Media spending on Chinese ecommerce platforms is rising but shifting: Ebiquity

Given that China experienced a V-shaped rebound in its ecommerce market in 2020, some media had predicted that post-lockdown “revenge shopping” might produce a similar result this year heading into the June 18 shopping festival. Yet what we learned is that the 2020 bounceback is hard to replicate. Instead, Chinese media dubbed the June sales event as “the coldest 618” ever, following the suspension of live streaming by Li Jiqi, China’s No.1 KOL and the economic slowdown amid the lockdown. 

Since last year, the ecommerce and internet economy in China has experienced a significant drop due to policy changes. But looking beyond the complex KOL and live streaming scenes, a recent study from Ebiquity suggests that overall ecommerce trends are still looking positive in terms of media investment.

Ebiquity's research results found that major advertisers’ media expenditure on Chinese ecommerce platforms in the post-pandemic period has grown by 9%, from 22% of total media investment during the pre-pandemic years (2018-2019) to 31% (2020-2021). It further emphasised that with 45.3% of total retail sales coming from the internet, ecommerce sales will surpass brick-and-mortar sales in 2025, as predicted by eMarketer’s trend report. 

Ebiquity's report also documents the erosion of Alibaba’s domination by JD.com and Pinduoduo. In fact, beyond JD and PDD, it notes how Douyin, Kuaishou, Little Red Book, and WeChat have joined the competitive ecommerce battlefield. 

Given the shifting landscape, planning and measuring media investments in Chinese ecommerce can be daunting. Ebiquity found that biddable media costs can differ more than 100% and that high CPC doesn't always drive better ROI, nor do the hottest ecommerce festivals guarantee it. 

Campaign asked Stewart Li, managing director of Ebiquity China more about the latest ecommerce trends in China and how advertisers should adjust their ecommerce media buying strategies as a result. 

How will increasing ecommerce sales affect media buying?

The continuous increase in ecommerce sales will have a major impact on a media agency’s strategic planning model in China. Currently most agency planning approaches are exposure-focused. But advertisers are not happy with the traditional approaches as they expect media planners to think deeper and be more in sync with Chinese consumer decisions and purchase journeys, and plan media accordingly.

In terms of media buying trends in future, besides higher ecommerce onsite spending, we believe that advertisers will shift more advertising and promotional (A&P) budget from display and video media titles which are primarily for exposure (insertion order buys) to those media titles and formats which have partnered with ecommerce platforms with retargeting capability, to drive more traffic through offsite media (more biddable buys).

Additionally, social commerce platforms such as TikTok, Kuaishou and WeChat, to name a few, will receive a bigger share of media budgets because they provide a one-stop solution from exposure to shopping carts.

What do you think of the erosion of Alibaba’s domination by JD and PDD?

We believe that the ecommerce battlefield has not only expanded to more platforms but has become more diversified. Given different ecommerce platforms have their unique game rules and ecosystems within each of their walled gardens, it could be more challenging for brand owners to manage their ecommerce media investment. It is crucial for advertisers to optimise or synergise across different platforms and avoid cannibalisation.

Your report notes that the hottest e-commerce festivals do not guarantee the best ROI. So what would be more effective strategies for advertisers?

The latest June 18 ecommerce festival (618) witnessed a slower growth rate of 13.5%, which reflects the tougher economy and the negative consumer sentiment post-Shanghai lockdown. Tmall, JD and Tiktok delayed their 618 pre-launch, and the festival overall was been trimmed down with less marketing effort.

Because of poor sales, Alibaba has not disclosed its total transaction amount this year, a rare occurrence for the company. Syntun Data has forecasted Alibaba’s 618 sales to have gone down by 10% while JD reported 10% growth and PDD is estimated to have 50% growth, primarily because of deep discounts and coming off a low base.

We believe that an ecommerce platform is not very different from brick-and-mortar stores nowadays, so advertisers need to approach it the same way as these stores. We advise advertisers to plan and execute on-going monthly and festive ecommerce promotions, plus ongoing CRM campaigns.

Ebiquity's KOL and live streaming report noted live streaming video viewers will include 50% of China's total population by 2023. How do you see this social commerce trend developing in China?

After the incredible live streaming ecommerce sales growth declined to 45% this year, it’s now the short video live streaming that has given a boost to social commerce. One of the big reasons for its success is high consumer engagement because of relevant content. This translates into higher daily active usage, hence, higher gross merchandise value (GMV).