L2 Prestige100 - China IQ 2011


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L2 Prestige100 - China IQ 2011

  1. 1. September 13, 2011SCOTT GALLOWAY China IQNYU SternDOUG GUTHRIEThe George Washington University School of Business© L2 2011 L2ThinkTank.com
  2. 2. Friday, October 14 HOSTED BY: CEIBS, Shanghai China Europe International Business School Pre-event reception: Thursday, October 13 Four Seasons Shanghai For an invitation & more information, contact: CLINIC Joseph@L2ThinkTank.com CORPORATE PARTNERS:The Social Graph: ChinaL2’s inaugural event in China will probe the underpinnings, platforms,and best practices of social media in China.Year upon year of double-digit economic growth and urbanization has armed tens ofmillions of Chinese consumers with increasing disposable income and a voraciousappetite for luxury goods. In 2009, China surpassed the United States as the world’ssecond-largest luxury market, trailing only Japan. However, while several prestigebrands have been operating in China for almost 20 years, most are still trying todetermine how to best tap this enormous but complex opportunity.The social media landscape in China is dramatically different from other markets. MEDIA PARTNERS:Industry leaders like Facebook, Google, YouTube, and Twitter are non-factors in themarket, requiring even the most digitally adept brands to fundamentally adapt their socialmedia strategies to local platforms like Baidu, Youku, Sina Weibo, and RenRen.The L2 China Clinic will provide a framework for thinking about the overall opportunityin China for prestige brands. Speakers will explore the key digital players and strategiesthat lead to success, as well as findings from the 2011 L2 Prestige 100®: China IQ. 工学坊 GONGXF.COM
  3. 3. Want to know more about your brand’s China IQ? CONTACT US China: The greatest opportunity for prestige brands in a generation Tomorrow Belongs to Me McKinsey reports that 73 percent of Chinese luxury consumers are under the age of 45, and upwards of 45 percent are under the age Over the next 15 years, the global addressable market of 35, suggesting that the majority of prestige purchasers are digitally for luxury goods is expected to grow by 600 million native.3 In the U.S., the average female prestige consumer registers consumers, provoking growth forecasts of 2.2 times GDP.1 Much household income of $150,000 and spends $3,000 annually on of this growth is projected to come from one market: China. In handbags. In contrast, the average female prestige consumer in 2000, the Chinese market accounted for a fraction of luxury sales China makes $18,300 (125 RMB) and spends $2,000 annually on globally, however torrid growth means in 2015, China will likely handbags.4 Often these purchases occur after two to three months overtake Japan as the world’s largest luxury market. of research and consideration, most of it done online. Forget What You Know The fastest growing luxury channel(s) in China: The algorithm for success in China is different: Paris and New York Increasing wariness of counterfeit merchandise, coupled with • Less about a 50-something millionaire, more about a 30-some- significantly lower prices abroad, has led to 56 percent of Chinese thing, upper middle class consumer luxury purchases occurring outside of China, suggesting that a • Less about retail in Tier I cities, more about new modes of distri- brand’s digital marketing investments on the mainland drive sales 1. McKinsey & Com- bution in Tier ll and lll cities in Shanghai and Beijing... and New York, Paris, and Hong Kong.5 pany, “Understanding China’s Love for Luxury”, March 2011. • Less about print, more about mobile and emerging platforms 2. Ibid. • Less about “expert” editorial, more about peer reviews, as Digital Is Different 3. Ibid. 60 percent of consumers indicate that the Internet is one of the Not a single global Internet leader is number one in China. The pro-4. Pao Principle, 2010. 5. Bain & Company, primary sources for information on luxury goods (up from 30 liferation of SNS platforms, BBS sites, and other digital channels“China’s Luxury Market Study 2010”, percent in 2008)2 present a challenge to marketers. The environment favors brands November 2010. © L2 2011 L2ThinkTank.com 3
  4. 4. Want to know more about your brand’s China IQ? CONTACT US that adopt nimble, platform-agnostic digital strategies that can be Internet Tidal Wave adapted to multiple channels. A testament to the pace of change, INTERNET USERS IN THE WORLD’S LARGEST LUXURY MARKETS Chinese microblogging platform Sina Weibo was not analyzed in 2010 vs. 2015 our May 2010 study. Launched in August 2009, the platform has (in Millions) added more than 10 million users per month and recently topped 200 million registered accounts. Sina Weibo has become the 800 platform of choice for prestige brands—57 percent of the brands = CHINA 740 in the study now maintain an official presence. = U.S. = JAPAN = U.K. China IQ = Growth = FRANCE Our thesis is that success in the world’s fastest-growing prestige 600 market is inextricably linked to digital competence. This study attempts to quantify the digital competence in China of 100 iconic TOTAL: Internet Users (in Millions) brands (The Prestige 100®). The majority, 91, compete globally, 450 447 while nine are of Chinese/Hong Kong origin. Our aim is to provide TOTAL: a robust tool to diagnose digital strengths and weaknesses and 401 43 400 help managers achieve greater return on incremental investment. 39 50 44 Like the medium we are assessing, our methodology is dynamic, 97 and we hope you will reach out to us with comments that improve 94 our approach, investigation, and findings. You can reach us at scott@stern.nyu.edu and guthrie@gwu.edu. 200 Sincerely, 257 224 SCOTT GALLOWAY DOUG GUTHRIE Founder, L2 Dean, 0 The George Washington Clinical Professor of Marketing, University School of Business 2010 2015 NYU Stern Source: eMarketer, April 2011.© L2 2011 L2ThinkTank.com 4
  5. 5. Want to know more about your brand’s China IQ? CONTACT US Addressable Market for Luxury Brands POPULATION WITH INCOME > $30,000 USD (1995-2025 Estimates, in Millions) 1,500 = REST OF THE WORLD = CHINA = JAPAN +600 million = EUROPE (2010-2025) = U.S. 1,200 900 Population (in Millions) +300 million (1995-2010) 600 300 0 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 199 199 199 199 199 200 200 200 200 200 200 200 200 200 200 201 201 201 201 201 201 201 201 201 201 202 202 202 202 202 202 Source: Goldman Sachs, March 2011.© L2 2011 L2ThinkTank.com 5
  6. 6. Want to know more about your brand’s China IQ? CONTACT USMethodology 40% SITE: China Digital IQ Classes Effectiveness of brand site. IQ Range IQ Class FUNCTIONALITY & CONTENT: 70% BRAND TRANSLATION: 30% • Site Technology: Load Time, • Chinese Social Media • Site Aesthetics 140+ GENIUS Hosting Location Integration • Messaging & Imagery Digital competence is a point • Site Navigation & Search • Customer Service • Chinese Relevance & of differentiation. Site content is • Product & Promotions • Account Services Translation innovative and optimized for the • E-Commerce • Content Localization Chinese consumer. Chinese social media efforts complement broader digital strategy. Brand experience 30% SOCIAL MEDIA: seamlessly extends across mobile Brand presence, community size, content, & engagement on major Chinese social media platforms. platforms. MICROBLOGGING: SNS: ONLINE VIDEO: • Sina Weibo: Presence, Programs, • Renren: Presence, Programs, • Youku: Views, Number of 110-139 GIFTED Community Size, Interaction Rate Community Size, Interaction Rate Uploads, Subscriber Growth, Brands are experimenting and Viral Videos innovating across site, mobile, and • Tencent Weibo: Presence, • Kaixin: Presence, Programs, social platforms. Digital presence Programs, Community Size, Community Size, Interaction Rate • Tudou: Views, Number of is consistent with brand image and Interaction Rate • Douban: Presence, Programs, Uploads, Subscriber Growth, larger marketing efforts. Community Size Viral Videos 90-109 AVERAGE DIGITAL MARKETING: Digital presence is functional yet 15% Marketing efforts, off-site brand presence, and visibility on search engines. predictable. Efforts are often siloed across platforms. • Search: China Site Traffic, Web Authority, SEO and SEM on Baidu and Google • Advertising & Innovation: Recent Brand Initiatives, BBS, Taobao and Jiepang Activity 70-89 CHALLENGED • Brand Buzz: Mentions and Video Uploads on Chinese Social Platforms Limited or inconsistent adoption of • Email: Frequency, Language, Content, Chinese Social Media Integration, Promotions mobile and social media platforms. Site lacks inspiration, does not MOBILE: translate to the Chinese consumer. 15% Compatibility and marketing on smartphones and other mobile devices. • Mobile Site: Compatibility, Functionality, Transaction Capability < 70 FEEBLE • iOS Applications (iPhone & iPad): Availability, Popularity, Functionality Investment does not match opportunity. • Android & Ovi Applications: Availability, Popularity, Functionality © L2 2011 L2ThinkTank.com 6
  7. 7. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description Innovation in technology: maintains presence on six different social media sites in addition to its 1 AUDI Automobiles 170 Genius own OurAudi.com Luxury’s digital darling doesn’t disappoint. From Jiepang VIP guest passes for Beijing grand 2 BURBERRY Fashion 157 Genius opening to Christopher Bailey soundtrack on Youku, Burberry claims the fashion crown From “beasts to joy”—sheer social pleasure; great translation of a global campaigns for 3 BMW Automobiles 155 Genius the Chinese market 4 VOLVO Automobiles 133 Gifted C70 Sina Weibo challenges consumers to design the plot for the next Volvo commercial Local e-commerce launch caters to consumers with samples and gift-with-purchase offer; Sina 5 BENEFIT COSMETICS Beauty 127 Gifted Weibo and Kaixin “Benefit Beach Honey” contests delight 6 CADILLAC Automobiles 124 Gifted Recently released Route 66 short film starring Karen Mok across site and social media 6 ESTÉE LAUDER Beauty 124 Gifted EL-Lady BBS includes videos, games, Q&A, and link to purchase 8 LAND ROVER Automobiles 122 Gifted “The Evoque Effect” sets the standard for multichannel digital campaigns SLK Mask Party contest provides winners tickets to China Fashion Week and site visitors an 8 MERCEDES-BENZ Automobiles 122 Gifted opportunity to create their own virtual mask Innovative comparison tool and stunning microsites for each model are the engine of their 10 PORSCHE Automobiles 112 Gifted online presence 11 FERRARI Automobiles 111 Gifted Sina Weibo fans earn tickets and tees for Ferrari Racing Days in Shanghai Online owners club provides access to forums, downloads and events; however could be updated 12 INFINITI Automobiles 110 Gifted more frequently 13 HERBORIST Beauty 108 Average Launched sampling program through popular fashion BBS communities Only Lady and Metroer © L2 2011 L2ThinkTank.com 7
  8. 8. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 13 SWAROVSKI Watches & Jewelry 108 Average Dedicated channel on PPTV sparkles with live event feeds 15 CARTIER Watches & Jewelry 107 Average Love microsite is shareable across Kaixin, Douban, and Sina Weibo 15 GUCCI Fashion 107 Average Gucci Style iPhone app transcends language barrier 15 LANCÔME Beauty 107 Average Rose Beauty continues to score points, but Sina Weibo hasn’t been updated since October 2010 18 LOUIS VUITTON Fashion 104 Average Voyages microsite and Jiepang tie-in promote exhibit at National Museum of China 19 CHANEL Fashion 103 Average Chinese iPhone app provides access to Chanel News content and fashion videos 20 KIEHL’S Beauty 102 Average Dedicated Sina blog profiles local influencers 21 CHRISTIAN DIOR Fashion 101 Average Lady Blue Shanghai film disappoints with only 146 views on official Tudou page 22 CLINIQUE Beauty 100 Average More than 145,000 users participated in Renren “Knock Out the Old Me” campaign in early 2011 22 DOLCE & GABBANA Fashion 100 Average Live-streamed summer men’s fashion show exclusively through iOS and Android platforms More that 180,000 user wishes have been submitted through the “Start Early” microsite 24 SK-II Beauty 98 Average for a chance to win gifts and samples Resting on the laurels of China legacy; dedicated Youku page and well-configured watch finder 25 OMEGA Watches & Jewelry 96 Average aren’t enough to keep time 26 M•A•C Beauty 95 Average Dynamic product recommendation engine transcends borders © L2 2011 L2ThinkTank.com 8
  9. 9. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 27 HENNESSY Champagne & Spirits 94 Average China-only Hxindian microsite hosts online contests, product videos and a members-only zone 28 JOHNNIE WALKER Champagne & Spirits 91 Average Yulu campaign features 12 mini films highlighting local personalities 28 LEXUS Automobiles 91 Average Generic site fails in pursuit of perfection 30 COACH Fashion 90 Average Mobile optimized site features the men’s collection DIANE 30 Fashion 90 Average Diane’s personal Sina Weibo account gets a boost from media mogul Hong Huang VON FURSTENBERG 30 LONGINES Watches & Jewelry 90 Average China-specific iPhone app cross-promoted on site 33 ACURA Automobiles 89 Challenged Creative promotions on Sina Weibo drive to the dealership 33 CHOW TAI FOOK Watches & Jewelry 89 Challenged Hong Kong jeweler showcases dedicated Taobao shop Live-streamed a press conference announcing its new models, but needs to push the accelerator 33 JAGUAR Automobiles 89 Challenged on its digital efforts 1,570 participants on the Rouge Aomatique microsite indicates the brand is puckering up to the 36 GUERLAIN Beauty 88 Challenged Chinese market Teaming with Formula 1 racer/blogger Han Han to create limited edition watch and accompanying 37 HUBLOT Watches & Jewelry 87 Challenged Sina Weibo page 38 CLARINS Beauty 86 Challenged “Looking for V-Girl Contest” in search of perfect face shape received more than 7,000 entrants Dedicated Youku page for eight episode miniseries directed by Gil Wadsworth received more than 39 YUE-SAI Beauty 83 Challenged 1.5 million views © L2 2011 L2ThinkTank.com 9
  10. 10. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description Chloé’s short-lived Chinese-language blog live-streamed runway shows and garnered more than 40 CHLOÉ Fashion 82 Challenged 40,000 visitors Almost 9,000 votes were cast in the search to find the best beauty expert on the brand’s 13,660 40 SHISEIDO Beauty 82 Challenged member BBS 42 MASERATI Automobiles 80 Challenged Strong configurator, but available only in English Must spend time on more than a mobile-optimized China site and a Youku channel if it wants 42 ROLEX Watches & Jewelry 80 Challenged to raise its profile E-commerce enabled iPhone app features city guides and taxi cards for Western visitors, 42 SHANGHAI TANG Fashion 80 Challenged but brand is lost on Baidu to Chinese consumers Translated microsite allows Chinese consumers to celebrate the 80th anniversary of the Reverso 45 JAEGER-LECOULTRE Watches & Jewelry 79 Challenged collection 45 RAYMOND WEIL Watches & Jewelry 79 Challenged Global video contest boasts dedicated pages on Douban and eYeka Single post on Sina Weibo account suggests “What Makes Love True” site will be launched 45 TIFFANY & CO. Watches & Jewelry 79 Challenged in September 48 BULGARI Watches & Jewelry 78 Challenged Exhibition at National Museum of China has no digital footprint IWC 48 Watches & Jewelry 78 Challenged Interactive IWC forum is mobile-optimized but available only in English SCHAFFHAUSEN Sina Weibo following more than 400,000 strong; decicated Sina Weibo account provides 50 IDO Watches & Jewelry 77 Challenged customer service 51 CALVIN KLEIN Fashion 76 Challenged CK One virtual box extends life of event 51 L’OCCITANE Beauty 76 Challenged One of three in Index with e-commerce enabled mobile app © L2 2011 L2ThinkTank.com 10
  11. 11. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 53 AUDEMARS PIGUET Watches & Jewelry 75 Challenged Royal Oak Offshore collection microsite is buttressed by Chinese translation 54 RÉMY MARTIN Champagne & Spirits 74 Challenged “Real Man” video contest via Youku encourages user-generated video from macho entrants 55 PANDORA Watches & Jewelry 73 Challenged Limited Chinese site content leaves a lot still trapped in the box 56 LANEIGE Beauty 72 Challenged Café Laneige online community enhances interactivity Faulty store locator is limited to Hong Kong site, but only brand to support Taobao plug-in 56 LUK FOOK Watches & Jewelry 72 Challenged on homepage 56 PIAGET Watches & Jewelry 72 Challenged Official Sina blog has registered only 5,000 visits 59 ARMANI Fashion 71 Challenged E-commerce pioneer with Emporio Armani launch, but fails to innovate elsewhere 59 BOTTEGA VENETA Fashion 71 Challenged Site is slow to load and lean on Chinese customization 59 FENDI Fashion 71 Challenged Placing in-video ads through Youku, but not placing enough attention on its overall strategy 62 LAMBORGHINI Automobiles 70 Challenged Brand-approved Taobao shop showcases eight different models but has yet to post a sale 62 ROLLS-ROYCE Automobiles 70 Challenged It’s hard to “contact us” when info is only for North America 64 HUGO BOSS Fashion 66 Feeble Online footprint pales in comparison to monstrous brick-and-mortar presence 64 MONTBLANC Watches & Jewelry 66 Feeble Huge SNS buzz, but not much else © L2 2011 L2ThinkTank.com 11
  12. 12. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 64 TAG HEUER Watches & Jewelry 66 Feeble Tick tock—patience runs out waiting for site to load 64 VERSACE Fashion 66 Feeble Versace Home is e-commerce enabled; Versace Fashion, not so much 68 ALFRED DUNHILL Fashion 65 Feeble Day 8 blog available in Chinese, but only shareable via Facebook and Twitter 68 BALENCIAGA Fashion 65 Feeble July site launch fails to incorporate Chinese language version 70 BOBBI BROWN Beauty 64 Feeble Users can tune into tips from experts on Sina Weibo, but site doesn’t support e-commerce 71 CHOPARD Watches & Jewelry 63 Feeble Chopard Diary boasts strong content; too bad it isn’t in Chinese 71 GIVENCHY Fashion 63 Feeble Sina Weibo alone is not going to move the needle 73 MIU MIU Fashion 62 Feeble Falling into fashion with global site redesign; noticeably absent from SNS 73 PORTS 1961 Fashion 62 Feeble First mover is one of few in Fashion to sell online 75 BALLANTINE’S Champagne & Spirits 61 Feeble Chinese golf fans can follow the action at the Ballantine’s Championship via online and mobile 75 WULIANGYE Champagne & Spirits 61 Feeble More than 9,000 members on site BBS 77 DE BEERS Watches & Jewelry 60 Feeble April site relaunch included simplified Chinese translation 77 FERRAGAMO Fashion 60 Feeble Not much other than a Sina Weibo account with 30,000 fans and not a single post © L2 2011 L2ThinkTank.com 12
  13. 13. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 77 HERMÉS Fashion 60 Feeble Offline innovation doesn’t translate online 80 MOUTAI (MAOTAI) Champagne & Spirits 58 Feeble Eagerly awaiting impending BBS launch and reactivation of online e-commerce 80 PRADA Fashion 58 Feeble Luxury’s digital laggard; Sino efforts arent any different 82 VALENTINO Fashion 56 Feeble Global e-commerce site ships to China, but consumers must be comfortable shopping in English 83 ASTON MARTIN Automobiles 55 Feeble One of two brands with mobile app for Nokia’s Ovi platform 83 CHIVAS REGAL Champagne & Spirits 55 Feeble Supporting site info for “Craft of Chivalry” concert tour is first step Men’s runway at fashion week featured projections of Chinese landscapes; but with limited 83 ERMENEGILDO ZEGNA Fashion 55 Feeble visibility on Baidu, did content even reach Chinese consumers? 86 MARC JACOBS Fashion 54 Feeble Should read Louis Vuitton’s manual on courting China Company website has good localized Chinese content but limited interactivity beyond 87 MOVADO Watches & Jewelry 52 Feeble flash navigation 87 RALPH LAUREN Fashion 52 Feeble U.S. digital fluency has yet to translate 87 VAN CLEEF & ARPELS Watches & Jewelry 52 Feeble Lacks SNS presence and Chinese-specific content on its translated site 90 PATEK PHILIPPE Watches & Jewelry 51 Feeble Strong brand equity; weak digital presence 91 HARRY WINSTON Watches & Jewelry 50 Feeble Rich site heritage content is tempered by poor load times © L2 2011 L2ThinkTank.com 13
  14. 14. Want to know more about your brand’s China IQ? CONTACT USBrandRanking Automobiles Beauty Champagne Fashion Watches & Spirits & Jewelry Rank Brand Category China IQ Class Description 91 MOËT & CHANDON Champagne & Spirits 50 Feeble Recent “Mr. & Miss Moët” Sina Weibo contest suggests IQ is about to pop 93 VACHERON CONSTANTIN Watches & Jewelry 49 Feeble English-only watch configurator and absent concierge need resetting 94 BELVEDERE VODKA Champagne & Spirits 46 Feeble Facebook focus doesn’t help in the East 95 MACALLAN Champagne & Spirits 44 Feeble Interactive elements not translated—blogs, artistry, and photo contest in English only 96 YVES SAINT LAURENT Fashion 43 Feeble Despite the iconic brand’s worst efforts, it still manages to gain some buzz on Chinese social media 97 DAVID YURMAN Watches & Jewelry 42 Feeble Compared to the global site, the Chinese site has no luster 98 BACCARAT Watches & Jewelry 41 Feeble Struggling to shine online 99 DOM PÉRIGNON Champagne & Spirits 26 Feeble China is in love with the brand; its digital presence not so much 100 VEUVE CLICQUOT Champagne & Spirits 24 Feeble Flat © L2 2011 L2ThinkTank.com 14
  15. 15. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT US China IQ DistributionKey % OF BRANDS PER CHINA DIGITAL IQ CLASS:Findings GENIUS CHINA IQ Audi Burberry In the Company of Genius Volvo >140 BMW 3% Benefit Cosmetics Two of 2010’s five Genius brands, Audi and BMW, retained their status, the other three, Cadillac GIFTED Herborist SK-II Estée Lauder CHINA IQ Swarovski Omega Lancôme, Estée Lauder, and Clinique, Land Rover 9% Mercedes-Benz 110-139 Cartier M•A•C remained solidly in the top quartile, buttress- Porsche Gucci Hennessy ing the notion that constant innovation and Lancôme Johnnie Walker investment are requisites for digital success in Ferrari AVERAGE Louis Vuitton Lexus Infiniti Chanel Coach this dynamic market. New to the Genius and Kiehl’s Diane von Gifted ranks, Burberry and Benefit Cosmet- CHINA IQ 20% Christian Dior Furstenberg ics, were among 2011’s biggest winners, both 90-109 Longines Clinique launching e-commerce in the past 12 months Dolce & Acura IWC Gabbana and making significant investments in Chinese Chow Tai Fook Scaffhausen IDo social platforms. Jaguar Calvin Klein CHALLENGED Guerlain Hugo Boss Ermenegildo Hublot L’Occitane Zegna More than two-thirds of the Prestige 100® Montblanc Clarins Audemars Marc Jacobs posted a Challenged or Feeble IQ, suggesting Piguet TAG Heuer Yue-Sai CHINA IQ Versace Movado digital efforts in China remain nascent across Rémy Martin Chloé Pandora 70-89 31% Alfred Dunhill Ralph Lauren the industry. The biggest differentiator between Shiseido Balenciaga Van Cleef & Laneige Arpels Genius and Gifted brands occurred across Maserati Bobbi Brown Luk Fook Patek Philippe Rolex Chopard the Site dimension. Brands that score well Piaget Harry Winston Shanghai Tang Givenchy Armani have developed transaction-oriented sites with Jaeger- Moët & Bottega Veneta Miu Miu Chandon superior customer service, Chinese-specific LeCoultre Fendi FEEBLE Ports 1961 Vacheron Raymond Weil technology integration, tailored content, and Lamborghini Ballantine’s Constantin Tiffany & Co. Wuliangye Belvedere Vodka consistent translation. Bulgari Rolls-Royce De Beers Macallan Ferragamo Yves Saint CHINA IQ Laurent 37% <70 Hermés David Yurman Moutai (Maotai) Baccarat Prada Dom Pérignon Valentino Veuve Clicquot Aston Martin Chivas Regal © L2 2011 L2ThinkTank.com 15
  16. 16. Want to know more about your brand’s China IQ? CONTACT USTop 20 2010 2011Brands Rank Brand IQ Class IQ Score Rank Brand IQ Class IQ ScoreChina Digital IQScores #1 Lancôme Genius 167 #1 Audi Genius 170 #2 BMW Genius 157 #2 Burberry Genius 157 = BRANDS THAT RANKED IN TIE THE SAME IQ CLASS IN #2 Estée Lauder Genius 157 #3 BMW Genius 155 2010 & 2011 = BRANDS THAT RANKED #4 Audi Genius 150 #4 Volvo Gifted 133 IN THE TOP 20 IN BOTH 2010 & 2011 BUT #5 Clinique Genius 146 #5 Benefit Cosmetics Gifted 127 CHANGED IQ CLASSES #6 Mercedes Benz Gifted 138 #6 Cadillac Gifted 124 TIE #7 Clarins Gifted 137 #6 Estée Lauder Gifted 124 KEY #8 Acura Gifted 130 #8 Land Rover Gifted 122Automobiles TIE #9 Cadillac Gifted 124 #8 Mercedes Benz Gifted 122 Beauty #10 Wullangye Gifted 121 #10 Porsche Gifted 112 Champagne #11 Lexus Gifted 119 #11 Ferrari Gifted 111 & Spirits #12 Infiniti Gifted 118 #12 Infiniti Gifted 110 TIE Fashion #12 Land Rover Gifted 118 #13 Herborist Average 108 TIE #14 Moutai (Maotai) Gifted 115 #13 Swarovski Average 108 Watches & Jewelry #15 Cartier Gifted 114 #15 Cartier Average 107 #16 Porsche Gifted 113 TIE #15 Gucci Average 107 #17 Herborist Gifted 112 #15 Lancôme Average 107 #18 Christian Dior Average 109 #18 Louis Vuitton Average 104 #19 Louis Vuitton Average 108 #19 Chanel Average 103 TIE #19 Tiffany Average 108 #20 Kiehl’s Average 102 #19 Luk Fook Average 108 © L2 2011 L2ThinkTank.com 16
  17. 17. Want to know more about your brand’s China IQ? CONTACT USKeyFindings GENIUS BRANDS: Audi Sina Weibo: A branded Sina event page, linking to the official Weibo account, features the interactive Audi Driving Experience game. The winner receives a PS3 or iPad 2. Fans on the brand Sina Weibo page grew 70 percent to almost 61,000, from July 1 to August 1. The Audi Driving Experience hashtag #奥迪驾控汇# has generated 147,850 posts on Sina Weibo. Audi also maintains separate Weibo pages for many of its models. Renren: Users compete for a chance to win professional racecar training at Shanghai’s Formula 1 race track. © L2 2011 L2ThinkTank.com 17
  18. 18. Want to know more about your brand’s China IQ? CONTACT US Key Findings Mobile: Multiple Chinese- GENIUS BRANDS: Audi language mobile apps provide virtual tours of the Audi A8L and complement a mobile optimized brand site.Tencent Weibo:Presence onTencent Weibo isin its infancy. Kaixin: 181,450 followers. Youku: 275,590 video views. © L2 2011 L2ThinkTank.com 18
  19. 19. Want to know more about your brand’s China IQ? CONTACT US Key Findings GENIUS BRANDS: Burberry Mobile: E-commerce enabled Chinese- language mobile site translates.Site:Chinese-language,e-commerce enabledsite mirrors the brand’sglobal experience,including Chinesesubtitled versions ofthe Burberry Acoustic Digital Innovation at Brick and Mortar Stores:video series. Burberry’s Chinese stores are outfitted with the latest in digital technology, including full-length touch screens and iPads. © L2 2011 L2ThinkTank.com 19
  20. 20. Want to know more about your brand’s China IQ? CONTACT USKeyFindings GENIUS BRANDS: Burberry Youku: Milan Fashion Show live stream on Youku garnered Burberry almost 1.2 million views on its channel. Live Stream: An all-digital, holographic fashion show was streamed on brand site, marking the grand opening of the flagship Beijing store. © L2 2011 L2ThinkTank.com 20
  21. 21. Want to know more about your brand’s China IQ? CONTACT USKeyFindings GENIUS BRANDS: Burberry Kaixin: 61,920 followers.Sina Weibo:182,250 Sina Weibofans are treatedto product videosand pics, magazinecovers, and celebritysightings. Douban: 20,780 members enjoy Acoustic series videos, product photo galleries, and a music channel on Douban.fm. © L2 2011 L2ThinkTank.com 21
  22. 22. Want to know more about your brand’s China IQ? CONTACT US Key Findings GENIUS BRANDS: BMW Mobile Site: Provides BMW model overviews and pricing, but fails to take advan- tage of mobile features. Sina Weibo: 240,300 fans on Sina Weibo experience the Joy of BMW.iPhone App:Exclusive iPhone app for ChineseBMW owners, MyBMWClubincludes click-to-call customerservice, a dealer locator, andoffline meet-ups and events. © L2 2011 L2ThinkTank.com 22
  23. 23. Want to know more about your brand’s China IQ? CONTACT USKeyFindings GENIUS BRANDS: BMW Youku: There are 31,800 unofficial BMW videos on Youku, the most of any brand and testament to brand strength. Tencent Weibo: BMW has the largest brand following on Tencent Weibo, with more than 173,000 fans. Jiepang: Fans checked in on Jiepang to the Bird’s Nest National Stadium in Beijing for a virtual badge and a chance to win tickets to the BMW 3 Series fashion concert. Kaixin: 622,640 followers. © L2 2011 L2ThinkTank.com 23
  24. 24. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT USKey Top Five Biggest Winners & LosersFindings 2010 VS. 2011 IQ PERCENTILE RANK Benefit Vacheron Constantin FEEBLE GIFTED -41% FEEBLE FEEBLE Top-notch e-commerce and program launches on Youku, Tudou, Kaixin, and Sina Weibo propel this LVMH brand to the top of the Beauty rankings. +67% Hour Lounge BBS available in Chinese receives minimal updates. Dolce & Gabbana Van Cleef & Arpels FEEBLE AVERAGE -43% CHALLENGED FEEBLE Fighting on every front; has launched a presence on nine social media sites globally including three in China. Developed mobile app for Ovi platform. +48% Flash and media-heavy site has had few technology or functionality updates. Johnnie Walker Chivas Regal FEEBLE AVERAGE -56% AVERAGE FEEBLE Launched presence on Sina Weibo and Douban; Yulu campaign featuring Jia Zhangke documen- taries is shareable across social media. +44% With the exception of Douban page, few updates since 2010. Burberry Wuliangye CHALLENGED GENIUS -67% GIFTED FEEBLE One of first in Fashion to launch e-commerce. Has extended social media prowess to Chinese platforms. +40% Localized site and high participation BBS forum aren’t enough to hold their ground. Audemars Piguet Moutai (Maotai) FEEBLE CHALLENGED -68% GIFTED FEEBLE Launch of Chinese site launches brand from Feeble to Challenged. +37% E-commerce functionality alone isn’t enough to keep this iconic liquor brand in the Gifted ranks. © L2 2011 L2ThinkTank.com 24
  25. 25. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT USKeyFindings Brand Site Sophistication % OF SITES WITH THE FOLLOWING ATTRIBUTES: Selling Is Knowing (2010 vs. 2011) The biggest change in site investments year on year are tied directly to sales. The number 88% = 2011 of brands that were e-commerce enabled 85% = 2010 doubled, and one-fifth now sell online. In 80% addition, 23 brands have added offline retail locators. E-commerce continues to be directly correlated with strong digital performance 62% across dimensions, and brands selling online registered average IQs 16 points higher than Feature Adoption (%) those without online sales, suggesting that as an organization begins generating revenue online, additional resources are allocated to digital marketing. 33% 32% The Beauty category leads the way with 11 of the 15 brands in the study boasting e-commerce 20% capability. The Fashion category posted the largest year on year change as the percentage of brands selling went from just seven percent 10% to 24 percent. Some Fashion brands, such as Valentino and Diane von Furstenberg, that do 0% not host a Chinese site sell and ship to China via their global site. (continued on next page) Chinese Locate Retail Site Hosted E-Commerce Language Within China in China Enabled © L2 2011 L2ThinkTank.com 25
  26. 26. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT USKeyFindings E-Commerce Payment Methods % OF E-COMMERCE ENABLED SITES EMPLOYING THE FOLLOWING: Selling Is Knowing (August 2011) (continued from previous page) Weak credit card penetration rates and online fraud fears continue to present e-commerce 79% obstacles. E-commerce enabled brands tackle the payment infrastructure in a variety of ways, the most popular being accepting payments 63% from the customer’s bank online. More than 58% 60 percent of brands provide payment option % of E-Commerce Enabled Sites through Alipay, a PayPal equivalent, popularized by B2C e-commerce site Taobao. Nearly 60 percent of brands still accept cash on delivery. 32% 21% 0% OTHER Online Banking Alipay Cash on Credit Card Other Delivery © L2 2011 L2ThinkTank.com 26
  27. 27. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT USKeyFindings Missed Opportunities Fifty-six percent of Chinese luxury purchases Site Features: are made abroad, however, just over half of % OF SITES WITH & WITHOUT THE FOLLOWING TOOLS Chinese language sites provide a U.S. and (August 2011) European store locator, a missed opportunity to provide information to Chinese tourists. % of Sites WITHOUT the following: % of Sites WITH the following: Although, specific international information is European & limited on many sites, so is local customization, 42% U.S. Store 58% and less than a third of sites publish prices in Locator Renminbi. Common 2.0 tools including user reviews and 52% Wish List 48% social media integration, that are ubiquitous on U.S. sites, particularly in commerce-oriented Prices categories such as Auto and Beauty, are only 68% Viewable in 32% RMB incorporated on eight sites. In most cases, when incorporated, social sharing via Chinese SNS and solicitation of user reviews is relegated to User 92% Reviews 8% simple interface BBS forums. Content 92% Shareable on 8% Chinese SNS © L2 2011 L2ThinkTank.com 27
  28. 28. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT US Key Brand Name Search Results Paid Search Tactics Findings POSITION OF BRAND SITES IN ORGANIC SEARCH RESULTS % OF BRANDS PARTICIPATING IN THE FOLLOWING FOR BRANDED SEARCH TERMS Google: (August 2011) (August 2011) A Distant Second = 2010: = 2010: = CHINESE Google continues to lose share in the Chinese 1ST POSITION OUTSIDE TOP 3 = ENGLISH search market since redirecting searches to = 2011: = 2011: Hong Kong in early 2010. The market share of 1ST POSITION OUTSIDE TOP 3 local search engine Baidu stands at 76 percent versus Google’s 19 percent.6 This is a dramatic 71% 67% shift from 2009, when Baidu controlled 58 per- cent of the market versus Google’s 36 percent. Prestige brands continue to struggle with visibility on the local leader. Only 31 percent of brand sites come up first in organic search 43% 42% results for the Chinese brand name, and 42 percent of sites are not returned in the top 31% three. Organic visibility has actually declined 29% 30% 26% 25% on the platform since our May 2010 report, 22% as the Baidu algorithm increasingly prioritizes 18% organic returns of customers purchasing terms 15% 13% 12% on other Baidu platforms. Brands are doing better on Google, however optimizing for a search engine that has de- 0% creasing relevance is short-sighted. Baidu: Google: Baidu: Baidu: Google: Chinese Brand Chinese Brand Brand Zone Paid Search Paid Search 6. Analysys Name Name International, “Seasonal Survey ofChina Internet SearchMarket in Q2, 2011”, July 2011. © L2 2011 L2ThinkTank.com 28
  29. 29. KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT US Key Findings Six Simple Strategies for Successful SEO in China: Pay to Play 1 Paid search accounts for 31 percent of total online ad spend in China and search revenues Get Your License: were up 67 percent year-over-year for 2010. 7 A legal ICP license is crucial. Without a certificate, site may be omitted from search results. A quarter of the brands are engaging in paid search on Baidu. Many are using paid search 2 to bypass Baidu’s algorithm and ensure visibil- Host Your Site in China: ity of their Chinese site. Despite being a proven Baidu’s crawler is “impatient” and will skip sites experiencing even minor latency issues eliminating source of traffic, less than a quarter of the the chance to appear in organic search results. brands are purchasing Baidu brandzones. 3 Without a presence on Baidu, brands are Buy a Baidu Brandzone: virtually invisible in China. Baidu’s algorithm Brandzones drive results. Brands report up to 30 percent of their traffic originating from a brandzone is different than Google’s and requires a and have seen click through rates up to 75 percent. dedicated strategy. In many ways, Baidu is 4 simpler and more accessible than Google, Reap What You Sow: and can be a very powerful tool with mini- Baidu content is prioritized in the search results. Curating brand content on Baidu platforms Tieba mal investment. (à la forums), Baike (à la Wikipedia), and Zhidao (à la Yahoo Questions) is “free” and can improve search results 10-20 percent if done right. 5 Cut the Code: Baidu’s crawler is not very sophisticated and requires aggressive spoon-feeding. Streamlining code and adding alternative text improves visibility. As with Google, flash-heavy sites encumber the crawler.7. iResearch, “2010 Q4 6 Backlinks Boost: Targeted efforts to acquire backlinks can significantly improve ROI and search visibility. China Search EngineMarket” January 2011. © L2 2011 L2ThinkTank.com 29
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