How Asia's ecommerce giants are burnishing their brands

Global ambitions and investor pressure prompt internet firms in China and India to change advertising tactics, writes Clarissa Sebag-Montefiore.

How Asia's ecommerce giants are burnishing their brands

Last Mother’s Day, Chinese internet giant Tencent released a video. A young man thanks his mother for bringing him into the world-—by bringing her into his. He shows her the wonders of technology by providing a sweet handwritten guide. He lessens her burdens by showing her how to shop online and shares his achievements from thousands of miles away via an online link. 

Tencent hired Fred & Farid to make the video as part of a bid to build their corporate brand image. They are not alone. In past years Chinese tech companies including Alibaba and Baidu have paid more attention to rapid growth than branding. Now, however, that is changing as they focus on brand building. “They’ve grown big enough as platforms, it’s time to [create] their own voice,” says Elena Zhang, marketing lead at SapientNitro, China.

In the neighbouring India, too, companies such as Flipkart, Amazon and Urban Ladder are jumping on the branding bandwagon. For consumers, differentiating between separate internet and ecommerce companies is hard. “All of them are built on one platform—price,” says Debraj Tripathy, managing director of MediaCom India. “This results in very little loyalty. Brand building is needed to build an emotional connect and create stickiness.”

Investor pressure is also forcing companies to change their advertising tactics. The decline of major local internet products—such as the ‘Chinese Facebook’ Renren and ‘Chinese Twitter’ Weibo—has proved just how important it is to create and sustain identity in a highly crowded online marketplace.

To boot, Vineet Arora, managing director with Havas Media Group China, believes that brands are now “looking at markets and audiences that are beyond China”. He points out that at least 15 per cent of Tencent’s 650 million monthly active WeChat users are outside the country—a number in excess of 100 million people.

Since making a record-breaking initial public offering in New York September last year, Alibaba has lost over a third of its market value. To attract international investors and to educate them on how the company works, Alibaba updated its corporate web page with ‘Alibaba Defined’, an interactive feature explaining in simple storytelling terms online-to-offline commerce (rather than acting as an online shop like Amazon, Alibaba’s business model links online shoppers to sellers and physical stores).

Critical for their branding effort is promoting founder and chairman Jack Ma abroad. Since the IPO there has been “a systematic build of Jack Ma’s image in the Western media,” observes Arora. As with Apple’s Steve Jobs, it is about creating a “personality cult [and] celebrity CEO”, who, helpfully, also speaks fluent English.

Another tactic is to hold an annual conference and summit. Globally, this helps to place Chinese companies—which in the past have been accused of copycat behaviour—as places of innovation. Tencent’s ‘Way to Evolve’ summit invited guests from the MIT lab and Google. Baidu recently released a video created by Studio Output’s Beijing office that shows an AI future. Everything from a self-driving car (Baidu is already developing the technology with BMW) to digital ‘talking’ assistants, akin to Apple’s Siri, were included in the slick ad.

If branding is for investors, it is also aimed at growing a new kind of audience at home. “These are very big brands but when you look at the potential market size, they have not even scratched the top five or 10 per cent,” says Krishna Krovi, managing director of Adknowledge APAC. “They want to go deeper and the only way to do it is to educate their target audience.”

In the past, internet companies attracted the urban, young and tech-savvy living in major metro centres. As online buying becomes more everyday, however, companies are moving their focus onto tier-two cities and to a demographic with less online exposure, such as the ‘mum’ in the Tencent ad.

But if their goals are the same, Chinese and Indian companies are following different tactics, with the former utilising digital and the latter traditional media. While the Chinese economy has suffered a year of instability, its ecommerce sector continues to be an engine for economic growth. At the end of 2014, China had 649 million users online, with 557 million of those using smartphones to access the internet.

In India, however, ads are most effective on television, which still has vast tentacles in society and a low cost per reach. While India has a large base of mobile devices, unreliable broadband and infrastructure means online access is often patchy, even in cities. As such, “brand building communication is highly skewed towards TV,” comments Tripathy. “The share of digital in India is still at sub 10-per cent levels while in China digital commands close to a 30-per cent share of total advertising spends.”

Krovi agrees “ultimately customers have to be online to buy online,” adding “Indian companies spend more offline mostly because there’s still a bit of education factor coming into play in the market.” According to television ratings firm TAM Media Research, India’s top 50 ecommerce firms spent Rs 1,200 crore (US$180 million) on TV ad in the three months ending 30 September, a 46.3-per cent increase from last year.

Whether using digital or television, building up a brand is a long-term game. And however slick a campaign is, ultimately performance and delivery remains paramount. As Tripathy comments: “it will take much longer and far more sustained investment to create an emotional connect (hence loyalty) among consumers.” 


BIG IDEAS

How Alibaba is going beyond China   

Josh Gardner, CEO, Kung Fu Data

Ambition, innovation and adaptability power China’s top internet firms. While obscure to many Western retailers, Alibaba’s home-grown marketplaces (Tmall and Taobao) have become the world’s largest ecommerce platforms. 

When China revealed plans to create free trade zones, Alibaba immediately launched Tmall Global. They followed with an IPO in late 2014 and subsequent effort in 2015 to advertise the wildly successful Tmall Singles Day everywhere Chinese tourists and expatriates congregate. Ads for everything from health supplements to Beats headsets could be seen as far away as New York city. 

Like most startups, constant iteration, testing and customisation are woven into the fabric of Alibaba culture. For over two years, they have invested in cross-border infrastructure and integration technology to make it easier for foreign brands to sell direct to the Chinese. A prime example is a new API that integrates product, price, inventory and content from foreign online stores into Tmall Global—automatically. 

They’ve tried to educate foreign brand owners on who they are and why they matter via various activation methods including a website revamp. These efforts are not a response to stock price fluctuations. Such investments are minor compared to Alibaba’s other high-ticket acquisitions and heavy investments in emerging advertising and media technologies.

Alibaba ambassadors travel the world. Like commercial services divisions of foreign governments, business development teams mine platform data to find brands with a real chance of success on Tmall. They publish lists of pre-approved brands and help them get onboard. Nimble category managers work with brand owners, offering free traffic and private events to qualified merchants.

As an insider closely working on Tmall, I witness the daily implementation of a long-term plan. Jack Ma’s genius created the first online marketplace where transparency, competition and community reign supreme. He shows the world his open-book model is the future of ecommerce.


Our View: Globally ambitious ecommerce firms have a rich innovation pipeline, but there is a need to educate consumers to create a strong brand. 

 

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