Just as agencies in China were wrapping up work on JD.com’s 618 sales in June, Jerman Zhang, GroupM's managing director for ecommerce, and his team were about to hit the ground running for the Singles Day sale on 11 November.
Singles Day is by far the largest shopping festival in China and globally, with ecommerce giant Alibaba chalking up a total of US$17.8 billion in gross merchandise value last year. It is the biggest event and brief that many agencies in China work on in a year. The year-by-year growth of sales volume by Alibaba raises the bar for brands and agencies alike. Alibaba's competitor JD.com had a 19.6% market share in sales last year, compared to Alibaba’s 71.2% for Tmall and Taobao combined.
While Alibaba hopes to go big with ‘New Retail’ in this year's Double 11, meaning the integration of online and offline, Zhang says sales are still foremost on brands’ agendas. “All brands aim to grow their sales on Tmall by 100% if not more," he says. "Obviously this [growth] is beyond the market value because the retail growth in China only hovers around single digits.”
He adds that it is difficult for brands to achieve such a breakthrough except by taking away market share from competitors or creating a completely new category on Tmall to attract a different audience. “This has been the biggest challenge…how to outpace and eclipse the stable growth rate of retail,” Zhang says.
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Seeing the potential of Tmall and the Alibaba ecosytem in China’s ecommerce scene, Zhang set up the ecommerce unit in 2013. It has since grown from a team of two to 80 across GroupM China’s offices in Shanghai, Beijing and Guangzhou, serving 38 brands for Singles Day this year, including P&G, Huawei and Danone. He hopes to increase the headcount of his team to 100 by the end of this year.
“It is plain simple that you need traffic to push sales," Zhang says. "But in the current climate, it is increasingly expensive to buy traffic and it is not enough to just rely on paid media." Besides focusing on sales and ads within the platform, Zhang says brands have to leverage their own resources such as the celebrities that they work with.
He stresses that media agencies are indispensable along the ecommerce chain, despite the growing trend of brands working with KOLs for content. "Media agencies are the driver behind a better collaboration between brands and platform because we can help brands to manage their data and resources,” says Zhang. "Due to their traditional understanding of sales channels, many brands fail to grasp that Tmall should also be a platform for brand-building and consumer engagement, and Singles Day is beyond the sales numbers."
Zhang and his team occupied a war room on 20 October and are prepared for a 48-hour all-nighter starting at 9 am on 10 November.
Mathias Chaillou, CEO of Performics Greater China, echoes Zhang's views, saying that media agencies are in it together with brands to learn how to win on Tmall. “From pure media buying, creative and conversion optimization to understanding how the ecosystem works, we discover how you could build your brand on Tmall,” Chaillou says in a statement.
Life or death by data
Yet all the promises made by agencies can be easily brought down to earth by the BAT (Baidu, Alibaba, Tencent) walled gardens. Agencies that have access to ecommerce data naturally have the upper hand, since audience data is fundamental to traffic and quality content.
GroupM and Publicis are the known media agencies in China that have data partnerships with Alibaba’s brand databank, Uni Marketing, following high-level meetings between the agencies and the ecommerce giant earlier this year. Bertilla Teo, CEO of Publicis Media Greater China, announced the partnership during the Alibaba Investor Day in June. Of the data partnership, Chaillou says: "Uni Marketing adds a new layer of opportunities for brands by enabling scaled personalisation. Data banks give unparalled granularity as well as insights on the consumers and businesses."
GroupM’s Zhang acknowledges that Alibaba only shares behavioural data, but he says the data helps agencies achieve more accurate targeting and audience segmentation within and beyond Tmall. “Alibaba is still king in consumer data, with Taobao, Tmall and their investment into [electronics retailer] Suning," he says. "But I believe it is a matter of time before JD.com catches up with their full suite of data."
He alludes to JD.com’s partnership with Tencent, which gives the former a headline slot on WeChat. JD.com also has an integrated inventory with Walmart through a joint supply chain and merged membership system. "Even though Tmall receives more attention for Singles Day, JD.com should not be counted out because it is the primary retailer for P&G and mobile phones. I am less interested in the sales that it will make this year, because they have already been quite close to Alibaba's number (US$17.6 billion) during the 618 sales," says Zhang.