From big tech antitrust fines to imposing time limits on short-video and gaming, the entertainment and technology sectors in China are facing regulatory upheaval that will have significant impacts on marketing strategies and budgets.
Bytedance's Douyin, the Chinese version of TikTok, has begun limiting young users to 40 minutes per day. And it's not alone. Major competitor Kuaishou has a 'teenage mode' that imposes a 40-minute time restriction, although it is not mandatory.
These moves come in response to government pressure on providers of online games, livestreams, audio and visual content, and social media to implement time-management tools, feature restrictions, and purchase restrictions for underage users.
While kids who enjoy short-form video look for ways to circumvent Douyin's restrictions, game providers are already working to impose a hard government limit of one hour of online gaming for kids (on Fridays, Saturdays, Sundays and national holidays). According to Chinese media reports, these limits are a cause of concern, for example, to esports teams, as they may translate to a shortage of skilled players.
Short videos, livestreams, video games and esports are all closely intertwined with Chinese marketing, advertising and ecommerce. Moreover, China's young people are the most significant consumption age group in the market. And according to a MediaCom whitepaper, the play economy is an increasingly important marketing battlefield.
“Chinese consumers of all ages are seeking out play to satisfy a wide variety of needs including learning, connection, social recognition, and health," Meha Verghese, the editor of that report and a member of Women to Watch Greater China 2021, told Campaign Asia-Pacific. "The huge growth of China’s short video, AGCN and gaming platforms is testament to the power of play and the opportunities it holds for marketers.”
The new rules for kids come as part of a broader regulatory crackdown on tech in China. In addition to restrictions on how they can use technology, companies have also had to concede with antitrust probes. Last Friday, China’s market regulator fined Meituan 3.44 billion yuan ($534.3 million), equivalent to about 3% of its 2020 domestic revenue, concluding an antitrust probe that lasted for months. Earlier in the year, Alibaba was hit with a record US$2.8 billion fine by the anti-monopoly regulator, amounting to 4% of its 2019 domestic revenue.
While antitrust investigations have the potential to dampen interest in tech giants, both have shrugged off the impact on their stock price quickly. As Meituan's fine was lower than expected,stocks surged over 8% on Monday (October 11). Other Chinese tech stocks listed in Hong Kong, such as Tencent and Alibaba, all closed higher on the same day. Similarly, Alibaba stock surged by up to 10% in early trading on the Hong Kong exchange just days after its fine in April.
With all this in mind, how will marketers in China work with the new regulations and guidelines? Under the current constraint situation, marketing industry experts in China will begin to adjust the media investments and take consideration to nurture brands’ long-term consumers. Campaign gathered thoughts and ideas from industry participants in China.
The Chinese government has always been very strict and careful making sure social contents abide with advertising law, which is why even before the new policy was announced, marketers are unable to target kids under age 14 on any digital platforms. Kids aren’t able to see any forms of advertisement on social platforms.
With this new policy launched, the biggest concern would be the usage time limitation, which I believe will lead marketers to make changes. Marketers will need to identify more precisely the moments to communicate with their audience, not necessarily through social communities but by putting more effort into other media channels.
I believe in revisiting investments on these platforms while reallocating the budget into other platforms to catch the attention of kids at the right moment. Communicating with parents could also be a direction that marketers pay more attention to.
Consumers need for gaming, for a short video, ecommerce or influencers will not change. Especially as the pandemic is not fully ended, the need will continue to grow. The key challenge I believe is where and how to market—understanding your audience becomes crucial in order to identify the right moments to reach out.
In the long run, I still believe nurturing a brand is important. A brand that grows up with kids will always be their first choice where emotional bond is built.
Head of Greater China
These limits on game playing will definitely impact budgets targeting the under-18 customers, so marketers should definitely focus more on adult audiences to avoid losing work.
That said, there are still plenty of opportunities beyond Douyin to market to younger audiences, including non-short-form KOLs and traditional avenues like outdoor advertising, which are seen by all ages.
We are fortunate that a lot of our KOLs who do videos sponsored by gaming clients are not gaming creators themselves. For example, we have had more than a few gaming companies sponsor a popular dance channel to do a dance video with their games’ theme song. These types of KOLs work with many different types of clients (snack companies, shoe companies, etc), so if there’s a sudden change in the regulations on game marketing, they are not impacted severely.
The focus of the marketing for games (as well as the development of games) will shift toward older audiences and their tastes. The biggest benefactor may be casual games.
Although it may be hard to quantify, there will definitely be some long-term impact on the industry. I think the impact will be greater on game franchises. Effectively this will remove a lot of future nostalgia for game titles and characters. If you were never able to play Zelda or Mario as a kid, you’re much less likely to keep playing those specific game series into adulthood.
Growth and innovation lead
Initially, I expect marketers will want to avoid any risk and will therefore have stricter requirements of platforms to ensure under-18s are excluded from paid-media campaigns and in-platform activations. As we gain more clarity about the new regulations, it’s possible that marketers could develop content and experiences specially designed for ‘youth mode’ on Douyin and other digital platforms. If so, this would be a fantastic opportunity for marketers to tailor their communications to be relevant and useful specifically to young consumers—their future growth audience.
Recent restrictions are unlikely to have a major impact on marketing activity in these online ‘playgrounds’, as most marketers are seeking to connect with post-90s and post-95s adults who now make up the majority of these platforms’ user bases. For example, over 60% of Douyin users are aged 21 to 40. There’s still a huge opportunity for brands to engage large audiences via online play and playful communications.
Children already hold major influence over many household purchases, and they absorb sophisticated knowledge about brands from a very young age. In a recent study, 3-year-olds could recall an incredible 12 snack brands and 4 apparel brands on average.
While recent policy changes may affect short-term media choices, the long-term objective for marketers remains the same: to build strong and sustainable brand preference among consumers starting from a young age to grow current and future sales.
Online media will remain key channels in a brand’s marketing mix, especially to reach these digital natives. Yet, the new limitations may boost the current ‘renaissance’ and reinvention of traditional media like out-of-home and TV, as well as offline experiences which can create a lasting impression on young consumers while they are on the go to various activities and spending time with family. To me, there are exciting times ahead for the marketing industry as true creativity thrives when faced with constraints.