Social Media Trends 2017

1. totem media 2017 SOCIAL MARKETING IN CHINA

2. Trends for 2017 10For brands marketing thru social media in China.

3. 2017 projects to be a year where social and content marketing make a major leap forward. Social is swiftly moving into the center of marketing plans for brands in China. In 2016, there were a number of important developments that inform the year ahead, including; the rapid emergence of live video, further integration social with ecommerce, and increased investments into social ads and KOLs. In this social marketing preview of 2017, we have highlighted 10 trends that will prove to be critical for marketers. The trends represent the most current conversations taking place with brands and agencies in China. These trends are placed in the context of China as a digital-ﬁrst market - with hot competition between Alibaba and Tencent for dominance. Prepared by Totem Media ABOUT THIS PRESENTATION

4. 1. WeChat Has Peaked 2. Weibo Bounces Back 3. Live Video Is Hot 4. Realtime Social Hubs 5. Quality Content = Growth 6. Virtual Reality & AR 7. Social x Commerce 8. Tencent Social Ads 9. KOLs Get Small 10. Ask Me Anything

5. 1. WeChat Has Peaked Quick and easy growth for official brand accounts has come to an end.

6. 1 Audience acquisition costs on WeChat are sky high! With 846m MAU and 556m official brand accounts on WeChat, its a very crowded environment. Its challenging for brands to attract attention, obtain and keep fans. In short, the honeymoon for brands (brand accounts) has come to an end. WECHAT HAS PEAKED

7. It's many times more expensive to gain a follow on WeChat than Weibo now. Its hard to attract new followers and hard to keep them on official accounts. Opportunities for organic (social) growth are shifting to the “Moments” stream. To break into the “Moments” stream, brands need to focus on creating content with strong viral appeal. However, Tencent is very protective of the “Moments” stream …and links into it are monitored and often blocked by Tencent. WeChat is preparing for greater expansion of ads into the “Moments” stream. There are still opportunities for organic social but WeChat will become much more of a paid-media platform in 2017 - supported by a large number of new paid ad formats. Implications for Brands

8. Source: Tencent March 2016 Pictures Text Short Videos Articles None of Above 0 15 30 45 60 3.8 22.3 45.2 50 50.7 Tencent Confirms Audiences Move to Moments Browsing and posting onto “Moments” is the number one daily activity. 61% of users check “Moments” every time they open WeChat AUDIENCES PREFER VISUAL & SHORT-FORM CONTENTS IN MOMENTS % of Respondents

9. Visuals Shared to “Moments” For brands to really get the most out of WeChat for growth (reaching new audiences), they must design content which is shareable to “Moments”

10. Expansion of Ad Formats on WeChat WeChat will ad self-service “Moments” ads to support a wide range of objectives in 2017. Lower minimum budgets also expected. WEIBO - STORE TRAFFIC - COUPONS WIN NEW FANS PROMOTIONS INCREASE VIDEO VIEWS PROMOTE MOBILE APPS LOCATION BASED - FOLLOWER GROWTH - LINKS TO H5 CAMPAIGNS Source: WeChat 2016

11. WeChat has built an incredibly powerful ecosystem - it rivals the desktop ecosystem in China. If WeChat is the new online ecosystem for China, then WeChat official accounts are its brand websites. During the hyper growth period on WeChat over the last few years, smart brands invested in growing audiences (followers). Those brands are now focused on adding “website” features/functions, including; more complete navigation, utilities, CRM, ecommerce and a host of features through H5 pages/links. Social content on official accounts play the role of what a blog would in a Website. At the same time, WeChat is in the process of launching its “mini app” program to provide more services/apps inside of its ecosystem …and ensure continued audience retention. Implications for Brands

12. display (Instream Ads) online video (Tencent Video) social (Moments) search (Sogou/WeChat) ecommerce (Tenpay/WePay) WeChat Ecosystem Where will Mini-Apps ﬁt in? What will happen with Official Accounts? subscription account Brand - Content Interaction Modules Ecommerce Customer Service Loyalty Management Reservations O2O service account Brand - Interaction mini-apps Services/Apps

13. WeChat “Mini Apps” “Mini Apps” currently in testing, are set to be a major focus in 2017. Search Chats Discover MeContacts Apps Lite App 1 Lite App 2 Lite App 3 Lite App 4 Mini App 1 Mini App 2 Mini App 3 Mini AppsWith 700m MAUs, “Mini Apps” will provide WeChat with an opportunity to disrupt the messy app marketplaces in China. They can also be seen as a move to lockdown users into its ecosystem. For ‘ﬁrst mover’ brands there could be interesting ways to gain audiences if they can create valuable services/content (cool branded apps). There is a risk that apps could overshadow service accounts, making them obsolete. Unless they are closely linked to (service) accounts, then the effect will be to shift attention further from brand accounts. What it might look like.

14. 2. Weibo Bounces Back While WeChat seeks more control, Weibo is more open/transparent for brands.

15. 2 Weibo added 70m MAU in 2016. With the support of the Alibaba ecosystem behind it, Weibo will continue to be an essential part of the social landscape in China. For brands trying to build awareness/reach, Weibo may be more effective than WeChat. Its also more measurable. WEIBO BOUNCED BACK

16. 0 75 150 225 300 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 48.6 52.8 58.9 61.4 66.6 69.7 76.6 80.6 89 93 100 106 120 126 Weibo Monthly & Daily Active Users Alibaba has organized itself around audiences with social features on Weibo, Taobao, Alipay and Youku. Audience retention, engagement has risen across the network. DAU MAU MILLIONS Source: Sina Weibo 2016

17. Weibo has surpassed Twitter in value and appears to be making the right moves to stay relevant in China, despite the prevalence of WeChat. In the last two years Weibo has added a host of new features and partnerships to keep up with changing market interests; adapting quickly to mobile-ﬁrst, adding more video content, aligning with news organizations and creating more interest-based streams of information. “We’re all-in with our strategies of going mobile, multimedia and verticalization. In the past three years, these strategies have worked,” says Julien Gong of Weibo. They also have the support of the entire Alibaba ecosystem working in their favor, allowing them to integrate with Tmall, Youku, and live streaming applications like Yi Zhibo. Implications for Brands

18. Alibaba Gets Social Alibaba has organized itself around audiences with social features on Weibo, Taobao, Alipay and Youku. Audience retention, engagement has risen across the network.

19. Alibaba Gets Social Alibaba has organized itself around audiences with social features on Weibo, Taobao, Alipay and Youku. Audience retention, engagement has risen across the network. Buy buttons on WeiboSocial sharing from TmallSocial sharing from Alipay

20. WeChat’s 700m MAU continue to eclipse Weibo’s 282m MAU. Despite this, 2016 was a bounce-back year for Weibo - they added 70m new active users. WeChat is crowded and expensive for brands to acquire followers. By contrast, Weibo gave brands more opportunity to grow. Weibo has proven itself to be brand-friendly, making it easier to build audiences through ‘organic reach,’ and promoted posts/ads. They also provide much more complete measurements and a more transparent system. By some estimates it is 5-10 times cheaper/easier to build followers on Weibo than on WeChat. The competition between Weibo and WeChat’s “Moments” will come into sharp focus in 2017. Weibo is purpose-built as a social stream but WeChat has a big advantage in terms of audience numbers. Implications for Brands

21. 3. Live Video Is Hot 100’s of live video sites emerged in 2016. Brands will keep rushing in.

22. 3 Live broadcasting has been added as a feature across almost all video sites/apps. Brands using live broadcasting have gravitated towards using KOLs & celebrities to sell products in real-time. Those spokespeople demo/trial products and engage directly with audiences watching. LIVE VIDEO IS HOT

23. Live Broadcasting burst onto the sceen in 2016 China has 150 major websites providing online live broadcasting platforms with a total audience of more than 200 million, according to the Ministry of Culture (July 29, 2016).

24. Inke YY Douyu TV Huya Panda TV Huajiao Chushou TV NOW Longzhu TV Yi Zhibo 0 5,000 10,000 15,000 20,000 25,000 30,000 2,666.2 2,672.3 3,438.2 3,546.4 5,623.4 8,234.9 8,291.6 9,631 24,883.7 27,716.3 Source: Quest Mobile 2016 Top 10 Live Streaming Apps As ranked by Monthly Active Users (MAU) MAU (,000)

25. A New Form of Entertainment Livestreaming in China is like a video version of selﬁes. The interaction between audience and host drives engagement.

26. Because of the two-way ﬂow of discussion between audience and host, this form of entertainment doesnt require scripting, planning and raw talent ...its driven more by engagement and attention. And when you add in the element of gifting (where audiences pay to send virtual gifts - money), there is real incentive for commitment and relationships to form - deep engagement. Portals like Taobao Live are central to brand involvement to- date, with the results being live sales and product demos - like QVC online. For brands looking to go beyond live sales, there should be interesting opportunities to do product placements and create branded virtual gifts. In 2017, look for brands to add more content and entertainment around live video broadcasts. Implications for Brands

27. Celebrities Show-off Products Brands like L’Oreal, Maybelline and SK2 made big news in 2016, introducing elaborate ‘live video’ campaigns, supported by armies of KOLs. MaybellineL’OrealSK2

28. Early efforts for brands using ‘live broadcasting’ have been to feature Celebrities (& KOLs), showing off products and doing live, realtime sales events. This is likely to continue into 2017 but as the novelty wears off, brands will have to start investing into more creative ways of using live video...and building genuine audiences. There are incredible opportunities for brands to connect their products with locations, events, groups and other scenarios - adding value to experiences. Using Celebrities makes the effort more about the celebrity. Audiences may only be tuning in to see the KOL. Instead of putting Celebrities ﬁrst, brands need to put scenarios ﬁrst and closely connect experiences to the brand. Implications for Brands

29. “Scenario Ecommerce” Brands are starting to go beyond the blunt use of Celebrities/KOLs to push products and sell on live broadcasts. Connecting events/products/content puts the brand ﬁrst. EcommerceProduct ScenarioLive Show Burberry demonstrated its leadership in social again with its “ ” Show in ’16. Live broadcasts of fashion shows were brought together with ecommerce. A critical link was in creating content to demonstrate how the product can/should be used. “Scenario Ecommerce” is about showing when, where and how to wear the product, leading audiences to ...‘want a product for when...’ IN CONTEXTCONTEXT

30. 4. Realtime Social Hubs Large brands are bringing social in-house, setting up realtime capabilities. 24/7

31. 4 Social is moving to the center of brands’ approach to marketing. As this continues, brands will move quickly to setup their own social media operations, bringing a full suite of social capabilities in-house. Marketing is moving realtime, brands need to get up to speed. REALTIME SOCIAL HUBS

32. Source content in realtime from a wide variety of people ...to ﬁt locations, trends, interest groups. CONTENT PLATFORM Manage followers by different segments ...develop content speciﬁc to audience types. CRM & SCHEDULING Learn about what audiences are saying about you - prep content based on deeper insights. SOCIAL LISTENING Critical Tools/Resources for Success Better Content - Audience Segmenting - Feedback/Data

33. Realtime Social Response Brands are demonstrating more mature responses to realtime opportunities. The best brands have focused in on the 2-3 themes that ﬁt their narrative and audience interests. Durex World Car-Free Day Coke iPhone 7 Launch Coke Olympics

34. Analytics to Optimize Copywriting & Design Engagement Strategy Create Online Trends & Hot Topics scout Client Approvals Coordination with Media approve Targeted Ampliﬁcation launch Publish & Realtime Engagement

35. Camera White Boards Escape Hatch Team Work Space Strategy & Decisions Monitoring & Analytics Operations Team Creative & Editorial Main Screen Featuring Hot Topics, Trending Keywords... Product Features/Beneﬁts Topic Angles & Discussions Event & Content Schedules TV Live Broadcast Camera Command Center = Newsroom x Editorial Approach Resources, team and layout necessary for effective realtime content.

36. The effective path to building quality, local content and creating impact, lies with a ‘launch-listen-learn-respond’ approach. Companies need to practice more dynamic brand management ...and employ an editorial/publisher’s mindset to get social right. This process starts by developing clear brand style guides and a set of brand/audience themes. Content (built around themes) can then be tested with audiences. Starting with small tests, brands monitor-listen- learn and then respond to success with bigger pieces of content (campaigns). What’s needed is an agile approach to brand management - the type of approach that “lean startups” use to learn and grow. Implications for Brands

37. 5. Content Quality Rising Brands who have focused on reach, will shift more to content quality.

38. 5 Brands that enjoy real growth in 2017 will take content quality seriously. The honeymoon on WeChat is over (audiences are very selective), paid media results are in decline, and big KOLs are becoming over-saturated. There are increasingly few short-cuts. Content Quality = Growth. CONTENT QUALITY = GROWTH

39. Relevant, Interesting Quality = Growth Visual content designed for speciﬁc audience segments goes a long way toward increasing brand performance on social. “Beats” by Dre - Thoughtful Media - 4.0million++ views in China.

40. 0 10 20 30 40 50 Jan Feb Mar Apr May Jun 47 43 38 40 30 33 9 7 6 5 33 27 22 18 15 11 10 Source: Taotiao Aug 2016 Mobile Content Consumption By Format Video rapidly rising against text - for content shared across social networks. Even on news sites like “Taotiao” ...video is moving into leadership position. VIEW COUNT (BILLIONS) Video Picture Text

41. Video is quickly becoming the key currency in social engagement. The explosion of live broadcasting and the emergence of Virtual Reality and Augmented Reality ...will shift the focus even further towards video as the standard in social. Brands will need to be remarkable on their social channels and take the time to thoughtfully build and execute content plans. They must also increasingly focus on delivering content which appeals to audience interests. Less PR and more interest-based. Tencent and Alibaba are both on top of this move. Tencent (QQ) has announced the launch of its Entertainment Quotient Plan (EQ Plan) to support third-party creators to build content onto their platform(s). Youku is launching similar programs to stimulate more, quality video content production. Implications for Brands

42. Content Creator Programs Tencent, Youku ...among others have started creator programs to incentivize independent creators to develop content for their platforms. Tencent EQ Plan Youku Creator Plan Miaopai/Weibo Independent Creators “PapiTube”

43. 6. Virtual Reality & AR It’s still early. Creative brands can be remarkable with VR & AR

44. 6 Virtual reality (VR) and augmented reality (AR) are both at very early stages for brands ...but setting up to have big years in 2017. VR/AR highlight the need for (1)greater focus on video content and (2)the importance of situational engagement - place x time x theme/topic. VIRTUAL REALITY & AR

45. VR brings quality experiences to life A natural ﬁt for ‘high-involvement’ brands where the immersive element Virtual Reality can help provide a more full experience of the product (think: travel, luxury, auto). Rejoice ZanaduDior

46. AR holds immense promise for situations Augmented Reality should allow brands to start adding value to special moments and to location-based experiences. PRODUCTS PLACE & TIME Pokemon Go x CAPI WaterHäagen-Dazs Concerto App

47. Virtual reality (VR) and augmented reality (AR) together with live broadcasting should all lead to a much greater focus on video content for brands. As this shift continues, brands will have to up-their-game and start producing much higher quality content. The path to success for brands on social will increasingly rest with quality. Until now, brands have been able to use short-cuts on social (think KOLs). Future growth will come from investing in quality, visual, social assets. It’s still early for VR/AR and there are structural challenges (people need headsets and software) but as they grow, so too will audiences’ expectations for brand content. Alibaba (and Youku) are however moving quickly into the space, supporting with infrastructure investments. Implications for Brands

48. 7. Social x Commerce Brands will continue to push for sales as economy is slow.

49. 7 The economy in 2017 projects to be ﬂat. With a tight economy, brands will map clear customer journeys and will reset priorities to focus more on sales. Social will be relied on to not only build awareness and engagement ...but to also stimulate (convert) to acquisition. SOCIAL X COMMERCE

50. Content unlocks quick awareness-to-sales path Very high quality (localized) content, based on targeted interests can move audiences from awareness to sales quickly. Drunk Penguin Society - Video wine tutorials ...to sales

51. Brands tempted to focus on sales-first strategies with social media need to be self-aware, and first understand whether they have; (1)established strong awareness, and (2)created affinity with customers. Brands must ask whether they are top 2-3 on customers’ wishlist. Without adequate levels of awareness and consideration, a sales-first strategy will quickly devolve into price cutting. It is very challenging to recover from price erosion. Implications for Brands

52. Channel Planning - China Social buy EVALUATE ADVOCATE ENJOY BOND CONSIDER AWARENESS

53. There are (as yet) very few compelling case studies of brands selling on WeChat but the potential is very clear. There are 200m users with credit cards linked to WeChat and 70% of users spend more than RMB100 per month already. The most clear examples of success on WeChat come from vertical-speciﬁc merchants who have (1)targeted an interest group closely, (2)attracted large audiences with relevant content, and (3)rallied customer interest with clear calls to sales and promotions. Most brand owners have not yet followed this path. Implications for Brands

54. 23% 32% 22% 23% Moments/Chat Groups Links to Other Apps Thru JD.com Official Accounts WeChat Ecommerce Rising Quickly Reports from McKinsey show that the number of users paying thru WeChat doubled in 2016. WeChat data claims that 70% of users spend >RMB100/mo. Source: McKinsey iConsumer China 2016 TOP CHANNELS FOR SALES THRU WECHAT

55. 8. Tencent Social Ads Tencent is about to move forward with more social ad formats.

56. 8 It is still very early days for ads in WeChat. In 2016, WeChat focused on supporting “Moments” ads but these efforts were tightly managed. In 2017 Tencent will rollout a host of new ad options including several formats in “Moments” and aligned formats across the Tencent ecosystem (inc. QQ). TENCENT SOCIAL ADS

57. “Coupons” showed real promise in 2016 “Coupons” help brands promote and sell from WeChat. They are in keeping with WeChat’s long-term aim of being an ecommerce and CRM focused platform. McDonald’s Details Use ItCoupon List Collect Coupons

58. Competition between Tencent and Alibaba is becoming more heated. Tencent is playing catch-up in many areas, including with social ads. They are poised to launch a number of new ad formats to support social across the Tencent ecosystem in 2017. Social ads on Weibo (eg. Fanpass) have been around for several years and accommodate a much wider set of parameters, with more budget ﬂexibility and more audience-targeting options. When compared with WeChat, Weibo is also much more transparent (measurable) and provides much better post-campaign data. For WeChat to truly move ahead with advertisers, they will need to bring costs down on “Moments” ads, allow for more precise audience targeting and more dynamic reporting. Implications for Brands

59. To grow with niche audiences, brands must begin looking past big KOLs. 9. KOLs Get Small

60. 9 Web Celebs - called “Wang Hong” - are being minted every day in China but the costs of working with big KOLs are becoming prohibitive. At the same time, the results of using big KOLs can be very disappointing. In 2017 brands will turn to smaller KOLs. KOLS GET SMALL

61. “Wang Hong” - Internet Celebrities Models, Taobao shop owners, fashion bloggers and social commentators enjoyed a big year in 2016, cashing in on helping brands reach audiences. Ecommerce Fashion/Beauty Sports

62. “When a celebrity posts about a brand on their Weibo page, the post engagement can be up to 6,000x that of the brand, and the post can reach a fanbase 1,800x greater than the brand has. As more brands use celebrity endorsements, these partnerships can become costly and may not guarantee the desired reach and engagement ampliﬁcation.” L2 Research on KOLs in China

63. ARTS HEALTH TECHNOLOGY ADVENTURE Fashion Music Movies & TV Sci-ﬁ Action Sports Fitness Gadgets & Gear Wellness Auto (Toys) Sports Travel BRAND Brands must focus on growing into new groups. Food & Drink KOLs KOLs KOLs KOLs Systematic use of small KOLs offers more sustainable, cost-effective path. Connection to interest-segments may prove more important that total follower count.

64. Celebrities (and big KOLs) have very large groups of fans and they are convenient for agencies. The problem with Celebrities is (1)they are costly, and (2)there is no assurance that the attention brands get in using them is for their products. In most cases the followers from Celebrity promotions are there to see the Celeb ...not the product/ brand. As costs continue to skyrocket for Big KOLs, brands will turn to smaller, more authentic KOLs. Finding interest-based, authentic inﬂuencers is shaping up to be a more effective strategy for brands looking to grow online and will become common place as brands become more methodical with social. Implications for Brands

65. 10. Ask Me Anything Q&A is an important way to jumpstart social traction. ? !

66. 10 Brands looking to create traction on social increasingly need to go to where the conversations are happening on blogs/BBS and Q&A sites like Zhihu. Posing questions and answering them is a great way to learn - adapt, and ultimately build momemtum around core brand themes. ASK ME ANYTHING

67. Conversation Starters Brands looking to kickstart social momentum need to ﬁnd out where the audiences are chatting and what topics matter most. Q&A sites, blogs/BBS are critical. DOUBAN ZHIHU WEIBO UGC (Co-Created) Viewable (Video, Images) Source of Content Distribution of Content START CONVERSATIONS EXPAND TOPIC/THEME

68. Weibo and WeChat have become incredibly crowded and noisy places. Brands focused on interest-based marketing must locate where discussions are being hatched...and seek out core interest segments. Well deﬁned interest groups are hiding in blogs/BBS and Q&A sites. From there, if brands can do a good job at adding value to the interest groups ...they will be in a good position to attract audiences as followers (to brand Weibo/WeChat accounts). Implications for Brands

69. 1. WeChat Has Peaked 2. Weibo Bounces Back 3. Live Video Is Hot 4. Realtime Social Hubs 5. Quality Content = Growth 6. Virtual Reality & AR 7. Social x Commerce 8. Tencent Social Ads 9. KOLs Get Small 10. Ask Me Anything

70. With organic growth slowing down dramatically on WeChat, it will become much more challenging to make quick, cost-effective gains. As a result, there will be a few paths for brands to growth on social: 1. Better quality content and in building interest-based audiences 2. Move into up-and-coming networks (namely video apps) 3. Invest in paid social promotions Brands that want to take full advantage over the long-term will need to cultivate interest-based audiences to take full advantage of social media. Relevant, compelling, visual content will be a MUST! And, as social media moves into the center of brand planning, companies will need to build in-house capabilities to listen-measure- respond to audiences ...ideally in realtime. Prepared by Totem Media SUMMARY

71. Chris Baker, Managing Director Email: chris@totemmedia.net Twitter/WeChat: Talktototem