Cindy Gu
Oct 1, 2019

Move over KOLs: 'KOCs' and 'private domain traffic' are hot in China

No market is more fond of latching onto the latest trends in marketing terminology than China. Campaign’s Cindy Gu looks at the origin and value of two old, but concepts for brands.

Move over KOLs: 'KOCs' and 'private domain traffic' are hot in China

Recently, two new terms have become hot lingo within Chinese marketing and advertising circles – ‘KOC‘ (key opinion consumer) and ‘private domain traffic’. KOC naturally derives from the widely-used KOL (key opinion leader), a term which in itself has become so overused that it’s now quite often the brunt of ridicule from many netizens. While the recent fascination with ‘KOCs’ provide a shift in focus, the concept (and acronym) is hardly original. 

According to Allan Chen -- who himself has a trendy title of ‘Head of Tailwinds’ as a group VP at AI platform Mininglamp Technology after spending years as Miaozhen Systems VP of insight -- KOCs can be defined as the following: An interest group or community that is active on a certain platform, the cluster whose opinions are trusted and spread around to a certain extent, who are loyal followers of a certain brand, and after receiving certain incentives from the brand, are willing to speak out for their favourite brand or brand of interest voluntarily.  In other words, not a regular influencer, but a brand advocate in smaller but important community circles.

“The concepts of influencer and micro-influencer have always existed internationally, from the Twitter era to Instagram. These are equivalent to KOL and KOC in China,” Chen says.

Meanwhile, the other term,  ‘private domain traffic’ has been building in popularly in China since the middle of last year.  Chen says the term, for brands at least, refers to their private digital domain. This includes user groups that a brand can easily connect with, such as application users in the brand's own channels, and members who have provided information on their mobile numbers.  In other words, it’s similar to Western concepts around using the first party data from ‘organic reach’.
From the perspective of traffic pools, KOCs are to private domains what KOLs are to public domains, says Chen. Both are key opinion leaders where they reside. In general, the differentiation between KOL and KOC is in the number of followers, with the latter more active within a smaller circle.
KOCs have existed for a long time

KOCs, also known as ‘power consumers’ have been around since the rise of Weibo. There we first saw KOMs (Key Opinion Moms) emerge in the maternity and baby industry a long time ago. 
But the differentiation between KOL and KOC has become more obvious on WeChat: KOLs operate in the public domains, that is, the system of official accounts, with content directed at all WeChat users. KOCs, on the other hand,  acquire their influence from non-public social relationships within the WeChat system, including chat groups, and closer circles of friends. Therefore, KOCs acquire user groups that they can influence through similar interest groups accessible through their own social relationships and operations.

“Actually, before the rise of KOLs, brands would do word-of-mouth marketing through fan groups. Members of these fan groups are, in reality, the so-called KOCs,” notes Maggie Wang, president of data verification company AdMaster.

Leon Zhang, general manager and national head of social media at MediaCom China  agrees that there have always been consumers or individuals with a positive promotional influence over others in sales and marketing, long evident in social CRM and e-commerce practices.

So why are KOCs now so suddenly in vogue?  Wang says that while KOLs have become essential for campaigns and promotions, marketing through these channels have become very costly and over-rated. As a result, brands have been  forced to think of other more effective and economical ways to communicate to their potential customers. Therefore, Wang says, tribe-based community marketing is rising. In small communities, employing big KOLs are not necessary.  Instead, the right common interests and topics alone can be very powerful. “Therefore, some brands hope to find other ways, using small but cost-effective social communities or KOCs as leverage to access a bigger market,” Wang explained.

The ‘private domain traffic’ boom

Just like KOCs, many industry experts indicate that ‘private domain traffic’ in itself has existed for a long time and the new term is just affixing a new label to it.

Leon Zhang’s easy to understand explanation of the term revolves around fishing. If catching fish is used as a metaphor for the acquisition and conversion of user traffic, then traffic in public domains is equivalent to the open sea. As there are more and more fishing boats (brands), the costs of fishing become higher and higher. As a result, different brands have started building their own fish ponds to catch their own fish with increased flexibility and control. Such fish ponds built by themselves are equivalent to traffic in private domains.

“Official websites, blogs and community marketing also reflect private domain traffic. All these have existed for a long time and are still in existence," Zhang said. “The hearts and minds of the consumers who have been educated by the brand and have developed an interest in the brand can also be interpreted as the brand's private domain,” adds Allen Chen.

The popularity of ‘private domain traffic’ can be partly explained from a platform perspective, Wang says. Tencent is currently trying to cash in on its two major social media platforms, WeChat and QQ, and therefore, private domain traffic primarily helps them in service conversion. Secondly, it also represents a voice driven by traffic. Its emergence is closely related to the increasing costs of public domain traffic, better control over data security in private domains, and the increasing maturity of the DMPs (data management platform) built by the brands. As the brand's available resources become more limited, traffic in private domains, that is, traffic that the brand itself can control over, becomes increasingly important.

Kenx Gao, general manager of digital ventures at digital marketing agency ASAP+ further explained that the increasing popularity of private domain traffic is also related to the transformation of the macro environment of China's e-commerce. “A combination of factors such as disappearing demographic dividend, changing consumption patterns, and the emergence of mini programmes have led to the rise of new terminologies like KOC and private domain traffic."

What brands can most benefit using KOCs and private domain traffic?

More important than the concepts is how to play the game. So how are they applied to marketing practices?

Let's first deal with the KOC. Zhang feels there are usually two types of scenarios: one targets customer segments that conventional advertisements can hardly penetrate. This is actually applicable to brands in general, especially those that require channel penetration and customer segmentation. The other type is related to social e-commerce and sales conversion. Such social e-merchants are often found in FMCGs (fast moving consumer goods), consumer electronics, cosmetics, and apparel – industries already active in the e-commerce area.

“Overall, KOCs are more suitable for brands with a relatively tight budget, a niche target audience, and a focused message to communicate,” Wang adds. She said that large brands will also use KOCs when they want to target a specific group to communicate their messages.

As for private domain traffic, Wang thinks that large media platforms can divert traffic to private domains, while traffic in public domains can leverage traffic in private domains to reach the target audience effectively. Only by combining the two can traffic continue to be optimised, thereby uncovering the long-term value of target users. To medium and small brands with limited capabilities, leveraging large-scale traffic pools like Tencent and Alibaba will be a more feasible approach.
Zhang’s ‘fish pond’ theory is applicable here too, in talking about the two approaches. One is building one's own ‘fish pond’, that is, the brand sets up its own private domain traffic pool. Another approach is to collaborate with others and do something together in the ‘fish pond’ built by others, that is, using third-parties' private domain traffic pools.

According to Zhang, these two approaches are suitable for different brands. In building a private domain traffic pool there are generally two factors: one is per customer transaction or individual customer value; the other is the interest level of the area or topic. Brands can determine what’s appropriate based on costs and benefits.

Gao believes that for niche foreign brands just entering the Chinese market, marketing models associated with KOCs and private domain traffic are relatively cost-effective. Discovering potential seed users can enhance brand reputation and consumption stickiness. However, for brands under pressure for short-term growth, using private domain traffic may not be very appropriate. Likewise, for FMCG brands whose overall sales are controlled by the distributors with low user acquisition, private domain traffic is not very appropriate.

The pitfalls of KOC and private domain traffic

Industry experts in China feel there are both opportunities and risks when applying these ‘new’ terminologies in marketing. Maintaining a balanced approach in allocating and investing marketing resources in these areas is important.

Wang says that in the long run, private domain traffic can increase the brand's voice through traffic, and hence, it has its value. To a certain extent, large brands all want to build their own private domain traffic and revitalise their data. However, since large-scale platforms like Tencent and Alibaba control so much of data volume throughout their layers of platforms, the brands still need to collaborate with them.

“In the midst of all these, there exists a fight for a voice driven by traffic. Brands need to ride on the media, and at the same time, build their own private domain traffic in order to strengthen their own voice," Wang said.

Chen says that if a brand attempts to use more direct incentives to drive a KOC to spread its messages or influence sales, the influence of this KOC, will have a contrary effect and be reduced. “Brands need to help KOCs maintain their public persona and sense of achievement on an individual level on an on-going basis," he emphasised.

On the other hand, Gao mentioned that the objectivity of KOCs and private domain traffic makes it impossible to duplicate them, or apply them extensively. “Brand value and product value determine the value of private domain traffic. Brands with in-depth distillation of user data can develop customer segments from big data and create incremental sales," he said, "However, how to apply KOC and private domain traffic extensively, and [deal with] the related operating and management costs are factors that overseas brands have to think about."

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