In our previous article, we dug into the complexity of China e-commerce and some major implications for international brands.
One of the major take-aways was that China e-commerce strategies cannot be designed “in a vacuum”; any China e-commerce strategy must consider the overall physical and digital landscape that drives the Chinese consumer’s decision journey. As a matter of fact, while e-commerce itself can often be a channel that drives awareness and consumer education, it is also true that the majority of the decision making often happens elsewhere.
E-commerce Consumers’ Decision-Making Process
Source: Jing Daily, Battaglia Advisory Services
When e-commerce consumers are interested in a particular product, most of them will do their own research on that product to compare it with other alternatives. It is only after this that they will, or will not, place a purchase order through an e-commerce platform. Some of them, once received and used the product, will share their opinions on social media which, at some point in time, will influence other researchers. In short, social media are key to the decision-making process of Chinese consumers.
For e-commerce players in China, it was then inevitable to try to integrate upstream in the consumer decision-making loop by adopting a new “social+” business model, on top of their traditional top-down advertisement model. Moreover, several occurrences of product authenticity or safety scandals have weakened over the years the Chinese consumer’s unilateral trust in brands. Therefore, consumers turn to Key Opinion Leaders (KOLs) for guidance, as they are viewed often, rightfully or not, as experts in specific fields who can share their knowledge and experience when using those products. The younger the consumers are, the higher their sensitivity to the influence of KOLs.
Percentage of Purchase Decision Caused by KOL Recommendations
Source: Sina Weibo Data Centre
Overall, there are 3 types of KOLs in China:
- Celebrities (e.g. celebrities in the “traditional definition”, such as a movie star)
- Influential Bloggers (e.g. individuals considered to have significant expertise on a subject, such as a fashion blogger, a car blogger, etc.)
- Wanghong (“Internet influencers” people who rapidly achieved celebrity status mostly through an internet-driven fan base)
Regardless of the type of KOL engaged by a brand, KOLs marketing is currently one of the most used ways to promote a brand in China. Since a typical KOL has a large number of qualified followers (generally above 100 thousand), they are able to increase social exposure of the brand they endorse. According to AdMaster, KOL marketing is currently considered the most effective social marketing method by 67% of the advertisement agencies surveyed (n = 90).
Effective Social Marketing Methods Survey
The overall “KOL economy” in China reached 147.4 billion RMB in 2017 and is estimated to keep growing until 2020. Interestingly, the bulk of the growth is expected to come from Influential Bloggers and Wanghongs rather than Celebrities.
Market Size of KOLs (in Bn RMB)
Source: Chyxx Industry Research, Topklout, Battaglia Advisory Services
To summarize, brands should be aware of the following key facts:
- Under the current “social+” digital environment, the relationship between consumers and brands is closer and the interactions between these two parties are more frequent than ever before. However, this could be a mixed blessing. On one hand, brands can reach more potential consumers; on the other, it requires brands to apply more sophisticated marketing techniques to communicate with their consumers.
- KOL is a considerable tool to promote brands and attract customers especially younger people.
In our next article in the series, we will discuss more about the example how KOL affects the marketing strategy and what contributes to KOL’s effectiveness.