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COVID-19 // China POV Vol.8

Vol.8: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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COVID-19 // China POV Vol.8

  1. 1. 1 Havas Group China August 10th 2020 EDITION 2020 #8
  2. 2. 2 In this edition Key market developments • Economic outlook • Consumer behavior developments • Key category outlooks • Havas POV China advertising market • Advertising market development • Media consumption update • Media market news • Campaigns worth mentioning • Havas POV
  3. 3. 3 Economic outlook Key market developments
  4. 4. China’s Q2 GDP rebounded to 3.2%. Some sources upgrade the year GDP forecast to 2.5% from around 1.5% earlier 4 GDP growth rate fast recovered to 3.2% in Q2 after the hard hit China GDP Growth Rate 6.8% 6.7% 6.5% 6.4% 6.4% 6.2% 6.0% 6.0% -6.8% 3.2% 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 “China’s economy will grow 2.5% this year according to UBS Group AG, which raised its forecast from 1.5% due to the recovery in domestic consumption and strong investment” —— UBS / Bloomberg Source: National bureau of statistics, Bloomberg, Asian review “The steady economic recovery in the first half has laid a solid foundation for a sustained recovery in the second half ” —— NPC spokesperson
  5. 5. As a result, Chinese live with the new normality confidently and optimistically 5Source: National bureau of statistics, Bloomberg, Asian review I believe that the recovery after the crisis will be fast (vs. 36% global) 77% COVID-19 has limited impact to their finance 88% I am optimistic in China to overcome COVID-19 92%
  6. 6. China retail market growth is gradually recovering Domestic retail market keeps recovering despite growing inter-country relationship tensions 6 Retail Market YOY Growth Rate 9.6% 8.9% 9.0% 8.3% 8.4% 8.5% 7.6% 7.8% -20.5% -15.8% -7.5% -2.8% -1.8% Source: National bureau of statistics, South China Morning post
  7. 7. Multiple positive vaccine developments contribute to confidence and hope for a better economic rebound 7 There are now 5-6 first generation coronavirus vaccines globally led by China, US, UK and Russia, expected to be ready in 2021 At end of July, Tianjin-based CanSino Biologics published results from an early-stage clinical trial showing that its vaccine is safe and can trigger an immune response. China’s Shanghai Fosun Pharmaceutical Group and Germany’s BioNTech on Wednesday began clinical trial of its novel coronavirus vaccine candidate Source: South China morning post
  8. 8. As a result, brands massively focus for business growth, like Chinese V’day campaigns with intensive support Source: BCG Valentines campaigns Special editions exclusively for China Dior campaign by the Nine Swarovski X Palace museum Valentino popup WeChat store
  9. 9. Also confidence is shown by brands long term investments, as new store openings and business initiatives are being launched 9Source: 36KR Opening IKEA new O20 stores: Ikea city Link shopping, restaurant, discount voucher, etc. to its mini programs Burberry launches the first comprehensive O2O retail experience in luxury
  10. 10. 10 Consumer behavior developments Key market developments
  11. 11. Chinese keep buying more online, though offline footfall has almost recovered to pre-Covid level in well virus-controlled cities 11 5150 billion China H1 online sales (RMB) 7.3% online sales growth rate in H1 5.6% share increase of online real product among total retail sales in H1 Source: National bureau of statistics, Savills research, Mob Tech lockdown measures remain due to the second round of virus offline footfall boosts due to high attraction of tourists and buying luxury domestically
  12. 12. The live streaming industry keeps booming while more strict regulations are launched 12 China’s first set of regulations for the livestream ecommerce took effect on 1 July. It restricts misleading advertising on livestreams and requires real-name verification from both merchants and individual live streamers Source: Linkedin
  13. 13. Chinese cultural elements continue to be more appreciated after COVID-19, mainly driven by young consumers 13 Sales of Hanfu (Chinese traditional outfit) rose 300% on Pinduoduo between January and June this year Baidu index of “New Chinese goods” sees climbing recently 新国货 Online Chinese goods market share keep increasing year by year Post 95 is the main driver Growth rate by age Market share by age Source: CBN data
  14. 14. Second-hand luxury market was activated during COVID-19, big potential to be further unlocked 14 Secondhand EC platform • ZHIER increased its DAU 82.4% yoy, • HONGBULIN increased its DAU 40.4% yoy • SECCO also see significant user increase on second hand luxury during COVID 5% 28% 31% 22% 26% China Japan US France UK Secondhand luxury sales share of total luxury market 47% 11% 9% 26% 7% Value for money Like vintage Sustainability Limited edition Others 11% 13% 52% 24% <19 y.o. 19-29 y.o. 29-36 y.o. >36 y.o. Secondhand luxury market share by age Secondhand luxury market purchase reason The market is dominated by young audiences Value for money as the top reason to buy secondhand Source: Yousheyipai APP
  15. 15. Source: China skinny Cosmetic sales continues to grow with anti-pollution cosmetics becoming a must-have Cosmetic industry new regulation, effect from Jan 1st, 2021 • Enhanced Compliance Obligations for License Holders The soon-to-be-implemented regulation places significant requirements on cosmetic license holders, making them responsible for compliance obligations related to the cosmetic products they make and sell • Stimulation of Innovation for New Ingredients the new regulation requires only certain high-risk new to be approved by the regulatory authority. Applicants of other unlisted new ingredients only need to go through a simplified notification process • New Rules for E-commerce Platforms e-commerce operators should record and verify the identity of cosmetic distributors or retailers that trade on their e-platforms, and suspend retailer’s ability to engage in EC service • Outstanding Questions under the New Regulation The regulations specifies what types of products fall within this realm to a certain extent Anti-Pollution cosmetics become a ‘Must-Have’ for Chinese consumers in all segments including hair care Consumer anti-pollution awareness is increasing, and they are linking pollution, outdoor and indoor, to their skin issues like skin sensitivity
  16. 16. Source: China skinny Rising consumer interest for elderly-care property concepts 241 M 486 M 2017 2050E China’s over-60 market is expected to be double by 2050 Elderly people(>60 y.o.) market 17.3% 36.0% Population Population share Elderly market Family life Career Age Entry level Career climbing Career mid-late stage Retire/re-employment Give birth to child Raise children Kids being independent Have grand children Get married Family life Take care of parents Take care of yourself Spare time Pass away Elderly people equipment & daily use products Entertainment Aged finance Travel Aged organization & professional service Nursing Interest consumption Remarried Elderly-care property Funeral and interment service A big pension market to be further unlocked
  17. 17. 17 Key categories outlook Key market developments
  18. 18. 18 Luxury and Lifestyle
  19. 19. Luxury brands are seeking growth on platforms relevant for young audiences 19Source: BCG, Chozan 140% YoY increase of new account openings of luxury brands on Douyin and RED in April and May Dior open Bilibili official account in June 2020
  20. 20. 20Source: BCG Luxury brands get even more active on social media In the three months through June, average engagement on luxury Weibo account posts, a proxy for brands’ social media spending in China, increased 230% compared 2019 same period Kering saw China sales increase 40% Q2 vs. 2019 same period, LVMH was up 65% LV 2021 spring summer show on Weibo Gucci Chinese V’day campaign on Weibo Chanel beauty boy line on WeChat
  21. 21. Jewelry brands start to cooperate with young celebrities to refresh brand image and attract young audiences TIFFANY CARTIER CHOW SANG SANG Tiffany announced Jackson Yi (易烊千 玺) as brand spokesperson on 6.3 Cartier continued cooperating with Meiqi Meng (孟美岐)&Vin Zhou (周震 南) on 6.6 &6.7 Chow Sang Sang announced Alan Yu (于朦胧) as brand friend on 6.15 PIAGET Piaget announced Haoran Liu (刘昊然) as brand ambassador on 7.20 21
  22. 22. 22 Travel & Tourism
  23. 23. The domestic travel recovered to 80% driven by summer holidays, booking lead time is dramatically shorter due to COVID-19 23 80% of domestic travel recovered compare to last year summer period 4 times higher on flight search in July vs. Jun 50%+ travelers are below 30 y.o. Source: Qunaer, forward keys 68% of people booking lead time is less than 4 days After a 172-day hiatus due to the coronavirus outbreak, China has greenlighted the resumption of tours that cross provincial boundaries on Jul 14th.
  24. 24. #88元随心乘# “88 Take any train you want” #66元 任性飞# “Take any flight as you wish” • Half year card: ¥88 can be exchanged for 10 times of tickets discount in 12306 mini program within Alipay and¥200 will be deducted from the total cost. • Train biweekly card: limited 60,000 cards. Get 4 times discounts for 14 days. People can buy domestic flights below¥500 for only ¥66; If the ticket price is above ¥500, tourists need to make up the difference to buy. Alibaba's Alipay and Fliggy promptly launched special offers for both plane and train ticket, targeting relaunched domestic group travel • The promotion is tailored to families living apart, commuters flying to and from work, and excursion on weekends. • Such budget promotion will change people’s travel pattern and will definitely help fulfill their desire to explore the country in an affordable way. 24
  25. 25. Hainan is becoming the top travel destination, as well as a new luxury shopping paradise 25 The first month(Jul.) of a new 100,000 RMB individual duty-free allowance coming into force, Hainan has seen its offshore duty-free sales surged to 2.2 billion RMB Source: Qunaer, forward keys, Xinjingbao
  26. 26. The “Free Flying” promotion may be aiming to meet three primary objectives: ✓ First is the sorely-needed cash flow: Because this is a prepaid product, the airline is able to amass enormous revenue before the passengers use its service. ✓ The second objective is to optimize flight occupancy. ✓ Lastly , “Free Flying ” product also play a lot of advertising effect for airlines. Chinese Airlines offer “Free Flying” promotion to boost domestic travel and increase flight occupancy HNA airline : ¥ 2,999 unlimited to flight in and out Hainan within half a year, and extra offer¥2,880 of CFS Duty free voucher and 10 kg of free baggage allowance. China Express: ¥2,999 covering more than 100 destinations in China. It is available both on weekends and weekdays until Oct 24th. Chunqiu airline: ¥2,999 not limited for service time, destinations, and number of times through the end of the year. 26
  27. 27. More foreign airlines resume flights to China 27 KLM Royal Dutch Airlines resumed passenger flights on 22nd July following the relaxation of travel restrictions by the Chinese government. Apart from KLM, other foreign carriers such as Air New Zealand, Delta, United Airlines, Air France, Lufthansa, Swissair, Aeroflot and Turkish Airlines have also resumed flights to Shanghai. Finnair restored flights between Helsinki and Shanghai on July 23. Additional airlines, such as Etihad Airways, have announced dates to restart flying to Shanghai.
  28. 28. 28 Food & Beverage
  29. 29. In July RT-Mart and Hema Fresh develop community-customized mini shop to approach consumers at last mile 29Source: IFengNews(凤凰新闻)&北京商报网 Hema Fresh opened two Hema mini in Beijing to explore community shop marketing RT-mart developed community-customized mini shop Traditional supermarket began to upgrade business model in the direction of community-customized mini shop, which can solve consumers’ demands at last mile. RT-Mart supermarket developed RT-mini, which provides 3 dinners on basis of fresh food and local specialties, on July 15th, 2020 in Nantong. On July 6th, Hema Mini settled in Beijing after 1-year operation in Shanghai. Compared to Hema Fresh, Hema mini has added Beijing local food, minimized dining area, increased the proportion of instant food and applied daily food to replace high-price food. With support of Hema Fresh supply chain, Hema mini is more flexible and convenient. Sales per square meter of Hema Mini is six times larger than Hema Fresh.
  30. 30. Heytea and Nayuki widen food category, and new retail category will be the new normal for them 30 Heytea: Utilizing New Retail Industry Nayuki: Optimizing offline experience and strengthen online precise operation Nayuki started new retail business this year. To be specific, it successively developed frozen-dried yogurt, frozen-dried fruits, cookies and tea gift box, which are health driven and easy to carry. Besides, it opens online channels such as WeChat mini-program, Tmall store to reach more consumers. Frozen-dried snacks Tea Gift Box Heytea registered trademark for its food and instant food, including popcorn, rice bread nuts and so on. Previously, Heytea established Heytea Lab in Shenzhen. Recently, Heytea developed chips by cooperating with Shake Shack and cooperated with Airbnb to provide real time experience for consumers. Heytea x Shake Shack Heytea x Airbnb
  31. 31. 31 Automotive
  32. 32. In June car sales continue to recover, exceeding even 2019 and 2018 monthly sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2,809 1,718 2,656 2,319 2,288 2,274 1,889 2,103 2,394 2,380 2,548 2,661 2019 2,367 1,482 2,520 1,980 1,848 2,056 1,808 1,958 2,271 2,284 2,457 2,658 2020 1,927 310 1,430 2,070 2,194 2,300 0 500 1,000 1,500 2,000 2,500 3,000 Monthly car sales in China 32 • The auto market continued to recover in June, both MoM and YoY sales are growing, while the monthly growing rate is slowing down. • The YoY growth in SUV sales (+11%) and minibus sales (+26%) are still the main drivers for the increase of overall PV sales. • The NEV sales in June continue to drop significantly (-38.5% vs. last year), which is mainly due to the reduction of national subsidy. Source: China Association of Automobile Manufacturers (CAAM),China Passenger Car Association (CPCA) Unit: Thousand
  33. 33. Auto and Tech brands rush into joining the playground of autonomous driving 33 • Basing on Deloitte, China will have the world’s most autonomous vehicles of 30 million in operation till 2030, which indicates the great potential of China autonomous driving market despite the challenges in current stage. • Didi has made its self-driving debut in Shanghai on June 27th. Didi also plans to hire 200+ employees this year to strengthen its autonomous driving division. • Tesla is building an autonomous driving team in China and will complete the L5 basic functions this year, said CEO Musk on July 9th. • Huawei then released a patent for autonomous driving system on July 10. This patent is for autonomous driving system that sets driving strategies based on historical and real-time environmental data. Source: Gasgoo Didi launched autonomous driving service in Shanghai
  34. 34. 34Source: Tencent news, Baojun Weibo official account A consumer complains about gearbox problem on the show. • During the 3·15 consumer rights gala held on July 16th, Baojun 560 – a model car from SGMW joint venture, was criticized for its gearbox breakdown problem. • The gearbox problem of Baojun 560 has been long existed. The company had recalled 32000+ units and consumers also had the malfunctioned cars repaired at their own expenses, but all in vain. • After the exposure, Baojun quickly released an apology and vowed to take responsibility for the issue at all costs. Baojun official statement with apology and commitment Baojun was critized during the 3·15 consumer rights gala
  35. 35. 35 Havas POV Key market developments
  36. 36. 36 Rebounding consumer’s spending, while competition being back at full force, drives the need for longer term approaches • GDP and domestic retail recover better than expected. Many categories show positive developments over the last period with growth expected back already now in Q3 and Q4. • This also attracts competition, with more intensity and unexpected tactics. Including more international brands focusing on recouping business here and shifting investing to China. • At the same time, when lacking real longer-term initiatives, competitors continue uplifting their (mostly) digital activations including live stream and EC festivals. It has become more difficult to push on activations only as many brands have followed this path, while more brand pull power, new relevant offering and differentiation is needed to keep on growing the months/years ahead. • So brand building and real innovation, versus one offs EC festivals, live stream and special editions (cosmetic innovation) are important to drive organic sales and profitability. • Which means real innovations based on longer-term pre-Covid existing growing consumer needs, sometimes accelerated or distracted by Covid, like health, cosmetics, O2O and elderly care are needed.
  37. 37. 37 Advertising market development China advertising market
  38. 38. While YTD ad spend remain below 2019, we see a significant increase in spend as advertising activities return in line with the overall economic recovery Month by month comparison 51,303 49,337 38,803 10,000 20,000 30,000 40,000 50,000 60,000 2018 May 2019 May 2020 May YTD vs YTD comparison 257,443 232,012 168,059 50,000 100,000 150,000 200,000 250,000 300,000 YTD 2018 YTD 2019 YTD 2020 Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 38 • In May 2020, the total actual* Ad market in China achieved RMB 38 billion; compared with last May, the total category spending decreased by 21%. Comparing to May 2018, investment also decreased. • YTD May 2020, the total actual* Ad market in China achieved RMB 168 billion; compared with same period last year, the total category spending decreased by 28%. • The main reasons behind decrease are COVID-19 outbreak and economic environment. 0 10,000 20,000 30,000 40,000 50,000 60,000 1 2 3 4 5 6 2020 2019 2018 Monthly Spending
  39. 39. Market trend varies strongly by category, only IT category shows high increase in monitored spending -12.8% -18.3% -41.2% -25.2% -1.7% -14.3% -2.7% -44.2% 37.9% -35.0% -8.0% -14.3% -8.3% -14.6% -37.8% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology 39 Compared with same period (Jan.- May.) last year, “IT Product & Service” experienced 2-digital growth rate in media investment while most other categories cut their spending, such as “Leisure”, “Household”, “Clothing”, “Leisure” and “Transportation, Logistics & Auto”.
  40. 40. Digital media remains the main battlefield and the primary media choice for most categories China Ad Spend Market Media Mix Digital, 41.4% TV, 27.3% Outdoor, 28.0% Cinema, 0.9% Radio, 1.6% Newspaper, 0.5% Magazine, 0.4% Top Categories 40 • 70% of overall media investment through Digital and TV. • In specific industries such as TLA and IT Product & Service category, the share of digital raised up to over 70% of total media investment. POST & COMMUNICATION LEISURE PERSONAL ITEMS REAL ESTATE & CONSTRUCTION… PHARMACEUTICALS COSMETICS & TOILETRIES TRANSPORTATION,LOGISTIC & AUTO BUSINESS & SERVICES FOODSTUFF & BEVERAGES IT PRODUCT & SERVICE 0% 20% 40% 60% 80% 100% Source: ADP (TV, Radio, Newspaper, Magazine, Cinema), CODC (OOH), Iresearch (Digital – PC & Mobile) 2018-2020 Note: excluding media spending on social and search; discounts are estimated based on Havas methodology
  41. 41. 41 Media consumption China advertising market
  42. 42. While life has mostly gone back to normal, TV rating show seasonal decline but remain higher than 2019 especially in lower tiers 5.9 6.4 5.5 5.4 5.4 5.3 6.9 9.5 7.2 6 5.7 5.4 0 5 10 Jan Feb Mar Apr May Jun 2019 2020 Tier 2 42Source: Infosys, Target:P18-45, Period:2020/01/01 – 2020/6/30, Timeslot: All Day Tier1 including(BJ、SH、GZ、 SZ),Tier2 including almost Provincial capital 6.2 6.8 5.2 5 5 5.1 7.2 10.2 7.2 6.5 5.4 5.1 0 5 10 Jan Feb Mar Apr May Jun 2019 2020 Tier 1 4.9 5.8 4.9 4.7 4.6 4.5 6.5 9.2 6.5 5 5.1 4.9 0 5 10 Jan Feb Mar Apr May Jun 2019 2020 Others
  43. 43. Hunan STV continues to be successful with their Dramas and Variety shows 43 Drama Hunan STV dramas won the first and second place in Jun. Variety Although several popular variety series air new season in Q2, Hunan STV still dominates variety shows. Zhejiang STV 局中人 Ave Rtg 1.1 Zhejiang STV 三叉戟 Ave Rtg 1.2 Hunan STV 蜗牛与黄鹂鸟 Ave Rtg 1.9 Hunan STV 幸福触手可及 Ave Rtg 1.7 Dragon STV- 挑战极限 Ave Rtg 2.1 Zhejiang STV- 奔跑吧 Ave Rtg 1.7 Dragon STV 燃烧 Ave Rtg 1.0 Hunan STV- 笑起来真好看 Ave Rtg 2.2 Zhejiang STV- 青春环游记 Ave Rtg 1.8 Hunan STV- 618超拼夜 Ave Rtg 2.2 Source: Infosys, Target:P18-45, Period: 2020/06/01-2020/06/30, Timeslot: All Day Market: 57 Markets
  44. 44. In Digital all app categories see a steady DAU increase, while EC and Financial service report the most significant growth 44 Source: iResearch, period: 2019-2020.06 22 23 85 180 281 387 428 442 754 1258 Health & medicare Food delivery & Recipes Education Travel & Navi Gaming services General news Financial service EC Video services Social networking 2020 June DAU 2020 June 2019 avg Unit: Mil 2019 Avg. VS. 2020 June growth rate +3% +8% +22% +23% +13% +13% +5% +17% +12% +1%
  45. 45. Early July overall Social DAU and time spent are in line with Q2 45 896 344 182 13 16 912 328 215 15 14 920 318 212 15 14 921 319 203 15 14 WeChat QQ Weibo LRB Baidu Tieba 2020 Top 5 Social Apps by DAU 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) Unit: Mil 1220 1265 1254 1250 92.5 95.9 91.0 90.3 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 0 200 400 600 800 1000 1200 1400 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Social Networking Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins Sources: iResearch, period: 2019-2020.07.12
  46. 46. Mango TV increased usage sharply since own-made variety show launched end of June 46 365 436 407 414 112.1 123.1 119.2 123.7 0.0 20.0 40.0 60.0 80.0 100.0 120.0 0 100 200 300 400 500 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Online Video Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins Sources: iResearch, period: 2019-2020.07.12 167 153 78 32 22 191 172 97 46 25 172 156 86 42 27 173 156 87 49 30 iQIYI Tencent Video Youku Mango TV Bilibili 2020 Top 5 Online Video Apps by DAU 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) Unit: Mil
  47. 47. Total short video DAU & time spent has stabilized, while Douyin continues to enjoys a strong growth momentum 47 430 476 460 471 39.0 56.4 60.1 60.9 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 100 200 300 400 500 600 700 800 900 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Short Video Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins 211 123 52 46 36 274 145 57 51 35 286 136 55 47 35 297 135 56 48 36 Douyin Kwai Watermelon Video Douyin Volcano Edition Haokan Video 2020 Top 5 Short Video Apps by DAU 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) Unit: Mil Sources: iResearch, period: 2019-2020.07.12
  48. 48. Live stream market continues its healthy growth and is expected to further increase together with 5G implication 48 397 477 613 2018 2019 2020 e Live Stream User Scale in China Unit: Mil 29% 7.5 10.6 16.3 2018 2019 2020 e Live Stream Market Size in China Unit: Mil Source: SCMP Analysis, China Internet Network Information Center 20% 41% 54% The market value per user has steadily increased over the last 3 years, from US$19.0 per user in 2018 to US$22.3 per user in 2019 to an expected US$26.6 per user in 2020
  49. 49. Kwai claim its livestream DAUs reached 170 million, a 70% increase within 6 months 49 TikTok’s biggest rival in China, Kwai (Kuaishou) released its 2020 H1 Content Ecosystem Report in July. This report claims that its livestreaming function reached 170 million* DAU, a 70 million surge since the end of 2019. Sources: Kwai 2020 H1 content ecosystem report, 2020.07.22 Tier 4 & below Tier 1 Tier 2 Tier 3 Users under 30 y.o. 70% + EC DAU 100 M+ Livestream DAU 170M+ Male 52% Female 48% 2019 July -2020 June 300M Gender distribution of Kwai content creators that published original contents Notes: Claim by Media owner, data does not correspond with iResearch data 15% 30% 24% 31% Overall Kwai user distribution by city tier
  50. 50. No big changes for News apps and Gaming compared to Q2, however both on much higher levels as in 2019 344 385 383 390 46.9 56.2 52.3 52.6 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 100 200 300 400 500 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 General News Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins 249 300 285 287 70.2 75.3 76.5 77.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 0 50 100 150 200 250 300 350 400 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Gaming Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins 50 Sources: iResearch, period: 2019-2020.07.12
  51. 51. Navigation apps see a significant rise in time spend, while OTA apps start to show an upward trend based on recovering domestic travel 51 127 126 143 143 19.5 17.3 28.9 33.2 0.0 5.0 10.0 15.0 20.0 25.0 30.0 0 50 100 150 200 250 300 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Navigation Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins 24 18 17 18 9.5 7.9 7.4 7.7 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 0 5 10 15 20 25 30 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 Online Travel Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins Sources: iResearch, period: 2019-2020.07.12
  52. 52. 279 73 37 16 10 270 84 38 18 10 302 89 43 18 12 300 91 39 18 11 Taobao Pinduoduo JD.com Xiaomi Mall Tmall 2020 Top 5 EC Apps by DAU 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) Unit: Mil After 618 shopping festival in June time spend on EC platforms declined, but overall EC usage remains on a very high level 363 397 424 425 17.9 16.5 17.4 16.8 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 0 50 100 150 200 250 300 350 400 450 500 2019 avg. 2020 Q1 2020 Q2 2020 Jul(till 12th) 2020 E-commerce Apps User Behavior Average DAU Average time spent Unit: Mil Unit: mins Sources: iResearch, period: 2019-2020.07.12 52
  53. 53. Pinduoduo targets young female consumers with aggressive pricing and coupons 53 Alibaba Taobao & Tmall 9,076 PDD 1,842 JD.com 5,761 Annual Spending per User (RMB) Alibaba & PDD year ended Mar 31st 2020; JD.com year ended Dec 31st 2019 company filings, GMV/ annual active users Sources: iResearch, period: 2020 H1; Alibaba, JD.com, Pinduoduo company filings. 50% 59% 47% 43% 54% 50% 41% 53% 57% 46% Taobao PDD JD.com Xiaomi Tmall Female Male 29% 32% 29% 28% 29% 27% 30% 32% 21% 24% 22% 19% 14% 12% 14% 14% 7% 5% 6% 6% Taobao PDD JD.com Tmall below 24 yrs 25-30 yrs 31-35 yrs 36-40 yrs above 40 yrs EC Apps User Distributed by Gender and Age What’s the typical user portrait of PDD? • Young females • Like to use entertainment or shopping app in her spare time • Spend more time on social media than average • Want to pursue a high-quality life but very sensitive to price
  54. 54. 54 Media market news China advertising market
  55. 55. In July Cinemas have started to reopen with strict rules and preventive measures Data source: China Daily, the paper • On July 20, cinemas, in domestic low-risk areas, have resumed operations. In the medium-high-risk areas, cinemas remain closed for the time being. • As of 30th July, 6,066 of more than 10,000 cinemas had reopened, accounting for 55.3% of all such venues in China. From July 24 to 26, China’s box office grossed nearly 93 million yuan ($13.3 m), more than 4 times the total amount earned from July 20 to 23, propelling the first relaunch week to gross over 100 million yuan. • Cinemas that reopen will be subject to a strict set of rules, including screenings being limited to 30% capacity and the number of movies shown at a venue capped at 50% of its previous volume. • While cinemas are rebooting the major cinema supplier Focusfilm and others have not yet begun to sell cinema advertising. 55
  56. 56. 1 / Quality population coverage Greatly improve the UV coverage and reach the member population. 2 / Automatic add pre-rolls to fill up vacancy The inventory gets through between pre-roll and digital flow, the pre- roll can be played in the background automatically 3 / No threshold, one-click delivery The pre-rolls materials can be reused directly ↑140% All reached universe ↑50%+ Concentration of High-quality population ↑20%+ Concentration of core cities Pre-roll Digital flow Combine Pre-roll & Digital flow New video ad format combining and connecting pre-roll and video feeds ads by Tencent Data source: Tencent Video Marketing guidance WeChat account 56
  57. 57. 57 • Better exposure:OneShot Plus • Accurate reach:Gender brush • Much more fun in interaction: Light OneShot/FollowU Static / Dynamic CPD/CPM Regular Buy New Playing Method upgrade Data source: Tencent Video Marketing guidance WeChat account Tencent launched new opening screen ad format ‘OneShot Plus’
  58. 58. Tencent OneShot Plus Introduction Two prime positions : OneShot + Homepage focus video ① Boot up with 5s OneShot ②60s Homepage focus video play after OneShot ③Fixed frame to prompt conversion ✓ 200%↑ average CTR CTR vs. Conventional splash screen ✓ 40%↑ Build brand memory Brand memory vs. Conventional splash screen ✓ 23%↑ Enhance users’ brand preference Brand preference vs. Conventional splash screen Support CPM/CPD/第一刷 buy,support jump to H5/EC APP/mini program etc. OneShot linked homepage focus video makes the brand more memorable 5+60s Long video bearer • Fully tell the brand story and product details • More creative space and richer presentation content Data source: Tencent Video Marketing guidance WeChat account 58
  59. 59. Gender brush ——The first ad seen by the user (Male/Female) when he/she opens the app for the first time on that day ① Open Tencent APP ②Show the brand ads ③Click to jump to the landing page Support CPM/CPD/第一刷 buy,support jump to H5/EC APP/mini program etc. Full coverage of men and women(UV) , Seize the user's first view to increase reach ✓ Meet different demands ✓ DIY delivery forms Static / Dynamic / Light OneShot / FollowU Girls' Day Mothers’ Day Valentine’s Day 520 Chinese Valentine’s Day Tencent OneShot Plus Introduction Data source: Tencent Video Marketing guidance WeChat account 59
  60. 60. FollowU · continuous splash screen ① OneShot ② Narrow down to homepage floating window ③Click to jump to the landing page Support CPM/CPD/第一刷 buy,support jump to H5/EC APP/mini program etc. Floating window show: ✓ 20%↑ average CTR CTR vs. Conventional splash screen ✓ 30s extend the exposure time continuously accelerate the users’ conversion ✓ Easier and more efficient Strong suitability, just need to add a floating window OneShot+30s homepage floating window, improve the effect in an efficient way Tencent OneShot Plus introduction Data source: Tencent Video Marketing guidance WeChat account 60
  61. 61. Phone 5+60s OTT 15s ① Boot up with 5s OneShot ② The focus page will frame out after 2s ① Boot up with 5s OneShot Support CPM/CPD/第一刷 buy,support jump to H5/EC APP/mini program etc. Tencent OneShot Plus example by Tiffany 1 / Strong exposure Both mobile and OTT are supported,and the two devices can be put together or put separately. 2 / Out of frame to improve efficiency On the basis of OneShot, the out-of-frame focus image is added to make it more attractive and increase CTR 3 / Attract customers and drive sales • 5+60s ultra-long video on Mobile, connecting to the mini-program and the e-commerce APP to form a closed loop; • 15s video on OTT, family scenes influence consumption decision ② The focus page will frame out after 2s Data source: Tencent Video Marketing guidance WeChat account 61
  62. 62. WeChat launched a new e-commerce mini program feature Westore 62 Westore, or Weixin Xiaoshangdian, offers basic functions such as product listings, order management, payment, logistics, and after-sales service as well as built-in streaming features. The new WeChat-based e-shop mini program will replace Weixin Xiaodian, which the company stopped updating on July 9 and will gradually phase out. Data Monitoring customer service Funds Settlement Logistics Management Order ManagementFunctions Promotion Channels UGC Ads Live Streaming New Product listing Account Screenshot Data source: Technode
  63. 63. Comparing Westore vs. other key e-commerce platforms Westore Taobao/Tmall JD Pinduoduo Positioning Focus on SMEs and individual can quickly own a online shop with zero cost Professional online shopping platform Professional comprehensive online shopping mall New e-commerce pioneer "Social + e-commerce" platform APP Payment WeChat pay Ali pay No limited (Ali pay excluded) WeChat pay & Ali pay (Bank cards directly excluded) DAU 1.2 billion 3 billion 0.5 billion 1.6 billion Pros and Cons • WeChat is the most popular social media app with huge population base • WeChat mini programs as lightweight applications. No need to download or upgrade • Late-start in e-commerce battlefield may customers have already formed shopping habit on Tmall or JD • Recently just focus on SMEs, lower competition • The commodity category is relatively complete as the foundation e-commerce platform, it has already accumulated a huge amount of users. • Lower competition in logistics and more female users, less male users compared to JD • Outstanding in 3C products • Warehousing logistics system, competitive logistics speed but high investment problem • Huge social foundation, users share benefits with fun • The low-price model is attractive, but it can't attract high-end users. • Also exist quality issue for low price model 63 Data source: Havas
  64. 64. TV/OTV – New program hot Variety 64 元气满满的哥哥 – The Irresistible Period: 2020 Jul 31st Episodes: 12 Cast: 杨洋、吴奇隆、胡军、黄明昊、蔡国庆、王耀庆、李维嘉、陈学冬 Media: Mango TV,Hunan TV Introduction This variety show is an all-star competitive real game show. Guests play the traditional childhood games to compete, allowing young people who are addicted to the electronic world to find the joy of original games. This show focuses on childhood. The beautiful memories and games bring the audience back to childhood, and it is easier to resonate with the audience. While maintaining entertainment, it focuses on the correct value orientation, and subtly influences audience behavior in the game.
  65. 65. OTV – New program hot Variety 65 夏日冲浪店 – Let’s Sacalaca Period: 2020 Jul 4th – Sep 5th Episodes: 10 Cast: 王一博,黄轩,黄明昊,韩东君,乔欣 Media: iQIYI Introduction “Let’s Sacalaca" aims to show the surf culture and the trendy life of contemporary young people through the full record of the guests and surf instructors operating in the summer surf shop, and lead everyone to establish a healthy lifestyle. In the program, the four guests went to Riyue Bay, Hainan, and worked as apprentices in the surf shop. They spent 21 days learning surfing skills and accumulating surfing practical experience while helping operate the store. The show advocates the concept of "being no fear of worries and enjoying the wave", hoping to make the users’ spiritual life full of vitality, while demonstrating their trendy life attitude.
  66. 66. OTV – New program hot Variety 66 奇妙小森林 – Wonderful Little Forest Period: 2020 Jun 13th Episodes: 12 Cast: 郑爽,谭松韵,张新成,吴奇隆 Media: Mango TV Introduction “Little Forest" aims to "return nature to children; and return the wonderful little forest to the world". In the natural environment, the program built a small forest house for children to play, inviting children to put down their electronic devices, explore the nature, and learn about nature in outdoor activities and understand the meaning of life.
  67. 67. OTV – New program hot Drama 67 河神2 – Tientsin Mystic 2 Period: 2020 Jul 6th Episodes: 24 Cast: 金世佳、张铭恩、王紫璇、陈芋米 Media: iQiyi Introduction "Little River God" Guo Deyou and Ding Mao continued to investigate the source of the evil water explosion mystery. Unexpectedly, the madman Cui died, the diplomat is burned to death, and a water-buried tomb emerged from Haihe. The jailed, newcomers appeared on the scene. The intricate political and business relations between Tianjin and Wei behind the case are obvious, and it is about the tomb of the "Nine Bulls". New cases ensued one after another, and for a while, Tianjin Wei was full of panic. The shocking secret of "Two Tigers and One Chicken" gradually surfaced. Let's see whether Guo and Ding can reveal the secrets and continue the legend.
  68. 68. TV/OTV – New program hot Drama 68 二十不惑 – Twenty Your Life On Period: 2020 Jul 14th Episodes: 40 Cast: 关晓彤、金世佳、牛骏峰、卜冠今、李庚希 Media: iQiyi,湖南卫视 Introduction It tells the story of four girls who are about to graduate. Although they experienced setbacks, confusion and embarrassment during the transition from campus to society, they understood the meaning of true love under the family guidance and friends’ support. Finally they obtained career success and personal development.
  69. 69. TV/OTV – New program hot Drama 69 三十而已 – Nothing But Thirty Period: 2020 Jul 17th Episodes: 43 Cast: 江疏影、童瑶、毛晓彤 Media: Tencent,东方卫视 Introduction The drama unfolds from the perspective of three thirty-year-old women, telling the story of urban women encountering multiple pressures at the age of thirty. In this drama, Gu Jia is a full-time wife with high IQ and EQ, Wang Manni is a good-looking gold salesperson, Zhong Xiaoqin is an ordinary staff in a company, and a writer who has reached the pinnacle of life because of unexpectedly high returns in writing. They embraced their 30s in their own way and opened a new chapter in their lives.
  70. 70. 70 Campaigns Worth Mentioning China advertising market
  71. 71. 1st Outdoor LED live broadcasting of Jay Chou’s Kwai debut Source : Phoenix media • On July 26, Jay Chou made his live broadcast debut on Kwai and outdoor LED large screen was simultaneously broadcasting live in Beijing, Shanghai, Guangzhou, Chengdu and other cities. • Landmark OOH was also used for promote this broadcast • Outdoor LED relies on the advantage of "outdoor first-sight media", combined with online live broadcasting to increase traffic, which is the new value of traditional media. 71
  72. 72. Campaign Summary Key Takeaways Result ➢ Campaign Period: Mar.26, 2020 ➢ Est. Budget: 1.0Mil ➢ Market: Nationwide ➢ Key Platform: ➢ Highlight: • First try with 15K View Number, but social feedback was negative. ➢ Learning: • Live streaming is a double-edged sword for brand to communicate with consumer. Well prepared in equipment, content and platform selection is necessary. RED ➢ RED Performance: • Views Number: 15,000+ • Brand Account Followers: +10% ➢ Social Feedback: • Most social reactions are negative, focus on: unaesthetic scenery, boring content and low atmosphereOpening Page Topic Page Live Streaming Page Brand Customized Gift Comments from Weibo Paid Social (RED) LV uses live stream on RED to promote new collection 72
  73. 73. Campaign SummaryFila X Maison Mihara Yasuhiro celebrities encourage social buzz Key Takeaways • FILA announced new spokesperson KUN and cooperated with designer MIHARA YASUHIRO to launch cross over product at the same time, which showed fashion style of deluxe sports for the first time by ‘致锋 尚者’ theme. • FILA aroused imagination and exploration about deluxe sports fashion of the young through online and offline activities, broke fashion loop and started the marketing competition of sports fashion. • FILA established group of ‘致锋尚者’ consisted by different celebrities such as KUN and Kimura Mitsuki, invited celebrities of different ages to act in the advertising film <致锋尚者>. The topic of #致锋尚者# also successfully expanded to the public vision and generated plentiful UGC. • FILA held offline party that showed Tokyo trend and Shanghai night scene, which cooperated with online Tmall Super Brand Day at the same time. ‘致锋尚者’ led by KUN and Jinna showed daily style on the party which directly drove sales. Party Style Conference FILA x Maison MIHARA YASUHIRO 致锋尚者 UGC 73 Result • Weibo topic #FILA# 80.68 million reads, 115k comments #致锋尚者# 360 million reads, 3.215 million comments
  74. 74. Key Takeaway • New Zealand captured people's enthusiasm for tourism in summer vacation, and leveraged the live streaming hosted by official endorsement & influencers to arouse people’s interest and create social buzz • The recovery campaign is more like a cheer-up effort than a really strong performance drive, New Zealand becomes one of the dream destination when the ban on outbound tourism is lifted. 2. The popular KOL links to Tourism New Zealand Via live streaming to introduce local cuisine 1. The official Weibo of Sina Tourism has launched a theme campaign of “Meet New Zealand,/与新西兰不见不散" Campaign Summary • Period: Jun 15 – Jul.13, 2020 • Est. Budget: Over 1Mil • Market: Nationwide • Key Platform: Result • Topic Reading:150M times • Comments:42000 times • live streaming viewers:4.56M 3. Top travel KOL @ "Meet New Zealand" topic , to share their experience and feeling while traveling in New Zealand New Zealand Tourism launches social campaign to inspire and become a bucket list destination once boarders re-open 74
  75. 75. Continental x BOSE partner up and have joint JD Super Brand Day Social Promotion 75Source: Continental official Weibo account Warm Up Social Poster Series poster indicating “Best partner” to attract audiences’ attention Brand Video 2 preview short videos to trigger curiosity, 1 long video to fully display product benefits Celebrity In Livestream Invite popular celebrity to join in the livestream
  76. 76. 76 Havas POV China advertising market
  77. 77. 77 In line with the overall economic recovery also advertising activities are recovering • Advertising activities continue to recover and show a strong MoM growth since the COVID-19 peak in February. Digital media continues to be the main battlefield for brands. • Overall digital media consumption shows strong increase vs. 2019. Especially Online Video, Short Video, live streaming and EC are booming and have been proven meaningful media. • Live streaming continues its growth momentum with steady increase in user base and value by user. Hence more and more brands across all category leverage streaming in their comms activities on various platforms in order to drive sales. • Key platforms launch new ad forms in their fight for audiences, media dollars and to enlarge inventory. E.g. Tencent adding new formats combining pre-rolls and video feeds or impactful opening screens and pre-roll ads. • Try new and innovative formats as forerunners presence pays off and help you to break through the intensifying clutter. • While TV ratings show a seasonal decline, ratings remain above 2019 especially in lower tier markets • New hot dramas and hot variety shows are launched on TV and OTV platforms. Your Havas team can help you evaluate how those can be used to drive your brand visibility. • For OOH ensure to lock in premium resources as soon as possible as inventory will get tight. • While Cinema has re-opened in July, given the remaining uncertainties and limitations ad placements are currently not recommended.
  78. 78. MOBILE DATA STRATEGY VIDEO & AUDIO NATIONAL/LOCAL PUBLISHING NATIONAL/LOCAL OUTDOOR SPONSORSHIPS SPORTS MARKETING BRANDED CONTENT EXPERIENTIAL MARKETING SOCIAL MEDIA CREATIVE STRATEGY CRM SEARCH INNOVATION GEO-LOCATION PERFORMANCE MEDIA MUSIC GAMING ENTERTAINMENT INTEGRATIONS Recouping business and brand growth in China need a fully integrated approach with high speed to market. Within Havas Village we can efficiently mobilize the team you need tomorrow. 78 E-COMMERCE
  79. 79. SHANGHAI 11/F Novel Building 887 Huaihai Zhong Road Shanghai 200020 +86 21 3397 8666 GUANGZHOU Room 07, 16/F CTF Finance Centre, No 6 Zhujiang Road East, Tianhe District Guangzhou 510130 +86 20 3877 3282 BEIJING 1006, 10th Floor, China Youth Plaza, 19 Dongsanhuan North Road, Chaoyang District, Beijing 100020 +86 10 5923 2791

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Vol.8: An update from Havas Group China on media behavior and consumption during the COVID-19 global pandemic.

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