WeChat for your brand: harnessing the power of China’s ... · wechat for your brand: harnessing the power of china’s ‘super app’ 5 social network gaming services utilities

WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’

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WeChat for your brand: harnessing the power of China’s ‘super app’


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Introduction

China’s economy has grown and developed at an incredible rate over the last 35 years, making it one of the richest countries in world. It is estimated that China will become the world’s largest economic system within the next ten years.

China currently has a population of 1.37 billion people, 93% of which regularly use a mobile phone.1 The Chinese population is spending 3.7 hours a day on the Internet2, which is 20% higher than the average US consumer.3 More staggeringly, is the difference in time spent on social media. While in the UK and US, social media accounts for on average 33% of all time spent online4, in China it is 91.8%.5

This significant difference is largely due to a social networking app in China, sometimes called ‘the app of everything’ - WeChat. WeChat was launched in China in 2011 by media company Tencent as a mobile equivalent of its PC-centric app QQ and began as a messaging app. It enjoyed success with Chinese consumers very quickly given its voice messaging functionality.

Over the last few years, WeChat has completely transformed how people communicate, find information, shop, work and manage day to day life. The complex functionality and capabilities of WeChat set it apart from any other social network in the world, and given the size of the consumer market in China, it is easy to see why it has captured the attention of many Western marketers.

In this white paper, we will explore what the platform is capable of, discuss how brands can really harness its power and look into the future of WeChat.

Sources: 1. Statista, 2018 | 2. China Internet Development Report CNNIC 2018 | 3. Q1 2018 Nielsen Total Audience Report | 4. Global Web Index, 2017 | 5. China Internet Development Report CNNIC 2018


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What is WeChat


At its core, WeChat is an instant messaging app, but over the last few years it has grown into a vast ecosystem of features from communications to shopping, gaming, banking, appointments and travel.

It essentially allows you to do anything you’d want to do onlineand has the equivalent functions for many popular Western apps such as Slack, Tinder, Uber and other services.


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“WeChat is in all parts of my life. I use it from morning to night, mainly the chat and payment functions, but also to see how my friends are doing. I use it to order food, call a taxi, buy movies and train tickets and pay my utility bills.

I also follow the official accounts of other companies that are in the same industry as mine. Honestly, I have no idea how many times I use it each day because it is integrated into my life. There is no other app that is as widely used by all my friends.”

Dong Jian, 30 WeChat User

How does WeChat work?A USER DESCRIBES ITS IMPACT ON HIS LIFE:


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SOCIAL NETWORK SERVICESGAMING UTILITIES

TEXT MESSAGING

VIDEO CHAT SHOP

WECHAT PAY

VIDEO CONTENT

Before we go any further, it is important to understand the different WeChat features, as summed up below by Econsultancy in its 2018 ‘Understanding WeChat’ briefing:

Moments: This is a personal social news feed from WeChat contacts. It allows users to share music, pictures, post comments and post “likes” etc, with various privacy levels built in to it.

Shake: WeChat’s ‘shake’ function allows users to connect with any user or corporate accounts. Users can connect with each other if they have activated the feature and are actively shaking their phones. Offline retail businesses, including MBS Singapore and ION Singapore have used this feature to send personalised offers based on the user’s location.

WeChat ‘mini programs’: Mini programs are lightweight apps completely contained within WeChat that do not need to be downloaded and installed separately. WeChat Pay: A digital wallet service that is incorporated into WeChat, enabling mobile payments and contacts to send each other money. Over 200 million WeChat users have linked WeChat Pay to their accounts (Business Insider, January 2018).

WeChat Out: A Voice over Internet Protocol (VoIP) service that allows users to make low-cost calls to mobile and landlines via WeChat.

Enterprise WeChat: A special version of WeChat intended for business communication, management and work purposes. This feature allows employees to track their annual leave days, expenses and reimbursements and clocking in and out.

What WeChat offers


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• 1 billion monthly active users.1

• 60% of users open WeChat 10 times a day - and 1 in 5 users open it more than 50 times a day.2

• 85% of users are aged 18-35.3

• WeChat has 93% penetration of smartphone users in China’s tier one cities.4

• Just over 1 in 6 (17%) of users spend more than four hours a day on the platform.5

It has been reported in the WeChat Social Commerce Report 2018 from Youzan and Newrank that the growth rate of users on WeChat is slowing down, but this just reflects its saturation in the Chinese market. Time spent and engagement on the app continues to increase.

There are two different types of official WeChat accounts available to brands and individuals:

Sources: 1. Tencent, 2018 | 2.&5. The StartUp, 2017 | 3. Statista, 2017 | 4. Business Insider, March 2018

While a service account allows brands to utilise the more sophisticated functions, such as WeChat Pay, and supports content formats such as HTML video and mini programs, it restricts publishing to four times per month. A subscription account supports only basic functionality but posts can be published once a day.

MESSAGES SHOW ON MAIN FEED

MESSAGES SHOW IN SUBSCRIPTION FOLDER

POST ONCE A DAY

POST FOUR TIMES A MONTH

MESSAGES RECEIVE AND REPLY

MENU

ADVANCED INTERFACE

PAYMENT FUNCTION

SUBSCRIPTION SERVICE


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The choice between these types of accounts really depends on the nature of your brand/service and what you’re looking to achieve on WeChat. For example, many luxury fashion brands such as Mulberry and Burberry have used WeChat service accounts to develop rich and immersive experiences for their followers to drive awareness, engagement and build loyalty via a customer database. However, services or news orientated businesses such as BBC Radio or GQ Magazine use a subscription account to reach their audience on a more regular basis with up to date information.

Burberry has made use of the ‘shake’ feature to allow followers to send and then unwrap customised gifts and greetings and also to invite followers to exclusively virtually attend new store openings and events.


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The power of the mini-program

As we introduced earlier on, WeChat mini-programs are applications that sit within the WeChat ecosystem, facilitating a wide range of advanced functions

without the need to download or install separate applications to the phone.For brands, it presents an opportunity to give consumers a more immersive experience and build a deeper connection with their audience.



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Mini-programs were launched in January 2017 and according to a report from Business Insider (2018), 580,000 were launched within the first year. It is now estimated that 170 million people use mini-programs every day, spending on average 2 minutes and 48 seconds on each program.1

City Experience has built a mini program in collaboration with Tourism Australia, Visit Britain, Dubai Tourism and Destination DC (Washington) which helps Chinese travellers to explore destination guides, interactive maps, audio guides, restaurants and tourist attractions before and while they visit the destination.

Bicycle rental service, Mobike, partnered with WeChat to integrate its service into the WeChat Wallet function. This began as a mini-program, but now gives the brand the opportunity to reach all of WeChat’s user base, rather than building its own followers.

Sources: 1. Aladdin Index and Goldman Sachs analysis, 2018


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The Quest Mobile 2018 TRUTH Data Set report shows that mini-programs now account for 28% of all ecommerce mobile web traffic (253 million people). In the travel sector, this increases to 40% of all sector traffic (234 million people).

This year’s Chinese 618 shopping festival in June attracted 53 million new mini-program users, resulting in a 66 times increase in orders placed via mini programs.1

Many Western brands are reaping the benefits of building ecommerce mini-program applications into accounts.

For example, Montblanc tapped into the significance and popularity of Chinese astrology and the phases of the moon to raise awareness of its its Meisterstück Heritage Perpetual Calendar and Bohème Perpetual Calendar Jewelry watches, which each come with a feature to track the wax and wane of the moon on the watch dial.

Followers of the brand could input birthdate and gender into the app to receive a tailored message about how the moon phase at the time of their birth affects their work, personality traits, hobbies and relationships, creating an innovative and interactive way to excite and communicate with customers.

Sources: 1. Aladdin Index and Goldman Sachs analysis, 2018


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WeChat and social commerce

Social commerce is a nationwide phenomenon in China and is becoming more dynamic as the market grows and more brands and stakeholders are entering it. The credit card was never adopted in China and the ease and convenience of mobile payments, via QR codes now dominate.

It is fair to say that WeChat took

a significant step forward by launching its ‘digital wallet’ WePay in 2014,taking on the then market leader, AliPay (owned by the Alibaba Group). Together, both services now account for 92% of the Chinese mobile payment market (China Mobile Payment Report, 2017).



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WeChat Pay’s seamless integration with other functions of the app has now helped it grow to over 600 million users, compared to AliPay’s 450 million.1

The two companies have tensely moved onto each other’s turf, and while WeChat has now become a force to be reckoned with, Alibaba has not been as successful at building social functionality into its service.

In the WeChat Key Trends Report 2017, Mark Brennan of China Channel summed it up as follows:

Sources: 1. WeChat Social Commerce Report 2018 from Youzan and Newrank

“WeChat is a social app that has successfully transitioned into a payment platform, Alipay is a payment platform that is trying desperately to become a social app.”

Mark Brennan China Channel


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There are now more than 10 million online stores operating on WeChat1 and according to the WeChat Social Commerce Report 2018 from Youzan and Newrank, the number of social commerce stores have increased 68% year-on-year.

Mr & Mrs Aysh is a national restaurant chain in China and an example of a company that has completely embedded WeChat into its business. Visitors to the restaurant are encouraged to sign up to the membership program which gives them access to 360 degree restaurant tours, in-branch wifi access, discounts and branch details. Customers can only pay for items via WeChat Pay and via the membership program on WeChat, people can place orders, pay and top up their account.

Social commerce used to be more centralised in tier 1 cities (39%) in 2017, but this is now growing beyond that. In 2018, more second (tier 2) cities have joined the social commerce trend. Tier 1 cities have been diluted to 29% while tier 2 cities have increased to 18% of the total share (from 11% in 2017). (WeChat Social Commerce Report 2018)

The WeChat Social Commerce Report 2018 also states that between Q1 and Q2 of 2018, the transaction volume on WeChat shops grew by 134%. The rate of growth has slowed compared to 2017, as penetration is now high, and this still presents a healthy increase.

As the market matures, running a profitable WeChat store is becoming more challenging as the competition for attention on the platform is on the rise. Brands will need to combine high impact creative with optimised promotion techniques to stands out in such a ‘noisy’ market.

Sources: 1. (Yang, S., Chen, S. and Li, B. (2016). The Role of Business and Friendships on WeChat Business: An Emerging Business Model in China. Journal of Global Marketing, 29(4))


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Advertising

Paid promotion on WeChat has been available to brands since 2015 and to date, it has only accounted for 15-20% of Tencent’s overall revenue - that is compared to 70% for Facebook. By the end of 2018,

eMarketer predicts that it will triple to $11 billion.Advertising formats are similar to what we have seen on Western social media channels, with promoted content in news feeds (Moments), banner advertising, video ads and coupon ads. Brands can also promote mini programs at the top of the users’ home page.



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Mercedes Benz created interactive and ‘weather-responsive’ banner ads which allowed the user to tailor the ad creatively and put the car to the backdrop of their location’s conditions.


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What does the future hold for WeChat?

There is no doubt that WeChat is a dominant channel in China and we expect it to become even more significant for international brands in 2019 and beyond.

WeChat’s ambitions have been bold and it has evolved from a social channel to a ‘super app’in a short period of time. We will now explore what the future may hold for WeChat and what this means for brands.



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International expansionThis is one area where WeChat has struggled over the last few years. There are three main reasons for why this has happened:

While WeChat has seen growth in some other Asian markets, such as Vietnam and Malaysia, these obstacles above continue to hold it back from global dominance. However, with the scale of its dominance and influence in China, the question is whether global expansion needs to be a priority?

We know that Tencent is focusing more on building business partnerships and monetising its user base to enable more Western businesses to launch and grow in China, as opposed to international user growth.

Sources: 1. Statista, 2018 | 2. China Internet Development Report CNNIC 2018 | 3. Q1 2018 Nielsen Total Audience Report | 4. Global Web Index, 2017 | 5. China Internet Development Report CNNIC 2018

LATECOMER TO THE INTERNATIONAL MARKET By the time that WeChat was well established in China and ready to move outside the country, platforms such as Facebook, Twitter and WhatsApp were already widely adopted and popular. These platforms are banned in China, enabling WeChat to capitalise on this market. LIMITED FUNCTIONALITY OUTSIDE CHINA Coupled with the strong competition from platforms above, the international version of WeChat has only been available with reduced functionality, meaning that foreign users cannot benefit from the more advanced features beyond messaging.

LACK OF LOCALISATION While WeChat has a deep understanding of the Chinese consumer, it has failed to invest in localising the services, capabilities and user experience when trying to launch into other markets, resulting in limited adoption.

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TENCENT WILL FURTHER INTEGRATE WECHAT FUNTIONS TO MONETISE GAMING PRODUCTS

Tencent has developed several popular games, including the 50 million players-a-day Honor of Kings (with which they have done a deal with DC Comics). In 2016, Tencent acquired Finnish mobile game development company Supercell for $8.6 billion, which has Clash Royale, Boom Beach and Clash of Clans in its portfolio. As it looks to grow its gaming credentials and offering, there is an opportunity for WeChat social functions and WeChat Pay microtransation functions to be easily integrated into other popular games on the platform.

KOL MINI PROGRAM ECOMMERCE STORES WILL BECOME THE TOP CHANNEL FOR LUXURY BRANDS

Luxury brands in sectors such as fashion, beauty and lifestyle have started to create more meaningful partnerships with some of China’s leading KOLs. While influencer marketing is not a new concept, these partnerships will now go to a different level with KOLs opening their own ecommerce stores on behalf of brands.

Fashion brand LOOK has partnered with 30 of the top KOLs in China, 90% of which are exclusive to LOOK, and have a combined audience of 20 million people. The brand benefits from the reach and influence of leading KOLs promoting their products, while the KOL benefits financially from any sales - meaning they’re likely to promote products and brands much harder than they currently do.

Top three online luxury channels (2019)

BRAND WEBSITE

BRAND WECHAT MINI-PROGRAM

KOL WECHAT MINI-PROGRAM

66%

62%

57%


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EVERYONE IS A MICRO-COMMERCE CHANNEL

Individuals can now open their own mini program store, using store template software to be up and running in minutes. Each person can select the products they wish to sell and set the price point, taking a percentage of commission on any sales made. We will start to see more revenue sharing models on WeChat ecommerce stores which in turn leads to a more social-centric commerce approach rather than the more traditional commercial approach.

SOCIAL SHARING IS THE NEWCURRENCY ON WECHAT

We have started to see ‘share to pay’ as a method for people to transact with products and services. For example, publisher Mint Reading requires people to pay a subscription fee to access content, but offers refunds when people share that content to their own network.

We will see brands start to capitalise on this trend by offering discounts and incentivising the most engaged and socially active of their fans and followers.


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Talk to us about your next marketing campaign

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WeChat for your brand: harnessing the power of China’s ... · wechat for your brand: harnessing the power of china’s ‘super app’ 5 social network gaming services utilities