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Abu Dhabi, UAEFriday 21 September 2018

The rise of the influencers and 'retailtainment' in China

Chinese social media stars can command huge audiences and can make the difference between a brand succeeding and failing but the phenomenon may not last

In China, the rise of social-media based influencers can have a huge impact on how a brand performs in the enormous domestic market. Brent Lewin/Bloomberg
In China, the rise of social-media based influencers can have a huge impact on how a brand performs in the enormous domestic market. Brent Lewin/Bloomberg

What does Santa Claus have to do with Kim Kardashian? One of them is a real person (sorry kids) who is married to hip hop artist Kanye West, and is adept at using Instagram to generate publicity and leveraging the platform to increase her income.

Santa, meanwhile, is one of the first examples of "influencer marketing".

Coca-Cola, in the 1920s, created the Santa Claus figure we know today, imbuing him with a jollier personality to help sell their product. If it's good enough for Santa, it's good enough for us. That was the message Coca-Cola sought to convey, and when the Christmas season rolls around Santa holding a coke is inevitably seen on TV commercials around the globe.

While we may think social media influencers in the UAE and wider GCC have a measurable impact on a brand's success or otherwise, China, one of the world's largest economies, is seeing a much bigger effect of "influencer marketing" where online stars can have millions of loyal followers. Whereas traditional celebrities like pop singers, film stars, and even royalty (in the early days) were leveraged to help sell products or services for brands and corporations, these days leading social media names and online celebrities are ever more influential.

In China, they are developing their own brands and entertainment products and consumer brands are partnering these influencers to take advantage of their enormous audiences.

Also known as KOLs (Key Opinion Leaders), Chinese KOLs are selling their own branded products on online marketplaces such as Taobao (China's equivalent to eBay). Last year, on Singles Day, a retail event promoted annually by Chinese e-commerce giant Alibaba and held on 11 November, four influencer brands made over 100 million yuan (Dh57.9m). Revenue from stores managed by the blogger incubator Chen Fan reached 200m yuan within two hours of Singles Day, and by the day's end six influencer stores made it onto the rankings of Top-30 female apparel stores.

In China, social media platforms such as Weibo (a Twitter/Instagram-like app and online site), and the WeChat app, among others, are ubiquitous and have helped ordinary people generate income, if they can gain enough followers.

Rebecca Chiou, a marketing professional based in Shanghai who has more than 12 years experience working with Chinese and American brands, among others, first noticed the impact of KOLs in 2011. "These influencers and KOLs have become more powerful and impactful than traditional media", she tells The National, "because people don't trust the government, even the media, which is controlled by the government, thus they only trust friends and someone that's well known, such as celebrities, influencers, KOLs".

That China has developed its own unique ecosystem is related to the fact western social media apps such as Facebook, Instagram, YouTube, and Snapchat are blocked. There are also major differences between western social media stars and Chinese ones. "Chinese KOLs typically have much larger followings", says Lauren Hallanan, a digital marketing consultant with expertise of the Chinese influencer industry. "While 100,000 fans is a lot in the US, in China that is still considered a micro to mid-tier influencer."

This has led to the growth of agencies who help international companies market their products in China.

Olivia Plotnick works for one such company, in Shanghai, as a marketing manager focused on branding and digital strategy in China. "Chinese KOLs are much more effective than western influencers," she says. "This is coupled with China's sophisticated e-commerce industry and a highly integrated digital ecosystem meaning that shopping and social become one activity".

What distinguishes China is the similarity between e-commerce and social platforms. In China many e-commerce sites/apps have built in content sharing and social media functionalities, while social media apps like WeChat have payment functions, which are widely used among the population.

"In essence they are very similar. WeChat, Weibo, Taobao, Red; all can generate sales, all can post content. It's a purchasing environment", says Elijah Whaley, chief marketing officer at Parklu, an influencer-focused agency.

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Mr Whaley is an evangeliser for Chinese influencers, and believes they can disrupt the traditional media industry. "We're just seeing the beginning", he says. "It's going to be disruptive to branding, entertainment, to advertising".

He notes that the KOL-led industry, of which he is a part, attracts criticism among those working in traditional marketing. But he believes the results speak for themselves, not least in KOLs creating their own content studios. "Influencers are so connected to their audience. They read all their comments, and [are] very engaged."

But Ms Chiou, who has worked with influencers to support brands, thinks there is a limit to their influence: "Top influencers, such as Gogoboi, can really drive product sales very well, but at least 50 to 60 per cent of them only can help to raise awareness [of a product]." Ye Si is Gogoboi on China's biggest social media platform Weibo, and one of the most popular and influential fashion bloggers in China.

Sarah Zhang, a KOL based in Shanghai who has around 800,000 to a million followers spread across various platforms, and derives her income from producing web shows and brand sponsorships, also believes the trend for KOLs having such a large impact on advertising and the marketing industry may not last: "The original reason for fans to follow KOLs is the interesting content they put out. Fans are looking for entertaining or educational content," she says. But fans can lose interest if there is too much commercial content, she adds.

A couple of notable KOL-led campaigns from 2017 were in the auto and travel sectors. A unique campaign was Mini Cooper, the British automotive marque owned by BMW since 2000, partnering fashion and lifestyle KOL Becky Li. It was unusual in that it used a fashion blogger to sell cars through a messaging platform, WeChat, and the first time Mini released a product exclusively via a KOL.

Ms Li sold 100 limited edition Mini Coopers, priced at 285,000 yuan, in just five minutes.

And Airbnb increased their efforts in China last year, rebranding with the Chinese name Aibiying ("welcome with love"), and targeting the young middle class by collaborating with influencers. It was rewarded with huge social media impact, and mentioned 2 million times on WeChat the day it launched the campaign.

The importance of a digital brand such as Airbnb collaborating with Chinese influencers speaks to the favourable consumer perception of KOLs in China, especially among the young. And the combination of social media and e-commerce among that demographic is a trend that is likely to continue.

A 2017 poll conducted by Accenture, a professional services firm, found that up to 70 per cent of Chinese "Gen Z" consumers (those born after 1995) said they prefer to buy products directly via social media compared to a global average of 44 per cent.

This preference has led to the emergence of "retailtainment". US cable channels like QVC combine shopping with entertainment but in China it is far more advanced. E-commerce giants Taobao, Tmall, and JD.com provide online retailtainment with live-streams, where shows are fronted by brands such as Audi and Maybelline or by individual streamers.

But the fastest growing player in the retailtainment sector is the app RED (also known by its Chinese name Xiaohongshu), which has over 60 million registered users. A social platform that takes advantage of user-generated content and reviews (recognising Chinese consumers' preference for word-of-mouth recommendations), users of RED can also directly purchase the products seen in those reviews.

Influencers are also highly visible on these platforms, and are driving product sales. With the prevalence of online social media and increasing numbers of influencers, China appears to have heralded a brave new world of influencer-driven e-commerce.

Santa Claus has his work cut out.

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