Recent statistics show that there were about 430 million online video users in China and this number has been steadily growing at the annual rate of between 12 to 15% since 2007:

Given such enormous reach and, traditionally, high degree of video consumers’ engagement, advertising on this platform could be highly effective. In fact, according to Youku’s recent financial report, nearly 90% of its revenue comes from selling ads.

On the other hands, advertising on Youku is significantly different from YouTube in several key aspects. In this post, I’m going to review different advertising options with Youku.

More about brand advertising, less about direct marketing

Although some targeted advertising is available with Youku, the options are quite limited. As opposed to Youtube, the platform seems to be unable to target specific users based on their preferences or browsing history. Instead, Youku is still focused on blanket advertising by pursuing the largest possible audience, similar to traditional media such as TV or newspapers.

There is an inherent disadvantage of such approach: displaying Porsche ad to a student or a soccer mom would be a complete waste of Porsche’s advertising dollars (not that we’d feel too sorry for them anyway…). It’s reasonable to assume that Youku is working on smarter ways to display ads but, unfortunately to marketers, it isn’t there just yet.

Youku does offer a lucrative opportunity to reach extremely large audience but it doesn’t come cheap. Also, lack of focus on direct marketing makes Youku platform less suitable for companies seeking to focus on a specific audience.

Limited value of the analytics

Just as with Youtube, Youku makes basic analytics available to its customers. The data includes viewers’ demographics, geolocation, browsing technology, language, operating systems etc. As mentioned above, since the targeting options are not yet well developed, the practical value of such statistics has its limitations. It seems that Youku does know how to display ads relevant to what a viewer is presently watching but can’t show them based on recent browsing history – something that Youtube or Google’s Adsense does quite well.

Great multitude of ad options

The ads can be displayed in various shapes and forms: from videos to banners which can be both static or animated, as well as text links and buttons. Those are often referred to as “hard advertising”. Other forms include product placements in in-house produced content, or branded viral videos all of which are collectively known as “soft advertising”.

The price depends on the type of an ad, where and how it is displayed, and what scheme is chosen by a client. The most expensive ads are the ones that are displayed near the top of the page and those that are larger in size as opposed to smaller ones or those that are visible only after scrolling.

For big spenders only

Advertising prices didn’t see significant changes since 2012 and they vary wildly depending on the type of ads.

There are three basic schemes:

• CPM (cost per thousand impressions)
• banners in various locations on the site
• ads displayed with the video being watched which could be pre-roll, mid-roll and post-roll as well as pause ads.

Here is an example of the list prices (in RMB) for pre-roll CPM ads which are based on the IP address location and the length:

These are the list prices for for banner ads (Youku does offer volume discounts):

The actual price list of Youku ads choices is obviously much more elaborate and contains a few dozen different models, however, clearly, there are no low budget options here.

Who are the typical advertisers?

According to Youku, the vast majority of the advertisers are producers of the fast-moving consumer goods (~50%); IT services and telecoms (~20%); internet services (~10%) with the rest of the 20% spread between automotive companies, financial services and some others. Youku works with fairly large number of globally-recognized companies such as P&G, Coca-cola, General Motors, Apple as well as local heavyweights like China Mobile, e-commerce company Jingdong.com, food company Yum! etc.

In conclusion, Youku does offer a lucrative opportunity to reach extremely large audience but it doesn’t come cheap. Also, lack of focus on direct marketing makes Youku platform less suitable for companies seeking to focus on a specific audience. On the other hand, advertisers that could benefit less from accurate targeting, fast food chains for example, can see their advertising dollars well spent by using Youku platform.

In the next post, I’ll get into some more details on various advertising and ad display options with Youku. Stay tuned.

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The main attributes of various types of ads running on Youku site is the ad’s location, size, frequency and media type. Prices are based on the combination of those attributes and range between  30 RMB per thousand impressions for a 15 seconds pre-roll ad with CPM model  to 250,000 RMB for 24 hours of displaying the largest banner ad on the top of the page.

Here are the most common types of advertising on Youku:

Youku top banner ads

Banner ads can be displayed at the top, the middle or at the bottom of a page, as well as on the right panel’s top or bottom. Here is an example of the top page and top side panel’s banner ads:

Youku mid-page banner ads

Getting to the middle page banner takes a bit of scrolling down and it looks like this:

Youku bottom banner ads

Finally, the cheapest (relatively speaking) are the bottom banners that wouldn’t be visible until a user scrolls all the way down:

Youku pre-roll ads

Those are the ads that are displayed before the start of a video and they can’t be skipped:

Youku mid and post-roll ads

Finally, mid and post-roll ads are displayed during the video at certain times or at the end of it, similar to TV commercials. Since they can be skipped by a viewer they will be priced at much lower rate than pre-roll ones.

Here is an example of a post-roll ad that is displayed upon the end of a clip and will stay on until closed:

Youku pause ads

Pause ads is anther popular choice of adverting on Youku. Those ads are displayed whenever a video is paused. Such ad would stay on until playback is resumed. Those types of ads are usually static but can be quite effective – if the video is paused several times, a viewer will be seeing it every time which increases the impression rate per the same user.

Here is how a pause ad would look like:

Moreover, there is a nice feature of Youku that keeps a small floating frame of the video in constant view every time the page is scrolled down. This means that whenever a clip is paused, a pause ad will stay in view no matter where a user is on the page. Here is how that would look like:

In conclusion, advertising options on Youku although similar to Youtube, are in some ways more versatile and creative. This, however, does make pages look more cluttered and disorganized. On the other hand, Chinese consumers generally don’t consider such apparent clutter a distraction and, in fact, do prefer busy look of sites like Youku to clean and minimalist style that is more effective with Western consumers. Read here more on this particular topic.

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Here are just some of the most impressive nuggets on what has happened on one minute on China Internet:

• Almost 400,000 people log in to WeChat app every minute;
• 625,000 Youku-Tudou videos are being watched;
• Almost 65,000 Weibo tweets with over 50,000 of them containing images;
• Over 4 million of Baidu search queries;
• $1.1 million is spent on Taobao or Tmall;

China Internet in 60 seconds:

(credit to TechInAsia)

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Communication, browsing mobile internet, listening to music and watching videos are the most common activities of Chinese mobile users. Not surprisingly, companies who traditionally dominated those niches on the internet have also been the leading providers on mobile.

Interestingly enough, not only that there isn’t a single non-Chinese app in the top 10 list, they don’t even make the first 50. In fact, the only foreign app that enjoys some popularity in China is Google’s mobile Chrome browser.

Top 10 Mobile Apps in China

#1: WeChat

Having been installed with almost every Chinese smartphone, WeChat is the undisputed leader of mobile apps in China. WeChat user base has recently passed 700 million and continues growing. Tencent, WeChat developer, is one of the most innovative Chinese tech firms and is part of the so called BAT – the acronym for Baidu, Alibaba and Tencent.

#2: QQ

QQ is another hugely popular messaging app that has been the flagship Tencent product before WeChat. In fact, it is still the most popular communication tool on desktops and, is, perhaps, the most well known Chinese internet brand. Overall, its migration to mobile has been largely successful as offers a simple alternative to WeChat, although most people still use both. In fact, you are unlikely to meet a Chinese person below 50 who doesn’t have a QQ number.

#3: Mobile Baidu

While Baidu holds “only” about 60% of desktop search market in China, it completely dominates mobile with about 90% market share. Baidu mobile app is the third most used mobile app in China. It is also well designed, very fast, and accepts multiple input modes. Baidu is another part of BAT mentioned earlier.

#4: Taobao

When Chinese are not chatting or searching mobile net, they are shopping. Browsing Taobao app, is one of the most favorite pastimes for millions of people and it is often highly addictive. It is not uncommon to notice people shopping on their phone with Taobao app while eating, riding a subway or even driving…

#5: UC Browser

UC Browser is a mobile browser developed by Chinese mobile Internet company UCWeb. UC Browser claimed to have reached 500 million users in March 2014 majority of which were in China. It is still the most popular mobile browser here despite 2015 leaks linked to whistleblower Edward Snowden revealing some serious security weak points of UC Browser.

#6: QQ Browser

QQ Browser is the second most popular mobile browser across all mobile platforms. Tencent, has been leveraging their browser app installation using their other popular platforms mentioned earlier.

#7: Tencent Video

Watching videos is another most popular activity of Chinese mobile users and QQ video has been their platform of choice. Tencent video app has recently surpassed YouKu, the most popular Chinese video platform, in terms of mobile market share. Most commonly, it is used for watching TV soap operas and TV game shows while on the go.

#8: Sogou Mobile Input

Initially released in 2006, Sogou Pinyin is the most popular Chinese input software. It makes use of its search engine techniques which are the analysis and categorization of the most popular words or phrases on the Internet. Its mobile app version can be used with both Android and iOS devices offering dozens of colorful keyboards with hundreds of popular emojis and stickers that are so popular with Chinese mobile users.

#9: 360 Mobile Security

This app serves as both antivirus and memory management app and is most popular with Android devices, although it can installed with iPhones as well. It was developed by the second most popular Chinese search engine, Qihoo, also known as 360 Search. Qihoo 360 security software has a large install base on desktop, largely thanks to its free antivirus software.

#10: YouKu

YouKu is the largest video hosting platform and is among most popular video mobile apps in China. Although, it has been losing its mobile share market to Tencent, YouKu isn’t too far behind in terms of popularity. Often associated with pirated shows and films in the past, YouKu has largely cleaned up its act and now claims to only host legitimate content. Millions of Chinese tune to YouKu for their favorite TV shows everyday.

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Although the digital landscape in China continues changing, it is safe to assume that the main elements, such as current dominant platforms and leading services, will remain more or less the same for the next 2-3 years. In any case, the following infographic by Sampi Marketing, reflects the present state as of mid 2015.

Primary online platforms, such as Baidu for  SEO and SEM, Youku for video, WeChat for mobile and Sina Weibo for social media, are still the main elements in digital marketing in China. Additional platforms as well as other various ways of reaching people online are also covered in this infographic which is presented in a form of sequential process.

Depending on the nature of your business and marketing objectives in China, not all of the elements may be applicable or equally effective. So, the readers should take the information as an ideal and most complete set of tools to choose from:

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According to the latest numbers from iResearch, a consulting firm, in July 2014 there were 270 million mobile video users in China, which represents an increase of 134% from the same period in 2013. According to the figures, iQiyi has claimed the top spot with over 134 million users, closely followed by Youku-Tudou with 129 million. Although it seem to be doing well on mobile, in desktop space iQiyi’s market share is currently behind Youku-Tudou, Sohu and Tencent.

The company is founded by Baidu, the largest search engine in China. Baidu has also acquired PPS, another online video provider, in order to boost its position in the video market and counter Youku-Tudou. iQiyi focuses on fully licensed and high-definition content. It also provides content to iCNTV, which is the first internet television platform approved by China’s State Administration of Radio, Film and Television (SARFT).

In terms of monthly users, iQiyi has grown by over 9% in July 2014 and is estimated not only to retain its leading position in online mobile video market but to double its user base by the end of the year. This is the current market share breakdown of the top mobile video providers in China:

It has also been rumored that Alibaba is looking to buy PPTV, another popular video provider. If that happens, the competition in this space is likely to further intensify. When it comes to online videos, the absence of a dominant player like Youtube in the Western market, means that videos are not searchable across platforms. Users will have to download multiple apps in order to find what they are looking for.

With billions of hours being spent on mobile videos, those companies are rushing to monetize their mobile presence with advertising. iQiyi has a cross-platform ad service  covering its website and apps for Windows, iOS, and Android.

Youku Tudou is also offering mobile ads. Currently, iQiyi and Youku mobile apps offer two types of ads: pre-roll and pause ads. Here are the examples of pre-roll ads on iQiyi and Youku:

Below are the examples of a pause-ad on the same platforms:

One of the factors behind the growth of mobile video is the increase in the popularity of phablets, or smartphones with screens that are 5″ wide or more.

Another factor is improved battery life for Android devices. Finally, the increased availability of Wi-Fi is further contributing to the spread of mobile videos in China.

In conclusion, mobile videos provide excellent platform for advertising in China and the market continues growing. Also, from a marketer’s perspective, it will get even more attractive due to the fact that advertising prices will most likely go down because of the fierce competition between those providers.

On the other hand, depending on the advertising goals, this advantage could be offset by the need to advertise on multiple platforms to maximize the reach.

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Things in China are no different with one exception – YouTube has been blocked here since 2012. The “Chinese Youtube” is called Youku and while it is no YouTube clone, it operates along the same lines. After merging with another video hosting provider, Tudou, in March 2012, Youku Tudou became number one video site with well over 50% market share and growing.

According to figures from iResearch, the online video market size will grow to 16.53 billion yuan ($2.72 billion) by the end of 2014, up from 12.25  billion yuan ($2.02 billion) at the end of 2013. With over half of the online video market share, Youku has become the primary channel to reach 600 million Chinese internet users.

Here is the list of 8 key factors that have to be taken into account when considering brand marketing with online videos to Chinese:

#1: You only got 2 seconds

There is a crucial difference between online videos and TV ads: watching TV is a passive experience vs. interactive one in case of online videos. For an online video it means one thing – it has to be engaging from the start. All of us are sick and tired of boring or over the top TV ads but we watch them anyway, often simply because we are too lazy to reach for a remote. With online videos, moving on is a matter of a click or a finger tap. If it doesn’t pick your interest in the first 2 seconds, you won’t watch it;

#2: Make them laugh

Number one type of content that is being retweeted in social media in China are jokes. If at all appropriate, make your video as funny as possible. Of course, you should take into account that many jokes Westerners find funny fall flat in China and vice versa, so make sure that it is reviewed and approved by a native Chinese first, they are in much better position to judge how funny the content seems to them. In my experience, employing goofy characters with some degree of slapstick humor works the best;

#3: Make them cry

Another type of content that works well is the one that connects on the emotional level. Recent Pepsi advertisement about a lonely father who receives an unexpected visit from his grown up successful children all brought together by accidentally triggered childhood memories (Pepsi-related, of course) has brought many viewers to tears and became an instant hit;

#4: Produce mini soap opera

The most successful video advertising in China has been built as a narrative. Estée Lauder’s launched a drama series, Sufei’s Diary, with 40 episodes broadcast daily on a dedicated Web site. The show was received as an entertainment and less of an advertisement resulting in millions of people tuned in daily. As a result, brand awareness of their product was measured to be higher by 27% over competitors;

#5: Optimize for mobile

One of the advantages of online videos vs. traditional TV ads is the opportunity for almost immediate conversion. All it takes is a click or a tap to place an order, to join a mailing list or to send some other type of interactive response to the advertiser. In order to take full advantage of it, the entire experience has to work smoothly and seamlessly. It’s especially true for videos optimized for mobile devices – you don’t want your viewers to end up on a standard landing page that is not optimized for mobile;

#6: Spread the message

Once the video is produced and posted online it’s very important to make sure it’s easily found. First of all, the tags have to be in Chinese and they should be relevant to the brand, the message and the content. Second, make sure to integrate video with other online marketing content: link to it from your main website, your social media such as Weibo and WeChat, your newsletter etc. It is even possible to integrate a specific video or your Youku video channel with your printed material via QR code (read here about QR code usage in China);

#7: Don’t count on search engine

In case of Google, videos are posted on YouTube are indexed and appear in search results within few days. Of course, it is because of the fact that Google owns YouTube. This is not the case of the largest Chinese search engine Baidu which has its own video hosting service and is in engaged in a fierce battle with Youku over the market share. Of course, most popular video content from Youku would still appear in the search results but it takes much longer;

#8: Look beyond the metrics

Measuring the reach and the impact of your online video campaign is always an important aspect of the overall online marketing strategy, unfortunately the lack of reliable tools and huge spam problem make this task very difficult. Of course, conversion rate is always the best measuring stick but if your goal is brand recognition things get trickier. The key is to focus on the quality vs. quantity as the numbers can be misleading. Reaching the key opinion leaders (KOL), individuals who are most active in Microblogs with thousands of followers, is the best way to spread your message fast and to the most receptive audience. Identifying those channels takes time and experience but the results will be well worth the effort.

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