Singles Day: Where the brand money goes

Singles Day is a little bit like Halloween: It's a day when brands can get out of character and style themselves after Tmall's recognisable cat mascot, provided that they are among the 52 brands chosen by the Alibaba-owned ecommerce platform for its ad series this year.

"It has become the day when brands can behave differently," said Wei-Chong Khor, head of digital and ecommerce at Carat China, who has observed the mega Chinese shopping bonanza, aka Double 11, for over six years. "For some of the brands which have never had discounts for the whole year, if they do that on Singles Day, Chinese consumers will understand and not perceive them of lower quality."

He was of course referring to premium or high-end brands, the relative newcomers to Singles Day that are cashing in on China's growing affluence. For the other brands that have been regulars at Singles Day since its inception in 2009, the shopping festival has gradually taken up a huge chunk of theirte media spend over the years. According to data from iResearch, ecommerce adspend has increased from 23.3% in 2012 to 28.4% in 2017.

Here, Khor shares some of his insights on the mega festival and Chinese ecommerce in general.

How has Singles Day changed, and has brand spending on the event changed?

Brands are getting familiar with the platform after a little bit of trial-and-error. With proven numbers, there has been increasing investment for sure, from ecommerce budgets as well as media and brand budgets.

In terms of digital spend, spending on ecommerce platforms has surpassed search engines. A lot of brands are leveraging on ecommerce platforms for brand building and brand connection. The platforms have been the go-to channel for product because the search results on Baidu and Qihoo 360 search engines do not include product pages, because the ecosystem in China is not as open compared to the rest of the world.

On average, about 50% to 70% of ecommece budget goes to Singles Day. It varies from brand to brand, but since Double 11 was started by Alibaba, Taobao (including Tmall, later) has been a really important platform.

Say, three years ago, when brands looked at Singles Day, it was purely transactional. Brands want to sell products, the tactics that they used were purely marketing performance, SEM, leveraging all the data that Alibaba offered for better targeting, to sell the products with the least amount of money. 

That is all still very important today. But with the evolution of the platform, it now offers many opportunities from live streaming to fashion shows. Not all of that will lead to transactions, but brands look at Double 11 as an opportunity to engage with consumers, some of that have put aside a certain budget for this awareness and engagement building.  

Is there good ROI in fashion shows?

It really depends on the budget and what clients want. It is a different nature of traffic driver, a lot of people are watching the gala show but they may not be searching for the product and lead to conversion compared to SEM. I won't say that it is a problem. The ROI may be lower, but it serves a different purpose in brand communication. 

Luxury brands which are less inclined to offer discounts participate in fashion shows for this purpose.

What lessons have past years taught?

Plan earlier, and a lot of data helps.

Alibaba is a 'complicated' organisation to work with. Knowing who to speak to, at what time, is important to getting the resources you need. So having the right partner to help you to get the right resources is important.

From the POV of platforms, each wants to be exclusive. It becomes a challenge for brands to invest in the right one (Tmall vs. JD.com). When it comes to ecommerce platform, it's more than just going to the dashboard and doing the math, but also about relationship building, getting traffic and best value for the brands.

For every Singles Day, they have come out with new features. So to be able to reevaluate which one to get the best results for you is important. As an agency, we know the different products that Alibaba offers, beyond the standard offering, that will be most suitable for a certain brands than the others.

Some of the features are great in driving traffic, such as investing outside of Tmall (Alibaba's content collaboration with Toutiao, for example), but we know from our experience it is not great for ROI. If the goal this year is to drive the ROI, then we would advise the clients, to invest carefully with those products, but if the budget is to use for brand building for certain products, then by all means go invest in those outside of Alibaba platform.

A lot of times, the story on Double 11 is a lot on promotion, so if your only message is 50% discount, it's definitely promotional driven, then focus on ecommerce platform. It is really interesting that we can finally use purchase data from Alibaba starting this year and invest outside of its system with Uni Marketing. That is quite exciting for media investment. It is a lot more targeted; if the goal is to do brand building, we definitely would recommend it, but if that particular budget is for transactions, then we would suggest the client to be quite careful and invest within the ecommerce platform.

Do pre-orders and pre-sales help?

It is natural that most sales happen on Double 11. During the pre-sales period, we would not be able to see the transactions and optimise based on that. We can only optimise based on the traffic that comes in, but that is slightly different, because high traffic doesn't equal to high sales. Some traffic has better quality than others. This is the place where we advise our clients carefully.

Many of the promotions on Singles Day are rather complicated. How can brands make it easier for consumers?

Be more consumer-centric. I would advise against complicated math because it is not an arithmetic test for consumers. Certain things are set by Tmall, we are still leveraging on that, such as the deposit increments, but not too much. In the end it is about bringing value to consumers. They will eventually calculate and realise that the discounts are not that big.