Digital disruption in China has made winners of those who dare to break the mould. And leading that charge is LEO Digital Network (LDN), China’s A-share listed digital agency network whose parent company makes industrial and agricultural water pumps—an acquisition story that mimics WPP.
The Shanghai-headquartered company is anchoring its ambitious expansion plans on a strategy which CEO Dalton Zheng calls “Reshape Communications”. With the vision of becoming a leading global digital marketing communications network, LDN leveraged off the extreme complexity and fast-paced nature of China’s marketing environment to grow its expertise.
At the heart of “Reshape Communications” is a “digital-driven business transformation ecosystem”, which Zheng says can provide the network’s clients with much-needed integrated and strategic digital transformation solutions that deliver results.
Cloud integration—the office theme and an overarching goals of LEO Digital Network's "Reshape Communications" plan
“We digital marketing companies face more and more challenges today,” Zheng explains. “The separation of different functions within agencies make it increasingly difficult to serve clients in this new age of always-on connectivity where businesses need to transform in order to meet their consumer expectations.”
Zheng co-founded the media agency MediaV in 2009—in 2014, it became one of the first LDN acquisitions. “Our clients are looking for integrated solutions that are consumer-centric, data enabled and content targeted,” he says. The proposal for a single ecosystem, he continues, was formulated on the belief that a joined-up solution could satisfy the needs of advertisers worldwide.
Though not completely unique to LDN, the integrated management of digital marketing solutions directly addresses clients’ needs to have one agency at the forefront of an entire range of digital marketing functions. And LDN has built its reputation on the smooth execution of campaigns across its six wholly owned agencies and multiple other acquisitions.
The service difference
Siemens, a client of LDN’s, grew with the network beginning first as a media buying customer of MediaV. After LDN was formed, the group expanded its Siemens services to include planning for the brand’s digital transformation.
“We now serve Siemens Home Appliances in everything from media to data, from content to ecommerce,” Zheng says. “We’ve had a great verification of our work and the client is happy.”
For Siemens, the commitment to LDN reflects its expertise in the evolving nature of China’s consumer behaviour and changes in the overall retail landscape, encapsulating the move towards a deeply integrated online to offline model.
Insights from the LDN team help clients capitalise on early digital trends and for Siemens, it focused growth to online sales. “We discovered that the online sales ratio was increasing threefold each year. It now accounts for 30 percent of total sales,” explains Zheng. “So we strategised on the understanding that digital is not just a media channel, but an ecosystem for Siemens.
To do this, LDN combined the capabilities of its network companies to build a solution for Siemens. Zheng says critical to smooth integration of services is the “one-plus-one is more than two” effect.
The LDN headquarters in Shanghai
Integrating media data with business data creates intelligent platforms which drive more effective media-planning, audience-targeting and business analysis, Zheng explains. By developing multi-channel, always-on, real-time branded content, the network looks to engage with consumers more effectively. It follows through the consumer purchase cycle by investing in full ecommerce operation services, reinventing and digitising commerce and retail channels to drive sales revenue.
This “integrated closed service loop” has the added benefit of corporate digital transformation. And what appeals to clients most is from the financial perspective—clients enjoy significant cost savings from the consolidation of project management while ensuring a steady supply of creative and strategic resources.
This system has endowed LDN’s network companies with a competitive barrier which others have been unable to replicate. And clients can piggyback on driving competitive advantage through a highly responsive suite of complementary marketing services.
China’s digital dominance
LDN recently launched LDN CAPITAL to positively participate and contribute to the evolution of China’s internet ecosystem, disrupt the traditional agency business model, and reshape the boundaries of communications.
To date, the capital has already made substantial investments in three key sectors: interactive entertainment; internet services and smart city services; and mobile internet technologies and gateways.
Online content development continues to be a priority for the group—LDN has invested in entertainment content, including the creation of its inhouse production studios. The goal is to work alongside the LDN agencies to develop multi-channel network content solutions for both brands and media partners.
“For example, we may execute a media programme where all the home appliances are Siemens product placements,” says Zheng. “In this content process, we can then transform it into Siemens-dominated content.”
Other applications include online streaming programmes for financial tips, or travel and food content, he added. The investments in entertainment content are not suitable for the short-term, Zheng emphasises. “This is long-term media content and potential brand communication and product placement.”
LDN CAPITAL has also made investments in the internet economy. Offshore, Uhouzz, an online marketplace for overseas students looking for dormitories, apartments, and real estate, has recently come under the LDN CAPITAL umbrella. Also new to the portfolio is Chehejia, an internet electric car manufacturer and smart city mobility service provider. There is also a Rmb1 billion mergers-and-acquisition fund for WeChat and mobile-internet developers which fosters innovation in China.
The age of Chinese corporate globalisation is also an opportunity for LDN, which is looking to sign off on data collaborations with foreign companies to assist ecommerce, handset and electronic firms launching expansion plans. LDN will be a partner who captures both the local spirit of enterprise and global sensibilities. “We understand their needs better.”
LEO Digital Network
China A-Share Listed (SZSE:002131)
2016 revenue: Rmb 7.42 billion (US$1.07 billion)
2016 Profit: Rmb 561.3 million (US$81 million)
LDN consists of six wholly owned subsidiaries across four business units:
Amber Group (integrated creative agency) includes:
Amber China 琥珀传播
arkr GROUP (digital innovation agency) includes:
arkr digital 氩氪互动
LDN Media Group includes:
MediaV 聚胜万合 (digital media agency)
MIAGE 微创时代 (mobile media agency)
WSWY 万圣伟业 (digital and mobile traffic distribution agency)
WIT Ad 智趣广告 (online game media agency)
LDN Diversified Group includes:
BC Commerce 碧橙网络 (ecommerce service agency)
Century KP 世纪鲲鹏 (entertainment marketing agency)
Joyplus 秀视智能 (smart TV ad-network agency)
REYUAN 热源网络 (healthcare digital agency)
CARNIVO 嘉年华 (integrated content agency)