMENTAL ONES.Insight:While there are new channels emerging,brands need to pick their s

220、pots and not attempt to maintain too many channels concurrently.Having too many channels in operation can be a drag on resources and the quality of audience engagement.Very few brands are executing multiple channels well,with high quality content and operations.EARLY ADOPTERSSmall user base,deep inv

221、olvement from creators.LATE MASSLATE PASSIVEHit maximum potential in terms of audience#s.Engagement%static.EARLY MASSVery quickly growing audience,strong engagement.Very low active engagement.Audience#s in decline.60%25%10%5%EXPERIMENTAL(BETS ON BIG WINS)HIGH GROWTH(ACQUISITION)CORE CHANNEL(LONG TER

222、M ENGAGEMENT)AUDIENCE SCALEPORTFOLIOMEDIA PORTFOLIO PLANNINGNEW&NICHEKUAISHOUBILIBILIDOUYINREDTMALLWECHATWEIBOZHIHUMEDIA PORTFOLIO PLANNINGMAU584 M(Q3 2022)680M(Q2 2022)1.3 B(Q3 2022)200 M(Q3 2022)598 M(Q3 2022)332 M(Q3 2022)900 M(Annual Active Users,Q2 2022)Users-48%30-35yrs old-Tier 1 and coastal

223、cities-55%F vs 45%M-50%24-30yrs old-74%35 yrs old-Tier 1&2 cities-57%F vs 43%M-Official Account:43%F vs 57%M-Channels:58%F vs 42%M-Tier 1-Tier 2 cities-25-30yrs old-70%F vs 30%M-Tier 1-2 cities,coastal cities-52%F vs 48%M-Tier 3 cities-57%F vs 43%M-Tier 1&tier 2 cities-78%43-41-237%20%44%WITH YOUR A

224、PPROACH TO CRM,AND UNDERSTANDING AUDIENCES,HOW MANY AUDIENCE PERSONAS DOES YOUR BRAND FOCUS ON?BRAND COLLABS&PRIVATE TRAFFIC GOALS CONVERGEChinese lingerie brand,NEIWAI and LOreal recently joined forces to create a limited edition“nude”product series.The collaboration expresses common goals around a

225、 shift to natural beauty and diversity-and,importantly a shared focus on audience growth.Looking beyond the nuances of this campaign,the important point is that brand collaborations like these are proliferating across China-and seen as imperative for audience growth objectives.While we occasionally

226、see brand collabs globally,large brands in China perform dozens of shared marketing efforts per year.Some of these shared efforts are high-profile collaborations,featuring co-branded products.But the majority of such efforts are much more executional,and focus on how to share private traffic and bui

227、ld new reach/awareness.Brand collaborations in China serve as ways to;(1)reach larger audiences,(2)access new customer cohorts(niches not yet penetrated),and(3)bring down overall media costs,by pooling traffic and resources.There is probably no-turning-back with this trend.Even if exorbitantly high

228、media costs moderated at this point,brand collabs have become an important part of the playbook.Additionally,brand collabs support the significant CRM goals that brands have in acquiring and consolidating private and owned audiences.THE BRAND COLLAB,PRIVATE TRAFFIC CONNECTIONThe LOreal x NEIWAI coll

229、aboration was comprehensive and included product development,co-branding,marketing and sales coordination.But when evaluated simply as a“private traffic”effort-pooling social followings-the results are impressive.The combined results of“internal and external”traffic,helped the two brands reach more

230、than 100 million customers,with millions of interactions.GROWTH FRAMEWORK5BRAND GROWTH FRAMEWORK87CATEGORY CONCENTRATION84STRATEGIES&CASE STUDIES91CHINA IS A BIG PRIZE FOR GLOBAL BRANDSCHINA IS STILL A BIG PRIZE FOR GLOBAL BRANDS.THE SIZE AND GROWTH OF CHINA DRAWS IN TOP BRANDS-PER CATEGORY-FROM ACR

231、OSS THE GLOBE.AS A RESULT THERE HAVE BEEN MORE LEADING BRANDS IN CHINA THAN ANY OTHER MARKET.OVER THE PAST TWO YEARS THERE HAS BEEN A SLOWDOWN IN NEW MARKET ENTRY(AND A WAVE OF MARKET RETREATS AND EXITS).DURING THIS TIME,LOCAL,CHINESE BRANDS HAVE ALSO STEPPED UP AND ARE NOW LEADING IN MANY CATEGORIE

232、S.MARKET SHARE PERCENTAGES AND POSITIONING ARE IN FLUX.DESPITE BEING HYPER-COMPETITIVE,THE PROSPECT OF OWNING A HEALTHY SHARE OF A CATEGORY IS STILL ACHIEVABLE FOR BRANDS THAT PLAY THEIR CARDS RIGHT.Market share concentration on a category-by-category basis,is still relatively low in China,when comp

233、ared with most fully mature markets in EU,US.So,while China has attracted more brands than any other market,there is still room for brands to succeed.10-30EU Brands+10-30China Brands+10-30US Brands+10-30Asian Brands+10-30Other Brands+MORE TOP BRANDS4-12XPER CATEGORYIN CHINALEADERSTHE PACKNICHECollec

234、tively the top 25 brands typically account for 55%(or more)of a sub-category.Brands ranked 26-500+represent a minority share.Niche brands(who specialize)can hold a decent share of a Tier 4 category.0204060Market Share%TYPICAL MARKET SHARE CONCENTRATION PER SUB-CATEGORYCATEGORY CONTROL ON ECOMMERCECA

235、TEGORY SALES DISTRIBUTIONWhile the level of concentration varies by category,it is common to see the top 25 players in a sub-category controlling 55%of the category sales.By way of comparison,data from the IAB(2020)show in the US,that the top 20 manufacturers control 96%of cosmetics retail sales.In

236、China(online),for a top tier category like cosmetics,the top 25 brands would account for only 40%of sales(according to data from Moojing 2022).In China there are often in excess of 700 brands per category,so the share for the pack(non-leaders)is small.For brands outside the top 25,its often better t

237、o drop into a sub-sub category where they can differentiate,offer niche value and claim a larger share of sales as specialist.Online,categories(and niche categories)are organized into four levels,with 160(tier one categories,2,835(tier two)“sub categories”and 15,001(tier 3&4)“sub-sub categories.”Tie

238、r 1:160 Categories Tier 2:2,835 Sub-Categories Tier 3&4:15,001 Sub-Sub-CategoriesCATEGORY STRUCTURE*Classification of categories for ecommerce platformsSource:Moojing 2022NOTABLE FOREIGN BRAND RETRENCHMENTS(2019-2023)COMPETITIVE LANDSCAPEPRESSURE MOUNTING ON BRANDSA growing number of brands have bee

239、n pulling back on China investments-particularly in 2021-2022-as Covid restrictions in China added new pressures.Many brands are reducing investments,some are exiting the market all together.On the right is a list of higher-profile foreign brand retrenchments from the past two years.A good deal of t

240、he pressure on foreign brands has come as a result of Covid restrictions(travel of management teams in/out of China,and a host of other operational challenges).The general economic slowdown has also been notable.But,recent retreats come more as the result of a bundle of issues which have been buildi

241、ng over the past several years.Pre-existing issues include:-Cut-throat competition,with too many players per category-Particularly stiff competition from local players-Quickly inflating costs(media inflation,rents,staff)-Modest brand loyalty(very shallow LTV results)In short,too many foreign brands

242、have been unable to gain a meaningful share of the market-and it has proven very difficult to consolidate gains when they are achieved.The added pressures from Covid were-in many cases-the last straw prompting management teams to make tough decisions.Some industries have also been subject to particu

243、larly onerous regulations/compliance hurdles(eg.media,finance and automotive).Regulations in these industries,coupled with favorable policies for local players,have kept many foreign companies on the back foot and created market deficits which have been insurmountable.Source:Totem Research 2022Brand

244、DatesCategoryNotesOldNavy 2022 MarchFashionTopshop 2020 OctoberFashionSELECTED2022 JulyFashionClosed all the Off-line storesForever 212019FashionGAP2022FashionClosing offline storesAbbott 2022 DecemberFood(Baby Nutrition)Stopped sales of infant milk formulaEsprit 2020FashionSuperdry2022 JulyFashionY

245、ahoo2021 NovemberMediaBershka,Pull&Bear,Stradivarius(Inditex)2021-2022FashionEarly 2021-Closed all physical storesMonki(H&M)2022 MarchFashionClosed tmall shopCarls Jr2022FoodClosing last shop in Shanghai after 13 yrsLady M(cake)2022 SeptemberFoodClosing all physical stores(entered 2017)Acura2023Auto

246、Jeep,Skoda planning shutdowns alsoAirbnb2022 JulyTravel&HospitalityClosed China domestic business in JulyLinkedIn2021MediaShut service in China in 2021,launching site with no sharing Kindle2022-2023MediaEreader shuts in June 2022,and e-store to close in June 2023Nike Run Club App2022 JulyMediaJeep(S

247、tellantis)2022 July AutoDissolving local JV to manufacture in ChinaIKEA2022FurnishingsClosed 2 stores(Guiyang,Shanghai YangpuUniqlo2022FashionClosed 133 stores in 2022Tracking data and performance of over 5,000 brands in China and Globally,Totem has developed its“Brand Growth Framework”as a template

248、 for brand growth.It provides key strategies needed by start-up brands to quickly become category leaders.And,at the same time,provides tactics for established brands to defend leadership positions,with renewed momentum.When set against the China marketing landscape,the“growth framework”reveals that

249、 China marketers tend to be strong on operational capabilities(eg.Omni-channel and virtualizing experiences),but still weak in areas of emotional appeal(eg.“Brand Bravery”and“Distinctiveness”).While marketers in China have a strong bias towards“performance”tactics,the channels themselves have not ye

250、t provided brands with reliable,scalable conversion solutions.For instance,globally,with Google/Facebook,brands have tried-and-true CAC calculations from PPC ads.In China,(apart from TMall)there is no solution that comes close to providing reliable CAC metrics.As a result,few brands have yet impleme

251、nted KPIs such as CAC/LTV.TOTEMS BRAND GROWTH FRAMEWORKBrand“Bravery”Own Category/Culture1-2-1 at Scale(CRM)Advocacy&Trust New Media MindsetVirtualizing ExperiencesTop-DownMASS MEDIA(CPM Focused)Bottom-UpTACTICAL MEDIA(CAC Focused)PervasivenessSocial Media EngagementDistinctivenessOmni-ChannelBRAND

252、GROWTH FRAMEWORKNEW MEDIA MINDSETBRAND“BRAVERY”Brave brands have a purpose-and resolve to take a stand.They venture big gains with bold,compelling campaigns.Investing into underpriced platforms ahead of the curve.Well timed investments can earn brands big rewards.OWN CATEGORY/CULTUREPERVASIVENESS/PE

253、NETRATIONWhen brands become synonymous with a culture and become intertwined with it at every conceivable level.Sheer power of presence.Pervasiveness/penetration underpins a large share of market-scale for brands.DISTINCTIVENESSOMNI-CHANNELHow well a brand stands out against the crowd,or focuses in

254、on a particular niche.What makes them memorable.A full array of channels(offline and online)ensures that a brand is accessible at all times for customers.ADVOCACY&TRUST FOCUSEDVIRTUALIZING EXPERIENCESCreating quintessential brand experiences via new technologies(VR/AR,livestream,haptics and more).A

255、healthy relationship with customers-brand delivers on its promises and makes things right for its customers.1-2-1 AT SCALE(CRM)SOCIAL MEDIA ENGAGEMENTSystems to communicate with individuals and segments at scale,while keeping a personal touch.Social content which is highly responsive,conversational

256、and focused on authenticity and reciprocity with audiences.PRODUCT SUPERIORITY ABOVE ALLBRAND GROWTH TIERSBottom-UpTACTICAL MEDIA(CAC Focused)Top-DownMASS MEDIA(CPMFocused)STARTUPSCALINGGROWTHMASSRMB 5-10MRMB 10-100MRMB 100-500M+PERVASIVENESS/PENETRATIONOMNI-CHANNELOWN CATEGORY/CULTUREADVOCACY&TRUST

257、 FOCUSEDBRAND “BRAVERY”VIRTUALIZING EXPERIENCESNEW MEDIA MINDSET1-2-1 AT SCALE(CRM)DISTINCTIVENESSSOCIAL MEDIA ENGAGEMENT75%50%Cost of Revenue Sales/Marketing Ratio15%5%50%25%What share of revenue should a brand spend on marketing,at each stage of growth?At each new tier,brand equity provides a lift

258、 to sales performance.For start-up brands,its not uncommon to have Cost of Revenue ratios at 75%in very early stages of growth.By comparison,top-tier brands may spend as little as 5%of sales(rev.)on marketing.Amplification effects from brand equity can be massive for leading companies,allowing for m

259、uch lower ratios.Competitive markets like China require brands to spend a large share of revenue on marketing,for much longer periods of time.50%25%Fromto.BRAND GROWTH TIERSBottom-UpTACTICAL MEDIA(CAC Focused)Top-DownMASS MEDIA(CPMFocused)STARTUPSCALINGGROWTHMASSPERVASIVENESS/PENETRATIONOMNI-CHANNEL

260、OWN CATEGORY/CULTUREADVOCACY&TRUST FOCUSEDBRAND “BRAVERY”VIRTUALIZING EXPERIENCESNEW MEDIA MINDSET1-2-1 AT SCALE(CRM)DISTINCTIVENESSSOCIAL MEDIA ENGAGEMENTLong-term brand liftShort-term sales liftBRAND BUILDINGSALES ACTIVATIONWhats the appropriate split between brand and performance marketing spend?

261、Start-up brands can ride performance marketing efforts through to a first plateau in growth.During this stage,a bias of 90%toward“performance”(bottom of funnel)may be effective.Following this initial growth spurt,brands must flip-the-switch and increase brand building(top-of-funnel)budgets.Research

262、from Binet&Field has been instructive(they call for an average split of 60:40 in favor of brand investment).Ratios of 70:30 in favor of brand for incumbents looking to re-ignite penetration.RMB 5-10MRMB 10-100MRMB 100-500M+10%90%70%30%60%40%60%40%BRANDSALESSTRATEGIES&CASE STUDIESFRAMEWORK IN ACTIONB

263、rand“Bravery”Own Category/Culture1-2-1 at Scale(CRM)Advocacy&Trust New Media MindsetVirtualizing ExperiencesTop-DownMASS MEDIA(CPM Focused)Bottom-UpTACTICAL MEDIA(CAC Focused)PervasivenessSocial Media EngagementDistinctivenessOmni-ChannelBRAND GROWTH FRAMEWORKTHESE FUEL NEW CUSTOMER GROWTHNEW MEDIA

264、MINDSETBRAND“BRAVERY”Brave brands have a purpose-and resolve to take a stand.They venture big gains with bold,compelling campaigns.Investing into underpriced platforms ahead of the curve.Well timed investments can earn brands big rewards.OWN CATEGORY/CULTUREPERVASIVENESS/PENETRATIONWhen brands becom

265、e synonymous with a culture and become intertwined with it at every conceivable level.Sheer power of presence.Pervasiveness/penetration underpins a large share of market-scale for brands.DISTINCTIVENESSHow well a brand stands out against the crowd,or focuses in on a particular niche.What makes them

266、memorable.CHARACTERISTICSSTRATEGIES&CASE STUDIESFRAMEWORK IN ACTIONDISTINCTIVE-NESSThe tagline of the 2022 Sprite campaign asks whether“Sprite is promoting another brand.”The set of creatives-awash with Sprites green,yellow and black-remind audiences of how distinct and memorable the brand is.While

267、its unclear whether the campaign was effective in promoting its new sugar-free soda,it did highlight the notoriety of the brand.ITS HARD TO CONFUSE SPRITE WITH COMPETITOR BRANDSTo launch its sugar-free soda into China,Coca Cola company ran a campaign teasing the idea that Sprite may be promoting its

268、 core competitor,with a tagline“Is Sprite promoting another brand?”The answer of course is no.Sprites iconic green packaging,bottle,logos and colors are so memorable,it cannot be easily be confused with any other brand.The distinctiveness of Sprites identity permits it to take risks in pursuit of ma

269、rket gains.Sprite can make bold moves without putting its brand at serious risk.Despite acknowledging a competitor,the lasting image of this campaign is the Sprite brand.The campaign reminds viewers of Sprites identity,while creating space for growth(brand extension).The Sprite sugar-free campaign i

270、s centered around a TVC featuring a blurry image of two soda bottles.The one on the right is clearly a Sprite bottle,while the one on the left looks similar to a competitor sugar-free soda.The narrator initially asks the question whether Sprite is promoting its competitor,and swiftly replies with an

271、 answer;“Besides us,is there really anyone else?FRAMEWORK IN ACTIONOWN CATEGORY“AKADEMIE”PUTS LEICA IN CLEAR FOCUS AS A CATEGORY LEADERWell-known as a brand for really serious photographers,Leica has built a mobile app and service program called“Akademie”-taking aim at ownership of Chinas top-end ph

272、otography community.The“Akademie”mobile-first-web-app is designed for a community of people who want to learn from World-class photographers.Its users can book and pay for unique experiences and instruction-group classes,one-on-one tutelage and related events.The app also serves as a resource for cr

273、eating a community of photography insiders for China.It is being made available across greater China(mainland,Hong Kong and Taiwan).From a total marketshare point-of-view,Leica may be a lesser player but the brand holds a firm place among top photographers.Owning a Leica is a badge of honor among th

274、e industrys leading lights.This program puts Leica in the position to own the top-end of the photography category/culture in China.Category ownership drives share of voice and yields out-sized returns for brands who are in the drivers seat.The Leica“Akademie”program(and mobile app)provides photograp

275、hers(and aspiring)photographers access to World-class learning opportunities,while re-affirming Leicas place as the camera choice for renowned photographers.“Akademie”and similar community programs keep Leica in a privileged position as leader of the premium space.FRAMEWORK IN ACTIONBRAND BRAVERYRIS

276、K TAKING CAMPAIGNS BUILD CRED WITH CUSTOMERSThis video ad from Innocent juice brand features a character named Amy who hates the taste of real fruit.The video showcases her back-story as a child,cringing at the sight and smell of fruit at the market.And,when her friends and family get together for a

277、 party(taunting her with a festival of fruit),she looses her mind!She is surrounded by fresh fruit and Innocent pineapple juice(featuring real fruit of course).Far too often,brands and the clients they work with plan ads and activations from the perspective of managing risk downwards and fitting int

278、o the rules;(1)making sure that everyone featured in ads is positive,(2)fitting videos into pre-roll clip length or 30second commercial formats.Ads(especially in China)almost never feature a protagonist who hates the product!Doing something outside the norms is MEMORABLE and builds true credibility.

279、In an ad featuring an array of fruit,the lasting memory is about the fresh fruit being squeezed,sliced and devoured.The woman who hates fruit makes it memorable.The ad from Innocent stands out as being different,funny-and memorable.Being memorable is often more important that being 100%right.And,in

280、a category that features a lot of products with real fruit,confidently stressing real fruit;(1)removes any doubt about Innocents real fruit bonafides,while(2)creating subtle questions about competitor quality.FRAMEWORK IN ACTIONBAIDU METAVERSE APP“XIRANG”PULLING IN LUXURY BRANDS NEW MEDIA MINDSETBra

281、nds looking for the next frontier of marketing in China may want spend time evaluating Baidus metaverse app,“XiRang.”In 2022,“XiRang”played host to a couple of high-profile fashion shows for luxury brands-Dior and Prada.While it may be too early to take metaverse campaigns to the bank,the value of e

282、xperiments(together with related impact of press/PR)are material.And,with Chinese consumers trending several steps ahead in adoption of new digital experiences,its not a surprise that leading brands are piloting Web3 efforts in China.Learnings developed(and refined)in Chinas future-forward environme

283、nt,can later be applied Globallywhere pioneer brands will then have a clear lead.Featured(below)is the fashion show for Prada from Fall 2022.The event(held physically in Beijing),was both live-streamed and broadcast via the Metaverse via Baidus“XiRang”app.In late,2022,Dior held its SS23 fashion show

284、,titled“On the Road”in partnership with Baidu metaverse app,“XiRang.”Inside of the“XiRang”app,the event was hosted in the virtual space called“Meta-Ziwu”-a virtual space designed by famous Chinese architect Ma Yansong.If Baidu can continue to bring quality ingredients(beautiful spaces and events)and

285、 participants(eg.Ma Yansong)into play,they could consolidate a lead in this space.“Meta-Ziwu”inside XiRang app FRAMEWORK IN ACTIONPERVASIVE-NESSTHE WORLD CUP SET THE STAGE FOR A BATTLE OF ATTENTIONChinas two largest milk brands,Meng Niu and Yili have a long-standing rivalry-persistent and cut-throat

286、-which was highlighted again during World Cup 2022.Meng Niu secured the official sponsorship for the World Cup-featuring on-pitch signage seen globally.While this alone was more high-profile,Yilis efforts were more comprehensive(pervasive).Yili(the larger company)put in place a wide array of ads,spo

287、nsorships and creative content.With a history of football sponsorships(eg.Asian Football Confederation),Yili was intent on muscling its way into the World Cup and being omnipresent before-and-during the event.As part of its effort to out-muscle Meng Niu,Yili formed sponsorship agreements with the na

288、tional associations of;Argentina,Spain,Portugal and Germany.They also sponsored high-profile stars,including;Cristiano Ronaldo,Neymar and David Beckham.Importantly,it used these assets across a well coordinated array of ads,OOH activations,packaging and videos-to gain deeper penetration.Both brands

289、scored points during the World Cup.However,Yili won more attention at home in China than Meng Niu,owing to its wider implementation.OOH is useful in making powerful statements of presence(pervasiveness).The featured campaign(at Beijng Dawang Rd),was aimed at football fans who wanted to watch the mat

290、ches,instead of continuing the commute to work.Scanning the QR code allowed audiences to(anonymously)ask for work leave,with get-out-of-work-passes from star players including Ronaldo,Neymar and David Beckham.Brand“Bravery”Own Category/Culture1-2-1 at Scale(CRM)Advocacy&Trust New Media MindsetVirtua

291、lizing ExperiencesTop-DownMASS MEDIA(CPM Focused)Bottom-UpTACTICAL MEDIA(CAC Focused)PervasivenessSocial Media EngagementDistinctivenessOmni-ChannelTHESE SUPPORT LOYALTY,RETENTIONBRAND GROWTH FRAMEWORKADVOCACY&TRUST FOCUSEDVIRTUALIZING EXPERIENCESCreating quintessential brand experiences via new tec

292、hnologies(VR/AR,livestream,haptics and more).A healthy relationship with customers-brand delivers on its promises and makes things right for its customers.1-2-1 AT SCALE(CRM)SOCIAL MEDIA ENGAGEMENTSystems to communicate with individuals and segments at scale,while keeping a personal touch.Social con

293、tent which is highly responsive,conversational and focused on authenticity and reciprocity with audiences.OMNI-CHANNELA full array of channels(offline and online)ensures that a brand is accessible at all times for customers.CHARACTERISTICSSTRATEGIES&CASE STUDIESHennessy has put in place two Mini-Pro

294、grams to address its omni-channel and DTC(direct)goals in China.The“Blends”app(and private club)targets newer customers(younger,female focused),while the“Le Club”app is more focused on legacy customers(older,men).Both apps are strongly focused on loyalty-rewards and linking to ecommerce.FRAMEWORK IN

295、 ACTIONOMNI-CHANNELHENNESSY BLENDS ONLINE AND OFFLINE FOR DIRECT SUCCESSCognac brand Hennessy has been making a concerted effort to;(1)go more DTC(direct-to-consumer)and(2)re-fresh and expand with newer,younger consumers.Over the past several years,the brand has rolled out a series of well-planned i

296、nitiatives to address its goals.The first was an omni-channel private club(called“Blends,”located on the Bund in Shanghai)coupled with a loyalty WeChat Mini-Program of the same title.The“Blends”Mini-Program is a major driver for success of the initiative,and used for:-Taking reservations to the club

297、-Providing cocktail recipes(users can save favorites)-Connecting to ecommerce Aimed at a younger(more female)demographic,the“Blends”initiative has been effective at connecting the brand more directly with its consumers.Insights from the program should allow the brand to scale toward similar,larger s

298、cale initiatives.In parallel to the“Blends”initiative,Hennessy has all put in place another loyalty Mini-Program,called“Le Club,”which is aimed more at its legacy consumer group of(older)men who consume its product more on-premise.“Le Club”celebrates the legacy and prestige of Hennessy in China,wher

299、e it has a long,loyal following.FRAMEWORK IN ACTION1-2-1 AT SCALECUSTOMER INSIGHTS GET MORE PERSONAL-ITY MBTI(Myers-Briggs)personality tests have been a hot topic of discussion in China,for a few years.The diagnostic letters are well-knownand almost every white-collar GenZ/Millennial in a larger cit

300、y has done one or two of these tests over the past few years.Capitalizing on this interest/understanding of the MBTI,Starbucks ran a campaign-through one of its H5 apps-allowing customers to test themselves.The outcomes of the short tests linked the diagnostic letters with specific types of drinks.F

301、or instance,an EF(“social genius”)as being a Frappuccino person.Every brand operating on WeChat has looked into how to collect and interpret customer data more effectively.Every brand asks questions about how to link more detailed customer characteristics with product buying decisions.Its brilliant

302、that Starbucks just made the whole customer profiling effort blatantly public,with the Worlds most famous personality test.Social CRM systems connected to the backend of WeChat give brands the power to“tag”users(based on simple demographic and user journeys).More advanced efforts to“tag”users lead t

303、o surveys and interviews which provide much needed context about who the brand is talking to as a way of personalizing content,products and services to customers.Whats the right Starbucks beverage to suit your unique personality traits?Starbucks ran and MBTI survey program with users in China to tes

304、t users on personality and link the results to personalized drink recommendations.A great way to openly collect deeper insights on user personas-and serve up personalized customer experiences thru WeChat.FRAMEWORK IN ACTIONAI-DRIVEN CHAT GETS SMARTER AND MORE IMMERSIVEFAW-Volkswagen and Tencent rece

305、ntly unveiled a“cloud car showroom.”The cloud showroom weaves together a range of technologies from Tencent,including cloud rendering,artificial intelligence,and digital intelligence to bring users a personalized,virtual car consultation experience.At the centre of this experience is“Ida,”the brands

306、 car consultant who is capable of detailed,snappy discussions about user(driver)interests and the range of products sold by FAW-Volkswagen.As ChatGPT(and Chinas own,GLM-130B protocol),become more fully appreciated and implemented in the years ahead,brands will be looking to dust off the chatbots and

307、 customer service widgets they built over the past few years.These new protocols for training customer chat,will produce profoundly better results than past efforts.VIRTUALIZING EXPERIENCESAR/VR and the metaverse extend the possibilities for what is possible with virtualizing brand-customer interact

308、ions online.With its virtual(“cloud”)showroom,FAW-Volkswagen has creating an environment which is close to real life,in the sense that customers can freely navigate a branded environment,look at cars and ask questions of“Ida.”FRAMEWORK IN ACTIONADVOCACY&TRUST“You order me and the Tmall salesperson c

309、an get off work earlier”SNACK FOOD BRAND WEILONG LAYS FLAT WITH ITS CUSTOMERSIn an economic environment which was cautious and constrained,many of the euphoric promotions around Double 11,to pump up sales,may have fallen on deaf ears in 2022.Snack food brand Weilong seems to have been more in tune w

310、ith its GenZ customers,many of whom were“laying flat.”For Double 11,2022,Weilong,designed its entire Tmall shop under a buddhist theme,taking a laissez faire attitude to selling,with tongue-in-cheek“calls to action,”such as;“whatever you buy,it is fate,”and“buy or not,the product will be here,neithe

311、r sad nor happy.”Weilong scored a big win with its relaxed,counter-culture statement.The lay flat vibe was well placed for Chinas GenZ,who are often referred to as the“Zen Gen.”Not only did Weilong score points for its humorous approach,it also delivered a masterclass in empathy-and for standing on

312、the side of its consumers.Far too often,brands get so wrapped up in their own dogma,that they over-look the genuine interests of customers.Trust comes from being real,being authentic and demonstrating empathy-especially when times are tough for the other party.“Whatever you buy,it is fate”The buddhi

313、st theme,tone was carried through to the customer messaging system”FRAMEWORK IN ACTIONSOCIAL MEDIA ENGAGEMENTKFC HAS UNLOCKED CRAZY SUCCESS ON SOCIAL MEDIAKFC has been a top performer with social media and overall marketing in China for many years.Its weekly“Crazy Thursday”program illustrates how an

314、d why they are succeeding with social engagement.KFC has been running its“Crazy Thursday”promotion-with a special offer of RMB9.99 for select food items-since 2018.In the past two years however,the promotion has turned into a cultural phenomenon,as they asked audiences(on Weibo);“Why do you look so

315、down?Do you know what day it is?It is Crazy Thursday.”Audiences have taken this as an opportunity to have some fun,and riff on the idea that anything can be linked to(and improved by)“Crazy Thursday”a bankrupt company can find solace in some chicken wings,a romance falling apart soothed with a burge

316、r,wedding ceremonies can be held at“the temple”of KFC(on Thursday of course).Most larger brands overlook the potential of making a concerted effort with social media.Instead of building teams in-house for social,most larger brands outsource the work of scaling audience engagement,through influencers

317、,agencies and media.In fully committing to genuine social media engagement,KFC has developed an extremely effective formula for success-a formula which focuses on listening and understanding its audiences.In turn,it creates opportunities for its audiences to(1)have fun,(2)share ideas,and importantly

318、,(3)find small moments of joy.KFCs“Crazy Thursday”-a weekly social media program-has become a lightening rod for social dialogue,going well beyond being a“promotion.”Given the challenges of 2022,its no surprise that KFCs approach has hit home.In a year with low consumer sentiment,its approach to hig

319、hlighting empathy,humor and irony has been a success.CONTACT US Email: TOTEMBRAND GROWTH PLANNINGTotem works with a range of brands in Asia,China and Globally on brand strategy and business intelligence solutions.Our clients range across industries,including;retail,fashion,beauty,travel,entertainmen

320、t and finance.Projects for our clients address critical issues including;new markets entry,corporate development and M&A advisory,digital capabilities/innovation,brand strategy,category design and data insights and analysis.TOTEMDETAILED DATA AND DETAILS ON THE ECOMMERCE AND SOCIAL MEDIA LANDSCAPE A

321、CROSS ASIA.PERSPECTIVES ON REGIONAL GROWTH.COMPREHENSIVE PLANNING AND GROWTH FRAMEWORKS FOR BRAND SUCCESS IN CHINA.INSIGHTS,ANALYSIS AND GROWTH FRAMEWORKS FOR DIRECT-TO-CONSUMER BRANDS-WITH GLOBAL AND U.S.FOCUS.RANKING OF CHINAS TOP CONSUMER,RETAIL BRANDS GROWING ONTO THE WORLD STAGE.INSIGHTS ON IF/

322、HOW THEY ARE SUCCEEDING USOur team of experts work with brands in Asia,China and Globally on the insights and strategies that help brands grow.TOTEMEmail: DAVE WONGBRAND CREATIVE-ASIAKAREN LEEBRAND PLANNING-CHINAALEX LAMDIGITAL SOLUTIONS-CHINAZHAO YINBRAND CREATIVE-CHINALESTER NGBRAND STRATEGY LEAD-ASIASUMMER FENGINSIGHTS&PLANNING-ASIARON WARDLEBUSINESS ADVISORY-ASIACHLOE JIANGINSIGHTS&PLANNING-CHINAMO FEYZBAKHSHINTERACTIVE DESIGN-ASIAHENRY MINBRAND PLANNING-CHINACHRIS BAKERBUSINESS STRATEGY-GLOBAL