UPDATED: Innovation in China: Fixing mentality gaps and lingo clashes

On 21 April, OMD China expanded the reach of its OIF (OMD Innovation Fund) to become the market's first startup program focused on digital media, in collaboration with Chinaccelerator.

The announcement marks the first time OIF has opened its doors (and coffers) to startups throughout China, with the aim of bringing the latest technological innovations to marketing communication.

In December, Starcom MediaVest Group China also struck a partnership with Chinaccelerator to connect startups with SMG clients across the mainland. Startups can obtain mentorship, and perhaps auxiliary investment, while the agency can boast about bringing added value to the industry and (it hopes) earn higher loyalty from clients.

Since then, no hackathons or demo days have occurred under SMG though, according to William Bao Bean, managing director of Chinaccelerator.  

On the other hand, OMD China will be providing concrete funds (three chunks of 300,000 RMB each) to be seeded into three chosen startups to help build them into viable business models for OMD clients. The agency created the fund back in June 2014 with the initial goal of encouraging company employees to tap into their entrepreneurial spirit to incubate the ‘next big thing’ in media and marketing.

"In 2015, we are increasingly transitioning into an age where technology drives marketing innovation," said Arlene Ang, CEO for OMD China. The task for agencies is to marry the mentality gaps and lingo clashes between startups and brands, said Ang.

"The startup mentality is based on a utility that fills a technological hole, while the clients' mindsets are all about reach and brand-building KPIs," she said.

Vivian Zhu, head of digital, data and analytics at SMG China, who is the lead for her agency's startup program, told Campaign Asia-Pacific that Chinaccelerator has worked directly with marketers on a sporadic basis in the past.

However, it has been "painful" to do so, according to Zhu, because "startups speak a different language from brands". So having a media agency in between the two parties for brand-focused communications has proved beneficial, she added.

"To be honest, our innovative levels as media agencies are poor," Ang said candidly. "Brilliant ideas don't really come from 'have-beens' like us. But we are good facilitators between startups and clients. Every client has pain points, so we identify them, go to our startup pool to see which can soothe the pain point, guide the startup on how to come up with an elevator pitch that is not filled with financial jargon."

The money from marketers is more valuable than that from venture capitalists and angel investors, indicated Ang. "Marketers already believe in startups," she said. "Even though actual dollar amounts may be less than VC-backed investments, this is like an endorsement by the marketplace for startups that already have proof-of-concept."

Risk caused by the instability of the startup culture is minimised by evaluating them on a "robust meter" and being accepting of trial and error, added Alvin Foo, currently the head of Airwave China and co-founder of AppBoost (a performance-based mobile marketing agency).

Naturally, the inclination of media agencies is towards ad-tech startups, indicated Ang. For example, she wishes for an idea to solve the problem of multi-screen media planning, as optimising the balance between the prominence of 'five screens' in China with no single source of data has been "a nightmare".

Before that materialises, from the brands' viewpoints, leveraging the potential scalability and newness of startup platforms for marketing is more achievable in the near future.

Zhu found Olifun, a location-based app that lists personalised recommendations for happy-hour specials at nearby watering holes in Shanghai, is thereotically an interesting fit for AB-Inbev should the SMG client decide to involve the startup in real-life campaigns.

While SMG's discussions remain in coy hypotheticals, pointed out Foo, OMD has been conducting pitch days in cooperation with Chinaccelerator for McDonalds, Visa, Coach and Sony.

During a pitch day for one of the major payment service providers (PSP) in the world, whose objective is to get Chinese travellers to use it instead of Unionpay, a food-suggestion app that triggers a location-specific alert to friends based on previous travel itineraries was said to have exceeded the company's expectations.  

Chinaccelerator, the founding sponsor of BeijingTechHive, utilised the event for a 54-hour hackathon in the 798 Art District to help Durex tackle the following tricky issue: if 65 per cent of Chinese do not discuss sex with their partner, how do you even broach the topic of condom choice? 

Meanwhile, Levi's China marketing director Jeremy Chan has a broader definition of startups. The denim brand does not work with startups per se, but with 'startup digital agencies' and mobile app development companies such as fashion-social app Nice.

"It's a good balance with big agencies like FCB for global brand consistency and something quick and creative on hand from small and dynamic 'startup agencies'. Sometimes they are too creative, that we have to pull them back, but there is no conflict between the systematic and organised way of big agencies and startup-types just in case we want some crazy ideas," he said.

Chan himself acts as the "filter and guardian" between Levi's and these boutique shops, but until more marketers have such abilities, an opportunity will exist for agencies to act as effective middlemen.

Editor's note: This article was updated at 6pm on 8 May with additional comments from William Bao Bean and Alvin Foo.