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What Works Where ChinaDigital benchmarking research 2013

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WelcomeWhat Works Where in B2B Digital Marketing

“ One of the biggest issues in B2B is the lack of published research on best practice.”Andrew Markowitz, Director Global Digital Strategy, GEBMA Blaze Conference, Chicago May 2013

Contents

3 Overview

11 From digital to physical6 Cultural roadblocks

4 How we conducted it 9 In-house or outsourced?

7 Marketing priorities

10 Analyse this5 Generational differences

8 Digital channels

13 Summary

What Works Where ChinaDigital benchmark research 20133/14

OverviewOver the past three years, Omobono has conducted ‘What Works Where’ studies into the state of B2B digital marketing in the UK, US and India.

We have this year extended the study to look at the Chinese market. In depth interviews were conducted with respondents across a range of industries, including technology, telecoms and consulting.

China has long been painted a land of opportunity for businesses wishing to expand. Its exponential economic development in recent years has had many looking East to stake a claim in a developing market. Some have seen roaring success, while others have returned rather disillusioned by the surprisingly complex challenges laid at their feet.

With new emerging markets come new emerging methods. In May 2013 Omobono was invited to Shanghai to run a digital marketing training workshop for one of our global corporate clients.

To follow on up on this, we recently contacted representatives from seven different business sectors across China to investigate their attitudes to digital marketing. All respondents were from either B2B businesses, or B2C businesses with a significant B2B component.

Our objective, as with the other elements of the study, was to establish what best practice looks like in global B2B markets. What are B2B marketers setting out to achieve, how are they getting there, and what challenges are they facing in the process? We were also particularly interested in exploring the differences that might exist between the way that Western marketing professionals approach their tasks, and how their counterparts in China might do things. Is there a global template that people are following, or do cultural differences change the B2B digital landscape entirely?

52%of UK B2B marketers are responsible for Asia Pacific. So what does digital B2B look like in China?

How we conducted itHow we did itThe What Works Where in B2B Digital Marketing questionnaire was adapted for in depth interviews in the Chinese market. The process was structured as follows:

• Definescreeningcriteria

• Getintouchwithpotentialrespondents

• Preliminarycommunicationandshortlist

• Indepthdiscussion

• Analysisandconclusion

Respondents worked in companies in the consulting, health, food, technology, sports marketing, telecommunications and education sectors. Company size was monitored to ensure a range, from domestic players of under 1000 people to multinationals of over 10,000 employees.

Respondent titles spanned Marketing Director and Brand Principal to Recruitment Marketing and Business Development.

Interviews were conducted in Chinese and we would like to extend our grateful thanks to Audrey Yuan Shangguan, MBA student from Cambridge Judge Business School, who undertook the research and analysis for us.

What we studiedThe research into What Works Where in B2B Digital in China covered the following areas:

• Marketingpriorities

• Digitalchannelusage

• Socialandmobileusage

• Useofothermarketingtechniques

• Viewsofeffectiveness

• Resourcemanagement

• Budgetallocation

• Measurement

• Keychallenges

China is a country of conflicting influences. It has undergone drastic changes over the past 70 years, embracing republicanism, communism and capitalist influences all within this narrow timespan. The generational differences are therefore huge, and we must consider that a target market may include those who lived through the Cultural Revolution as well as those born straight into a Western-facing Shanghai.

The internet has always been exceptional at levelling the playing field, however, and its reach is increasing, with China now claiming 591 million internet users.1 This accounts for 44% of the population. The vast majority of users are below the age of 39 (81%) but this is unsurprising considering the increased ‘opening up’ of China in the past 30 years and subsequent adoption of new technologies.2

China is becoming digitized, but largely for only one generation. Whilst this provides digital marketers with a clear idea of who they are targeting, there will still be no ‘one-size-fits-all’ solution. After all, it is more likely that the decision-makers in business are going to be from an older generation; one which is not ‘digital native’.


Generational differences

1 Source BBC: http://www.bbc.co.uk/news/technology-233430582SourceGoGlobe:http://www.go-globe.com/blog/internet-usage-china

internet users in China

This accounts for 44% of the population

Cultural roadblocksIf there’s one thing for certain, it’s that China isn’t a free-for-all where western businesses can swoop in unhindered on the road to riches. China has a unique history and social structure which inevitably affects the way business is conducted. This cultural roadblock has had marketers stroking their chins, trying to determine the best strategy for success.

There are two particular social concepts that shed some light on marketing practice in China. The first is guanxi; a driving force in social relationships. It can be translated very loosely as ‘connections’, butthere’sawholelotmoretoitthanthat.Guanxirefers to a person’s ability to call upon a connection for a favour. These relationships are reciprocal and form their own network of obligation. This is what makes guanxi vastly different from the western idea of ‘networking’, since failure to repay a favour is seen as an unforgivable offence. The more you ask, the more you owe.

Exerting this influence is central to Chinese business, and relies upon social concepts that date all the way back to Confucius. Such ingrained ideas won’t be going anywhere soon, no matter how much digital media has changed the playing field.

We would think that social media would gel perfectly with the Chinese idea of guanxi. It provides an easy and efficient way of extending one’s personal network and maintaining bonds. And for many Chinese young people, social networks are seen as a virtual extension of their guanxi.3 The reason that social media doesn’t quite cut it with members of the older generation, however, is due to traditions surrounding another Chinese concept: ‘face’.

‘Face’ is an extremely important factor in Chinese society. It is a measure of one’s social status that is closely related to outward appearance and behaviour. When someone fails to fulfil a social obligation, they lose ‘face’ – a matter that is taken very seriously and can lead to great dishonour.

On the flipside, one can gain ‘face’ by being a good host, publically displaying wealth, and honouring guanxi agreements within one’s social network. Many of these acts are best done in person, which explains why the Chinese place a great emphasis on public meetings and events.

For some Chinese people, therefore, social media lacks the ‘personal’ element. Although it can extend and build personal networks, this has typically always been done face-to-face due to the prestige it allows both parties to bestow upon one another. As we see in our study, social media’s role is potentially a facilitator of these real world relationships, rather than a replacement for them.

3 http://marketingtochina.com/what-you-should-know-about-digital-marketing-in-china/

Marketing priorities


Despite differences in digital media usage, we found that Chinese companies’ marketing priorities are largely similar to those in the UK and US. In startling accordance with our What Works Where 2013 findings, ‘deepening customer relationships’ and ‘raising brand awareness’ are Chinese marketers’ top priorities. ‘Ensure that the organisation lives the brand’ is also considered an important goal. This offers some preliminary evidence that Chinese marketers are reading from the same playbook as those in the West.

These priorities inevitably vary depending on the sector. For a Chinese food provider launching a new produce line, brand awareness is the primary concern. On the other hand, for a leading company in the telco sector, deepening relationships with existing large-scale clients is the highest priority. However, these differences across sectors are understandable and similar to those we would expect in the West.

Primary objectives Secondary objectives Lesser objectives

Marketing objectives

Deepen customer relationshipsRaise brand awareness

Strengthen thought leadershipEnsure the organisation lives the brandLead generationLaunch a new product or service

Develop brand positionDeepen understanding of the target market

01

03

02

Digital channelsThe majority of our interviewees considered digital media channels to be important if not critical. The channels that are seen as the most effective are websites and social media, which is largely unsurprising.

One of the biggest differences in comparison to western marketers is the lower reliance on email as a communications tool. As we saw in our India study in 2012, access to accurate data is a barrier here. There was also an interesting difference in the function of websites. Increasingly we found that many company websites were little more than repositories of information with very little customer-facing messaging. In fact, we learnt that the Chinese rely on highly esteemed third-party directories that contain most of the relevant information about company services. The information on these websites is seen as more reputable and so many companies allocate resources to building relationships with these third-party directories, rather than website redevelopment.

Mobile is the channel to watch in China. Of its 591 million internet users, 460 million (75%) of those users are accessing via mobile devices.4 The number of mobile internet users outnumbers desktop users (at 71%) and laptop users (46%): a fact that has huge implications for the delivery methods used by digital marketers.5 This can be accounted for by a much greater reliance on instant messaging in China, with 468 million users (83% of total internet users).6

Instant messaging affords digital marketers far greater opportunities in China than it does in the UK. And not just due to its higher usage. China’s instant messaging apps are more hybrid than major western ones like WhatsApp. Weixin (which boasts 300 million users) has instant messaging, public profile and company page functionalities.7 Sina Weibo, the largest Chinese instant messaging service with 500 million users, has a similar set of features but resembles a combination of Facebook and Twitter. In fact, a startling 97% of social media users in China have some form of Weibo account. Therefore, marketing practice in China should not just dedicate extra resources to instant messaging services, but should also treat them as full-blown social media utilities.8

Social networking sites are even more central to everyday Chinese life than in the West. Whereas 67% of American internet users visit social media sites, in China the figure is 91%. This market is dominated by Qzone, a blogging, media sharing site (vaguely similar to MySpace) which boasts 712 million registered users. People on these networks are particularly receptive to advertising and brand placement, with 80% claiming they care about commercial information on social networking sites. ibid

4 http://www.techinasia.com/cnniic-china-web-mobile-user-data-for2013/5 http://wearesocial.net/blog/2013/01/social-digital-mobile-china-2/6 http://www.go-globe.com/blog/internet-usage-china/7 http://technode.com/2013/01/16/tencent-weixin-reaches-300-million-users/8 http://wearesocial.net/blog/2013/01/social-digital-mobile-china-2/

75%71%

46%

Mobile Desktop LaptopSource: http://wearesocial.net/blog/2013/01/social-digital-mobile-china-2/

Internet access by device


One of the areas we have explored in past UK studies is how marketers are resourcing their activities. On average in the UK, around half of digital activity is handled in house – most noticeably social media, email and web development. In contrast, Chinese B2B marketers favour a shared model; outsourcing the design and development of the channels, but expressing a desire to manage the channels themselves afterwards.

Social media, intranets and web development are the most outsourced channels, although there is some variation. The majority of respondents who use video outsource its production. One exception is in the education sector, where they have recently brought video resources in-house as a means of strengthening their thought leadership position. This would suggest that some Chinese marketing companies are cementing their own identities and attempting to provide industry insight alongside meeting customer goals; a shift that we have seen in other geographies such as the UK and US.

In-house or outsourced?

In contrast...

Meanwhile...Mobile optimisation and apps are mostly handled in-house by Chinese respondents. In the UK, mobile optimisation and apps are most likely to be outsourced.

65%

Social media outsourcingIn China the majority of respondents outscource their social media.

of social media is handled in-house in the UK, more than any other channel.

Analyse thisSo far we are seeing plenty of similarity between what Chinese B2B marketers are setting out to achieve and how they are approaching those goals.

Their channel usage would seem to indicate that digital marketing theory has crossed over to China largely unmodified. But when we started looking into budgeting and analytics, we were greeted with some surprising statistics.

Despite acknowledging their importance, spend on digital channels was low, with the average budget allocation close to 25%. This didn’t make much sense until we asked respondents what their greatest challenges in B2B marketing were. Near unanimously, the key issue was measuring ROI.

China’s web analytics capabilities lag behind those of the West, with the main issue being obtaining clean data. UsingGoogleAnalyticsisnotasustainablestrategysincetheChinesegovernmentregularlyblockGoogleservicesandproducts.AnyGoogledataislikelytobebouncedto

Hong Kong via the Chinese firewall, making it difficult to vouch for its validity. China has its own internal analytics services, such as Baidu Tongji, but there have been concerns expressed over the accuracy of this data also.9

All in all, B2B marketers are struggling to prove return on investment, and it is this lack of data and analytics technologies that can account for the low spend on digital channels. In terms of converting the ‘old guard’ of business owners to these channels there simply isn’t the hard data. Never mind about cultural resistance as a compounding factor. Perhaps this explains why even the leading social networks boast only a small proportion of the potential audience share.

Clearly there is a gap between the perceived effectiveness and ROI, with many having to put their faith in digital channels. This ‘faith’ isn’t going to be enough for the sceptics, and the analytics will have to become clearer before spend will increase across the board.

9 http://www.east-west-connect.com/baidu-analytics-guide

On average, digital channels are only allocated

25%of budget, which is unsurprising given the barriers to measuring ROI.

This low spend on digital can also be accounted for by the strong emphasis in China on building personal relationships, gaining ‘face’ and strengthening guanxi networks. Harmonious relationships are the central idea of Confucian thought that has prevailed in the country for more than 2500 years. Chinese business relationships therefore require a far more personal bond than Western ones, and deals are not struck based purely on contracts and profit.

Instead the most important factor in B2B is trust. And not brand trust, but personal trust.10 Business relationships are personal relationships, and require plenty of face-to-face time to cultivate. Of the traditional marketing channels, our respondents consistently rated meetings, conferences and customer referrals as the most important techniques, all of which involve a strong personal element. The vast majority of respondents regularly used more than half of the traditional channels in our survey, a significantly higher proportion than digital media methods.


From digital to physicalOne interesting reflection of this is that personal PR was mentioned by several respondents as a valid business communications activity. Spending budget on building their personal brand was seen as having a direct impact on the business, in a way which would be less acceptable in western cultures.

Due to the deep-rooted importance of strengthening relationships face-to-face, digital is unlikely to steal the majority spend from traditional methods. Whilst social networks provide ways to extend guanxi, they lack the deep personal ties that are better formed through drinking, dining and attending events together. This also carries implications for establishing new business in China. Western enterprises cannot sweep into the market with a ‘smash and grab’ approach, concentrating only on the reduced cost of doing business in China. Instead of simply spending money, it is paramount that companies spend time.

10 http://sloanreview.mit.edu/article/building-effective-business-relationships-in-china/

China’s top 3 professional networks

Source: Sootoo.com as cited in China internet watch (December 2012), Socialbakers (January 2013), Socialmediaweek (September 2012)

Tianji Dajie Ruolin

Number of users

(millions)

12.3

12.3

12.2

BudgetLow spend on digital

channels

AccountabilityROI the biggest challenge faced

by marketers

ChannelsDigital must build on,

rather than substitute, face to face

25%average budget

allocation for digitalSocial media Higher usage than

UK and US

Mobile An untapped

opportunity for digital marketing

83%use instant

messaging apps

75%of internet users access via mobile

B2B Marketing in China:Challenge or Opportunity?

opportunitieschallenges

91%of Chinese internet

users visit social media sites

Qzone is the top social network with

712musers

More than

70musers of professional

social networks

Access to analytics and reliable data

limited by government


Summary• Business is based on personal trust. Significantly

more so than in the West. A business relationship must be harmonious, well established and contribute towards a mutual gain of ‘face’ for both parties. ‘Direct’ western business methods may not achieve this.

• There are no cultural objections to digital, although traditional methods will most likely still take precedence. This does not mean that digital channels cannot grow in the Chinese market, just that they must build upon traditional methods rather than trying to substitute them.

• Digital marketing methods are following the same blueprint. Actual B2B digital practice is largely similar to the UK and US.

• Chinese analytics capabilities are fraught with issues. Despite the perceived importance of analytics, there are barriers as a result of state censorship and monitoring.

• Mobile is booming. 75% of internet users are accessing the internet via mobile devices and there is a wealth of apps that provide digital marketing opportunities. This is the channel to focus on for the future.

What Works Where beyond ChinaTo see our insights on B2B digital marketing in the UK, USA and India, please visit our website:

www.omobono.com/insights/what-works-where

Copyright 2013 Omobono Ltd. Omobono is the digital agency for business brands.Our clients are major national and international enterprises. We help them manage their digital presence both internally and externally – with customers, employees and stakeholders.For further research data or to discuss how Omobono can help you maximize the effectiveness of your digital activities, please contact Francesca Brosan on +44 1223 307000 or email [email protected] Works Where in B2B Digital Marketing by Omobono Ltd is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

[email protected]@omobono_digital

T: +44 1223 307000F: +44 1223 365167

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www.omobono.com

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