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Social Media and Luxury in China


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A recent presentation to the French Chamber of Commerce on Luxury and Social Media in China. Apologies, but I needed to edit back on quite a few of the slides and videos.

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Social Media and Luxury in China

  1. 1. Social Media and Luxury in China French Chamber of Commerce and Industry Hong Kong Thomas Crampton Asia-Pacific Director, Social@Ogilvy
  2. 2. AGENDA • The China opportunity • How to build a digital strategy in China • Understand • Localize • Remain true • Prevent • Learn from Experience •  QA
  3. 3. The China opportunity is clear…
  4. 4. ..and growing quickly… 60% of purchases come from first-time customers 45% of luxury consumers in China are 35, or younger Sources: Bain Co 2011; CNNIC, 2011
  5. 5. …accounting for a large portion of revenue… LVMH: +27% growth rate in Asia, PPR: L’Asie-Pacifique hors Japon (32,0 % du chiffre d’affaires total) acontinué d’afficher un rythme de croissance élevé (+ 29,5 %), tirépar une hausse de 39,1 % en Grande Chine. Sources: Company Results
  6. 6. …but ripe for further growth. Sources: L2 Luxury Report 2011
  7. 7. Most growth will come from lower-tier cities… 75% of China’s future wealth creation will takeplace in smaller cities and towns. Localcustomers will buy big-ticket items online. Get there before someone else… Sources: L2
  8. 8. …increasing the importance of engagingwith your customers digitally.
  9. 9. What is a good digital strategy for a luxurybrand in China?
  10. 10. How to build a luxurydigital strategy?
  11. 11. 85% of Chinese luxury consumers engage with brands online 80% use social media to research luxury purchases Sources: L2 Luxury Report 2011
  12. 12. Chinese consumers are positively affected by their online experience with brands 69% purchase or consider purchasingproducts after looking for brands online Sources: Global Web Index 2010
  13. 13. 1) Understand
  14. 14. And sometimes sales volume does not reflecton popularity… In China, LV bags are so in bad taste that even To be frank, there are too cleaning ladies own at many LV fakes, which does least one. not make me look good even if I carry a real one.
  15. 15. Absence from the social space often brings: Unwanted consequences + Confusion Between Armani and Zegna, which one is more suitable for an What’s the difference between older person? Armani and Zegna? Need to ask? Zegna, for sure! The difference is that Armani is a Zegna, look, Berlusconi always real Italian brand, while Zegna is a wears it. brand created by Wenzhounese and sold as Italian.
  16. 16. A listening exercise first step to understand and craft a digital strategy in China
  17. 17. 2) Localize
  18. 18. Chinese socialmedia aredominated bylocal players Sources: Social@Ogilvy 2012
  19. 19. China’s top growing social media platform isuniquely chinese 296% Sina weibo user increase in 2011 to 260m active users Sources: CNNIC 2012
  20. 20. 4 out of the 5 top e-Commerce sites are local % of users who ever used the following sites for e-shopping 40 35 30 25 20 15 10 5 0 Taobao Suning Gome Joyo 360 Buy Amazon Sources: L2 Luxury Report 2011
  21. 21. Chinese consumers use the web in a totallyunique way 87.1% of online content about fashion brands isaround “shai” (showing off) Sources: CIC 2011
  22. 22. Brands that have localized their content for theChinese market have been most successful Smart group buying on Taobao: 305 cars sold in 89 minutes
  23. 23. Brands that have localized their content for theChinese market have been most successful Lamborghini’s million dollar car on Taobao
  24. 24. Brands that have localized their content for theChinese market have been most successful Bobby Brown: how to become a beauty guru in China through social media
  25. 25. 3) Remain yourself
  26. 26. 56% of Chinese luxurypurchases are made abroad, but only58% Chinese websitesof international brands have U.S.or European store locator Sources: L2 Luxury Report 2011
  27. 27. 84% of Chinese consumers think countryprovenance is a decisive factor for purchasing Sources: China Luxury Forecast 2010
  28. 28. And France is the most appreciated countriesby Chinese consumers 6% 10% 18%58% 58% 28%of Chinese consumers arepositively influenced by the 35%label “Made in France” 50% Sources: China Luxury Forecast 2010
  29. 29. Localizing does not mean losing your brandessence – it means enhancing it! In 2011, Hennessy launches Classivm, a cognac specially catered to the Chinese market
  30. 30. With an unemotional digital strategy moving away from Hennessy’s classic look and stress onheritage, Classivm did not break through on the Chinese online space. 0 comments on Classivm’s Renren page after 6 months
  31. 31. JW Vdie
  32. 32. 4) Prevent
  33. 33. Don’t underestimate the power of social media public opinion
  34. 34. Carrefour vs McDonald’s The importance of having a strong brand on Chinese social media On March 15 (Chinese Consumer’s Day),CCTV exposed alleged safety scandalsabout Carrefour and McDonald’s. Bothbrands responded officially to theaccusations on their official website andsocial media pages within an hour. But the reaction was very different.
  35. 35. Carrefour vs McDonald’s The importance of having a strong brand on Chinese social media McDonald’s received 7,660 reposts to their With barely 391 reposts, Carrefour’s story official message on Sina Weibo, with most got buried beneath negative buzz, and netizens showing support for the brand added to the large pool of negative rather than for CCTV. sentiment towards the brand in China. Thanks to a strong online communication strategy, McDonald’s brand has become stronger than CCTV’.
  36. 36. Inform netizens without creating crisis New Conversations Page Views 120 40,000 35,000 100 30,000 80 25,000 60 20,000 15,000 40 10,000 20 5,000 0 0 n n n n ay ay ay ay ay ay ay ay ay ay Ju Ju Ju Ju -M -M -M -M -M -M -M -M -M -M 1- 2- 3- 4- 22 23 24 25 26 27 28 29 30 31
  37. 37. Inform netizens without creating crisis New Conversations Page Views 120 40,000 35,000 100 30,000 80 25,000 60 20,000 15,000 40 10,000 20 5,000 0 0 n n n n ay ay ay ay ay ay ay ay ay ay Ju Ju Ju Ju -M -M -M -M -M -M -M -M -M -M 1- 2- 3- 4- 22 23 24 25 26 27 28 29 30 31
  38. 38. Real conversations improve crisis response Both positive and negative feedback is crucial during online crises. I am confused: where should I find the official statement? Unlike offline crises, we can monitor the public’s reaction to the crisis management strategy in real time. This allows us to continuously tweak and improve our strategies to better address the issue and better protect our clients’ brand. I think I will still buy one. It’s a good product and they showed good will during this crisis Conversation samples about Brand X’s online crisis on Chinese forum platforms
  39. 39. Key Crisis Characteristics in the Microblog Era Traditional Crises Crises in the Weibo Era Speed Spreads in hours, days, weeks Spreads in seconds and minutes Channel Reported by print, broadcast and TV media Crises often erupt on microblogs and amplifies interactively in new and traditional media Key Opinion Leaders (KOL) play an important role in pushing for change, while crisis Traditional media plays a hugely important role in disseminating stakeholders (victims, netizens, brands, media) exacerbate the crisis from multiple angles and Role information, pushing for change and demanding answers channels. Ordinary netizens and online influencers who sympathize with the victims help to spread the message further and faster. Form Monotonous print, photos or TV coverage Vivid and multiple forms such as spoofs, videos, cartoons, and re-enactments Personal and emotionally charged expressions have become an important driver in the Tone Relatively neutral, objective, unbiased spread of a crisis Feedback Difficult and slow to collect feedback Rapid fire feedback; an inappropriate response may easily trigger a second crisis, or aftershock 39
  41. 41. 5) Learn from experience
  42. 42. The Simple 3-Step Program Step 1: Look at search volumes and conversations about your brand. If either is significant, you need a localized approach. Step 2: Think strategically about digital marketing. Use data and insights about your customers from your website and online conversations Step 3: Begin participation. Think holistically an integrated approach works better.
  43. 43. Beyond e-commerce an integrated digital strategy helps 1.  Capitalize on fast-growing markets 2.  Monetize existing demand 3.  Complement the store presence 4.  Open new markets
  44. 44. Who we are
  45. 45. We are the largestdigital agency in Asia 19 countries 26 offices 3 000 digital experts
  46. 46. Ogilvy Social Media Awards in Asia-Pacific Aiming to beat our own record as the region’s most awarded social media team Wommy (GLOBAL) Digital Media Awards (APAC) •  2011: Momentum Awards – Bronze •  2011: Best Use of Social Media – Bronze Digital PR Awards (2011) Click Awards •  Best Online Community – Won •  2010: Integrated Marketing •  Best Digital Marketing Campaign – Honorable Mention •  Best Social Network Campaign – Honorable Mention WPPed Cream Awards •  2010: Best Consumer Marketing Sabre Awards •  2011: Global Digital/Social Consultancy of the Year ITSMA Marketing Excellence Awards •  2010: Most Effective Public Relations (Diamond) Marketing Magazine •  2011: Best Use of Media – Integrated IBM Global Best Practice Awards •  2011: Excellence in Creativity and Execution in Social Media, The Holmes Report Innovate India 2011 •  2011: APAC Digital Consultancy of the Year •  2010: Best CFO Case Study (Silver) •  2010: Best Impact in Regional Activity Using Social Media Asia Pacific PR Awards (Bronze) •  2010: Best Use of Digital x 3 •  2010: Values Award •  2009: Best Use of Digital Atticus Awards Asia Marketing Effectiveness Awards •  2010 Best Digital Influence Essay •  2010: Most Effective Public Relations
  47. 47. Grazie!
  48. 48. CONTACT Thomas Crampton APAC Director | Social Media | Hong Kong EMAIL BLOG