China Marketing Insights Monthly Newsletter [March 2022]

Hello,

Welcome to our March Newsletter.

In this issue, we start with the roundup of China regulatory announcements – Content moderation law is in effect from 1st March 2022, consumer privacy protection enablement through Private Data Networks, clean cyberspace, and more.

Next, we take a look at the mini-program ecosystem development based – WeChat has over 3 million mini-programs, with DAU surpassing 450 million. China’s mini-program ecosystem has maintained steady development, both the number of mini-programs and the number of users’ usage data are growing rapidly. 

We have 2 great market insights. First up is the 2022 China search market forecast – CTR recently release a report on the 2022 search marketing budget trend, we filter down some of the top trends for 2022. These trends include increased digital spending in 2022, budget allocation for innovative solutions, changing search landscape, content ecological search, etc. Second, our research team did an analysis on the OTT market outlook 2022 – OTT revenue will be 15 billion, 5% of advertisers have increased their budgets for large-screen advertising in the past year.

In-app of the month section, we take deep dive into FaceU – FaceU provides young users with photo and video functions. As a photo camera that launched the sticker function earlier in the domestic industry, it also integrates several functions including stickers, filters, beauty, beauty, emoji GIF production, photo editing, and “follow video” and other functions. Learn about the key features, marketing potential & advertising opportunities with FaceU.

Sincerely,

Mia C. Chen

CEO & Co-Founder of OctoPlus Media

This is part of our series on the regulatory policies updates, reports and advertising laws – Xiaohongshu Banned 39 Brands, December update, November update, October update, Anti-monopoly crackdown, PIPL, Advertising law, Medical Advertising.

With the rapid development and application of emerging technologies such as artificial intelligence, big data, cloud computing, and blockchain, data has become a factor of production, and data security is closely linked to economic and social development and is related to national security. When the algorithm is abused and the algorithm becomes a technology that restricts users from obtaining new content this further affects the rights and interests of users, even violates personal privacy and can cause trouble.

For example, when using internet content services such as online car-hailing, hotel booking, online shopping, etc., all of them will bring different experiences under the influence of algorithms, but often some old users are additionally controlled for consumption, and new users can always enjoy more affordable service prices.

Content moderations

On March 1 China has officially implemented the “Provisions on the Administration of Algorithm-generated Recommendations for Internet Information Services” to strengthen the protection wall of personal information protection. Article 29 of the “New Regulations” clearly stipulates that the relevant institutions and personnel participating in the security assessment and supervision and inspection of algorithm recommendation services shall keep confidential of personal privacy, personal information and business secrets they know in the performance of their duties, and shall not disclose or Illegally provision to others.

The successive promulgation and implementation of new regulations of national standards mean that the country and the industry have gradually increased the emphasis on personal information protection, and it has also attracted the participation of the industry and enterprises.

March 16 – CAC has sent a team to social media company Douban’s office in Beijing to supervise the “rectification” of “severe online chaos” on its platform. This renewed scrutiny comes after a series of penalties and fines were imposed on Douban last year for violations such as failing to censor “harmful” and “unhealthy” content, promoting “chaotic fan culture,” and collecting excessive user data. The company was penalized 20 times in 2021, with fines totaling RMB 10.5 million. In December 2021, the Ministry of Industry and Information Technology (MIIT) ordered the platform to be removed from app stores because of user data violations. So far, its app has not been reinstated.

In July 2021, Alibaba’s Taobao open platform issued the “Announcement on Strengthening the Protection of Sensitive Information of Consumer Orders in accordance with the Law”, requiring third-party developers and merchants stationed on the Taobao platform to include the consumer’s name, mobile phone number, ID card, etc. sensitive information such as addresses to desensitised. At the same time, JD.com announced the “JD User Order Privacy Security Plan”, which stated that it would desensitise the mobile phone number and landline number in the order, and also promised not to share users’ personal information with any company, organisation or individual other than JD.com.

Consumer privacy protection

Now that the country has officially launched the algorithm, internet giants have successively participated in the new regulations to protect personal privacy from being violated, and gradually entered the era of privacy protection, and the battle for advertising data has also begun.

With the release of the new ATT framework by Apple, it will be updated with the update of iOS14, and immediately began to promote user’s privacy protection capabilities, the hype about their privacy protection capabilities, further made SKAN (SKAdNetwork) the only “voice of truth” in Apple’s advertising ecosystem overnight, the privacy protection cognition war has officially started.

Overall, there is an imminent change in the digital advertising industry – the importance of both advertiser-side data and publisher-side data has increased significantly. Now, as the importance of the first party data continues to increase, this in-roll acquisition between internet media and even advertisers may be further intensified to obtain more data from one party.

Consumer privacy protection will continue to be strengthened, and with the increasingly limited access to data, the way apps acquire users’ info and serve ads to users is changing. It is certain that first-party data is “invaluable”, in the future, practitioners may even start to create corresponding PDNs (Private Data Networks), and interact with data after multiple encryptions. Establish a private data network that complies with the same data transmission specifications among media, data providers, brands and advertising platforms to complete the secure interaction of data. Ultimately, through the subsequent creative optimisation of content, the disturbance to users will be reduced, users will be happy with the use of data in compliance with regulations, and both parties and even multiple parties will achieve a win-win situation under privacy protection.

Xiaohongshu Bans more accounts

Xiaohongshu’s official account “Shuguanjia” released the fourth round of “false longing activity” content rectification announcements. This round of special rectification is mainly to crack down on the content ecology of medical aesthetics. This is also the strictest medical aesthetics special governance in the history of Xiaohongshu. The first batch of 279,000 illegal medical beauty notes have been disposed of, 142,000 medical and cosmetic notes suspected of marketing have been removed, and 168,000 illegal accounts have been punished, including but not limited to illegal medical and cosmetic projects, medical and cosmetic institutions, plastic surgeons, and doctors. All medical beauty marketing content such as beauty products.

This round of rectification is mainly divided into two parts,

1. Cancel the professional certification of private medical beauty institutions, and only open professional certification for medical beauty in public tertiary hospitals and tertiary hospitals

2. Check the medical beauty notes produced by ordinary users, clean up, and remove the content and accounts suspected of marketing diversion and violating medical beauty content, and accounts will be removed, banned, and downgraded.

In the era of social media, medical aesthetics is an emerging industry, and content in the form of pictures and texts is rapidly spreading among young circles. This kind of false medical and aesthetic content is growing rapidly, which makes it even more difficult for consumers to distinguish between true and false.

This time, Xiaohongshu rectified the medical beauty content to avoid the adverse effects of false longing activity, and it has also become the most stringent medical beauty special treatment in history.

As early as June last year, the National Health Commission, the Central Internet Information Office, the Ministry of Public Security, the General Administration of Customs, the General Administration of Market Monitoring, the State Post Bureau, the State Food and Drug Administration, and the State Administration of Traditional Chinese Medicine jointly issued the “Special Rectification for Combating Illegal Medical Beauty Services Work Plan”, indicating that the medical aesthetics industry will enter a new round of strict rectification period.

Kuaishou Bans external links

Kuaishou E-commerce recently announced that due to the change of the cooperation agreement between the third-party e-commerce platform and Kuaishou, from March 1, 2022, Taobao Alliance, Jingdong Alliance, etc. will not be able to publish products in Kuaishou live broadcast room.

The link of products from Taobao alliance will not be able to publish the links of goods and services in the shopping cart, short video shopping cart, business details page, etc. in the Kuaishou live broadcast room; the links of goods and services of the Jingdong alliance will not be able to publish the links of goods and services in the shopping cart of the Kuaishou live broadcast room, which can be found at short video shopping carts, business detail pages, etc. publish links to products and services.

Clean Cyberspace

March 17 – Cyberspace Administration of China (CAC) announced a 10-point “clean cyberspace” plan that includes a plan to “rectify” companies that manage social media influencers. The focus of the campaign will include rectifying multi-channel network (MCN) agencies, short video and live-streaming, as well as cracking down on internet rumours.

MCN firms are behind 40 percent of all accounts with over 10 million followers on China’s main social media platforms, according to CAC officials, who said future regulatory measures would target MCN firms whose influencers produce content deemed harmful to society.

In 2021 CAC deployed and carried out 15 “clean” series of special actions such as the rectification of “fan circle” chaos, the rectification of the network environment during the Spring Festival, and the rectification of chaos in user account operation. There are 1.34 billion accounts, more than 7,200 streamers have been banned, more than 2,160 apps and mini-programs have been removed from the shelves, and more than 3,200 websites have been closed.

With our experts helping you navigate the field, you have nothing to worry about. Contact us to talk in-depth about your China strategy and how to avoid all these pitfalls.

According to the “2021 Douyin Luxury Industry Report” released by Trend insight, China’s luxury goods consumption growth will lead the world in 2021, and major brands have deployed content fields one after another.

In 2021, OTT revenue will be 15 billion, which membership revenue will account for about 20% and advertising revenue will account for 80%. At the same time, according to the “2021 NEW TV Marketing Report” released by Miaozhen statistics, 25% of advertisers have increased their budgets for large-screen advertising in the past year, such as beauty and personal care brands, and the growth of OTT advertising in 2021 will reach 28.45%. Compared with the PC and mobile terminals, the advertising traffic of OTT smart TVs has continued to rise in recent years, and in 2021, it will become the only traffic growth screen among the three major screens.

According to Miaozhen data, 64% of consumers chose to watch the Winter Olympics through smart TVs during this period, far exceeding other viewing devices, and 58% of consumers even said that the whole family watched the Winter Olympics together. It seems like the smart large screen has firmly occupied the “C” position of the family scene.

Nowadays, OTT is no longer the “small but beautiful” platform of the past. Since last year, more and more first-line big brands including Chanel, Tiffany, Dior and so on have invested in OTT big-screen marketing. Except for the number of users and the boot rate, what are the charms of OTT, and what is the confidence of OTT to become such high value?

Let’s start with the irreplaceable value of OTT

The data shows that in 2021, OTT-side advertising has increased by 109% compared to 2018. In the digital advertising traffic pattern (PC, Mobile, and OTT), the share of OTT-side advertising traffic has gradually increased from 11% to 20%. Compared with 2019, the budget of advertisers in OTT video media in 2020 has increased by 54%.

Why is OTT advertising increasingly valued by advertisers?

As far as the hard power of this big screen is concerned, there are three reasons.

1. Miaozhen data pointed out that compared with PC and mobile terminals, the advertising traffic of OTT smart TVs has continued to rise in recent years, becoming the only traffic growth screen among the three major screens. The future of advertising has undoubtedly pointed to OTT as this new traffic depression.

2. Currently, OTT has covered more than 300 million households, and 120 million households turn on the TV every day. As the core entrance of the family scene, OTT reaches not only one person but a group of people. With the family scene as the core, it can reach a wider audience and achieve greater marketing volume. This one-to-many model is more conducive to brand marketing reaching a wider audience.

3. Multiple gameplays, customizable, further strengthen brand awareness and accumulate long-term assets. At present, whether it is a mature brand or a new consumer brand, it is an eternal and important issue to further penetrate the brand concept into the minds of consumers and strengthen brand awareness.

Compared with the small screen, the large screen can provide a more impactful and immersive experience, and the user’s emotional identity is stronger. The most obvious advantage of OTT is the visual effect of the “big screen” and the innovative interactive experience supported by a series of new technologies.

Data shows that OTT advertising ranks first in all media in terms of brand recognition and delivery trust, surpassing traditional TV and building district advertising.

“Content” differences are smoothened out

“Precision” is increasingly demanding

“Intelligence” is the answer

The future direction of the development of the OTT industry is intelligence, which goes hand in hand with precision, and is also the key to becoming an advertiser’s choice.

Intelligence mainly reflects the OTT’s grasp of the target group and the connection of the scene. OTT will recommend corresponding content for users according to user preferences and understand the actual needs of users through usage habits, then will recommend advertisements for users on this basis, thus the user’s resistance to advertising will reach the lowest level. Scene connection is the core hardware of the OTT large screen in the user’s living room ecology. Compared with traditional TV, OTT intelligence brings AI ​​interconnection, cloud gaming, education, and other related content which then bring great freshness to users. The boot rate of smart TVs and daily life are increasing year by year, largely because of these rich scenes.

With the content differences that have been smoothed out, coupled with the dual attributes of “precision” and “intelligence”, it is natural for advertisers to increase their investment in OTT channels.

In addition to the hard power of OTT itself, there are two trends that also determine that advertisers pay more attention to OTT advertising.

Trend 1: The usage time of more valuable long video content is shifting towards the big screen

“User preference for long-term video media” project data shows in “2021 OTT Commercialisation White Paper”, users who use smart TVs to watch TV series and variety shows are higher than mobile terminals, accounting for 87.9% and 82.4% respectively.

In addition to focusing on small mobile phone screens, iQiyi, Youku, Tencent, Mango TV, and other main battlefields are shifting towards large screens, which further proven the imagination and potential of “big screens”.

Larger-sized, ultra-high-definition large screens can bring users a better viewing experience, allowing users to return to the home entertainment centre, and making content parties begin to focus on the large-screen market, while OTT TVs have mastered the large-screen entrance. It is also a matter of course for each platform to intensify efforts to deploy better, more, and exclusive content to expand IP management. This means that OTT TV will gain more traffic and stronger user stickiness.

Trend 2: OTT user groups tend to be younger and have higher spending power

36Kr pointed out in its “2020 China OTT Large-screen Service Industry Research Report” that compared with traditional TV users, OTT large-screen TV users tend to be younger and have higher incomes. Data shows that 34.8% of OTT users are between the ages of 26 and 35, which is, the post-80s and post-90s are the mainstream users of OTT large-screen TVs.

The “2021 OTT Commercialisation White Paper” pointed out that 77% of the interviewed advertisers expect that the budget expenditure of brands to launch OTT will increase this year. In terms of advertising budget distribution, nearly one-fifth of advertisers make an independent budget for OTT launch.

While chasing OTT investment, comparative with internet platforms and traditional advertising, how will the advertisers further maximize the benefits of advertising? Or is there a set of scientific evaluation indicators?

The two biggest characteristics of users in the current market are fragmentation and user experience, the same applies to advertising, it is difficult for users to accept “indoctrination hard advertising”, only by truly meeting their needs and knowing what they want, to be recognized. But what is certain is that in 2022, the OTT industry will change its low profile and become a new battlefield for brand owners to compete for advertising.

Summary

• The OTT activation scale is increasing year by year, and the growth of OTT is optimistic

• From on-demand in the 1.0 era to the one-screen multi-scene upgrade in the 2.0 era to the 3.0 era, OTT is gradually upgraded to an intelligent hub, and the OTT interactive entertainment scene and usage functions are constantly being upgraded

• Consumers recognize the three value points of expanding awareness of OTT advertising, increasing interest, and strengthening trust

Please contact us if you would like to know more about the data content of the report.

China’s mini-program ecosystem has maintained steady development, both the number of mini-programs and the number of users’ usage data are growing rapidly. In such a rapidly developing mini-program ecosystem, product updates and optimizations, the maturity of the market environment, and changes in user behavior will help merchants reduce costs and increase efficiency in digital marketing and expand brand market influence.

Overview and Trends of Mini-Program Development in China in 2021

The annual development overview of China’s mini-program in 2021 can be summarized by the following sets of data:

• There are more than 7 million mini-programs in the whole network, including more than 3 million WeChat mini-programs

• The WeChat mini-program DAU alone has exceeded 450 million

• There are more than 2 million mini-programs in the sub-industry

• The number of active mini-programs increased by 41% year-on-year, and transaction mini-programs increased by 28%

The accelerated expansion of mini-programs is inseparable from the rich traffic portals inside out of their products, except for in-app searching, offline code scanning and social sharing can access mini-programs, further through text messages, emails, and web pages, now you can also jump directly to the applet page by clicking the link, convenient access entry is the basis for rapidly expanding the number of users.

Open the mini-program through SMS link outside the APP (Chongqing Emergency Center Mini Program Promotion SMS)

The interconnection and interaction between different products and mini-programs enable products to form complementary advantages, open-up public domain, and private domain, and help users’ retention. Taking the WeChat app as an example, the closed-loop functions formed by the functions of mini-programs, video accounts, official accounts, and corporate WeChat directly cover goods promotion (live video account), sales (mini-program e-commerce), after-sales (Enterprise WeChat), and private domain precipitation (public account push) content, it forms a complete ecological closed loop from attracting traffic to sales conversion, and then to customer retention.

(The mini-program can broadcast live and sell goods)

From the changes in the types of mini-programs, compared with the previous top-ranked pan-entertainment mini-programs, the usage of life-type mini-programs in 2021 will grow rapidly, and the ranking of education, shopping, tourism, and life-service mini-programs will improve. It also intuitively shows that mini-programs are gradually deepening into the lives of Chinese netizens.

The Industry Ecosystem of mini-programs

In China, public transportation or taxis can be completed by using the mini-program.

User Behaviour Summary

From the perspective of industry segmentation, video mini-programs have achieved good development in 2021. Affected by the epidemic, the demand for the big health industry is also increasing, mini-programs have become the main way for netizens to obtain life services, such as ride codes and health codes have become a daily requirement. In terms of the number of visits to the Mini Program, the life service category is also the first category.

In today’s digital era of mobile, tremendous changes have taken place in terms of content from production method to the transmission path. At the same time, with the development of the mobile internet, there are some new changes in the information environment and users’ search needs, but the essence of search is still the acquisition of content. CTR recently release a report on the 2022 search marketing budget trend, we filter down some of the top trends for 2022.

Top 5 Search Marketing Trends of the Year 2022

1. Marketing confidence returns and digital marketing budgets grow

Data source: CTR “2021 Advertiser Marketing Trends Report”

According to CTR CCTV market research, 42.9% of advertisers are expected to increase their promotion expenses in digital marketing in 2022, and advertisers of large enterprises with an advertising scale of 500 million yuan or more will be stronger spending on digital marketing promotion expenses.

2. New features of digital marketing advertising budget allocation

• Large – tend to choose larger platforms

• New – focus on new traffic, new increments, high willingness to advertise

• Linkage – more emphasis on linkage and integrated marketing

3. Search advertising sees budget increment; the search landscape is quietly changing

In 2022, global Omni-media advertising spending will grow by as much as 19.9%, of which search advertising will become an important driving force for the growth of Omni-media advertising spending with a growth rate of 29.3%.

In 2021, search advertising will rank fifth among mobile Internet advertising types, and 21.5% of advertisers who expect a net increase in search advertising in 2022 will rank fourth. The main types of Huliang.com advertising after advertising.

The “Personal Information Protection Issue” was officially implemented on November 1, 2021. It is China’s first department to specifically regulate and is China’s first law to specifically regulate personal information protection. The strictness of the rules is comparable to the EU GDPR (General Data Protection Regulation). Combining the impact logic on advertising business and the impact experience of EU GDPR implementation may benefit the growth of search advertising business in the future.

The data shows that after the implementation of the EU GDPR, the website pages of search advertising channels are relatively the least affected. The reason is that search advertisements are placed through keywords actively searched by users, and there is no need to use data and information that touch the boundaries of users’ privacy.

4. The future trend of search advertising

However, most advertisers believe that search advertising still has certain advantages, and it is generally believed that search advertising has the value of strong initiative, accurate coverage, and efficient conversion.

As technology continues to improve, search ads can better match user video and live broadcast scenarios. In the era of graphics and text, users’ content browsing is easier to understand and define, and search ads can be better matched. In terms of content viewing behaviour of current users, video and live broadcasts have gradually become mainstream, and the advancement of related media processing technologies has allowed search advertisements to better match the needs of scenarios.

In addition to the search engine, the search function on other platforms has become standard. For example, when users browse Taobao, they will search for products in Taobao, when browsing news on Toutiao, they will search for news-related content in Toutiao, when travelling, they will search for information such as train tickets or hotels on the Ctrip APP.

5. Content ecological search has become an industry consensus

The trend of content ecological search has become a consensus in the industry, and content ecological search advertising has become an important option for marketing budgets:

• Users have diverse search needs, and their essence is the acquisition of content, including life problem/difficulty solving, knowledge learning, news, and current affairs, and shopping information.

• Video-based content production brings video-based search results.

• “Searching while swiping” in the content has become a new habit for users. The user’s search behaviour and browsing behaviour are linked, and the search results are more time-sensitive.

The development focus of search engines will shift from traditional search to ecological search. Although the role of the search itself is still huge, its attractiveness to advertisers has declined due to the impact of information acquisition methods such as information flow. In such a context, the independent survival of traditional search engines may become increasingly difficult

Content ecological search advertising has become an important option for marketing budgets:

Search marketing under the content ecology is in line with the trend of “big, new and connected”:

• Large – search marketing under the content ecology of the platform layout with large traffic

• New – Content Eco-Search Ads bring new traffic space

• Linkage – Search advertising under the content ecology is conducive to integration and linkage

Large – search marketing under the content ecology of large traffic platform layout

Large Internet companies all have search advertisements, and search marketing is not limited to search engines

FaceU is a camera on IOS and Android platforms made by the Toutiao Face Moe team. Developed at the end of 2014, FaceU was officially launched on September 14, 2015.

Faceu provides young users with photo and video functions. As a photo camera that launched the sticker function earlier in the domestic industry, it also integrates several functions including stickers, filters, beauty, beauty, emoji GIF production, photo editing and follow video and other functions; at the same time, it also has face recognition technology, AI intelligent recognition and other technologies.

• MAU: >90 million

• DAU: >11.183 million

(Data source Aurora Data)

User Analysis Reference

• Age: 84% under 30

• User population: mainly female users, accounting for up to 80%.

• City distribution: Users are mainly distributed in first- and second-tier cities, accounting for up to 80%, mainly in Beijing, Shanghai, Nanjing, Guangzhou, and Chengdu.

Spending Power:

• The proportion of users who spend more than 1,000 yuan online in a single month on Faceu is as high as 76%, and the willingness to spend is high.
• The users are generally high-end mobile phone users, and 45% of the users use mobile phones priced above 3000 yuan.

FaceU Ads

Faceu, relying on intelligent recommendation technology, opens up the whole link of user’s photo-taking behavior from the four aspects of technology, creativity, data and gameplay, provides rich marketing resources, and diversifies business methods to help brands achieve exposure.

1. Open screen ad

The ad is displayed in full screen when FaceU is activated, with strong visual and massive exposure, helping the brand to increase exposure, supporting full-screen static and video styles.

Development Prospects of Beauty Shooting APPs

• Beauty photography APP has a huge monthly activity, the overall user scale continues to expand, and the traffic value is large. Compared to gourmet takeaway. The average number of monthly active users of other types of apps such as online travel and fitness is significantly higher.

• With the diversification of entertainment methods, the usage scenarios of beauty photography APPs become more abundant, so that they are continuously integrated into the daily life of more users.

• The functions are diverse and fully meet the individual needs of users for shooting. With the improvement of living standards and aesthetic awareness, the popularisation of the internet and the continuous improvement of technology, beauty shooting APPs have become an indispensable part of people’s daily life. Through beauty shooting APPs to share your daily life able provide more fun for socializing.

• Beauty photography APPs have diversified usage scenarios, and their user groups are relatively vertical. They penetrate users’ lives and can effectively reach target groups. Marketing can reach users’ lives from multiple points and multiple aspects, which greatly improves the overall effect of product marketing.

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