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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Douyin, which literally means “shaking sound” (or “vibrato”) in Chinese, has, without a doubt, created some major shockwaves in Chinese digital world and has become the top success story, particularly in short videos space. In June 2018, the app reached 150 million daily active users and has established itself as the world’s fastest growing app, with the biggest music video community globally.

Zhang Yiming, founder of Toutiao – another hugely popular news aggregator with over 120 million active daily users – is the man behind Douyin success. The technology behind both platforms is underpinned by AI-based algorithms that are designed to learn user preferences in order to fine tune serving the most suitable content.

PHOTO: Zhang Yiming, founder of Beijing ByteDance Technology Co.(Photo by Giulia Marchi/Bloomberg)

Douyin is a deceptively simple app allowing users to do basically do these three things:

1. Watching 15 seconds long video clips that run as a never-ending feed;
2. Shooting and editing 15 seconds videos directly with the phone;
3. Adding filters and special effects to the videos and secretly hoping that they will go viral.

How does an app, which was virtually unknown a year ago, become such a sensation practically overnight? How did it manage to beat the earlier and already quite popular short video apps?

Here are the main reasons for Douyin success:

Technology is the key

Douyin main advantage lies in the technology under the hood. Although, it may seem ridiculously simple, there is a lot of intelligence packed into the platform. It uses sophisticated machine learning algorithms deciding which videos should be served to users, so no two feeds are ever the same. The goal is to hook the users serving them videos that they are most likely to enjoy.

Serving it straight

Rather than focusing on refining the search function, the app developers were betting on having a continuous stream of clips with minimal user control. Only watching the full video or skipping it advances you to the next one. Those choices themselves provide the necessary feedback to the app, which is, in turn, used to further refine the feed.

Tapping into the right demographics

Douyin has been marketing the app for just the right audience: young people in their early-to-mid-twenties, living in 1st and 2nd tier cities and primarily females. As the app popularity continued to rise, now about half of the users come from 3rd and 4th tier cities and the gender split is getting more even.

As it is often noted, with all the entertainment options around, the attention span of that particular demographics is notoriously short making bite-sized 15 seconds clips especially easy for consumption.

Unleashing creativity of common people

The vast majority of the clips are produced by ordinary people using their phones, most typically shot over a popular song’s background. The app makes it super easy for anyone to come up with original content – video editing function are easy to use and by adding special effects and applying original filters, the clips can be made ready for sharing within minutes.

In fact, most of the videos that went viral on Douyin were the dorkiest ones imaginable.

Moreover, in order to stimulate creativity, Douyin often runs contests asking users to shoot videos on a particular topic.

Nurturing early adopters

Douyin has understood the importance of getting creative early adopters on board as early as possible. It reached out to artists and internet celebrities generating the pool of loyal content creators who could produce high quality clips.

As the user base grew, more and more people saw the success of those early adopters. As a result, the prospect of stardom drove even more users to the app, creating a powerful network effect.

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What is unique in China’s millennials who are born around 90’s is the their size – 211 million which is already 5 times larger than their US counterparts. Perhaps not surprisingly, they are also glued to their phones – 50% reported checking their cellphones every 15 minutes.

Social media is the main source information for 70% of Chinese millennials and they spend almost twice the time of Americans watching online videos.

Although Chinese and US millennials online behaviors are similar, the sites and platforms they are using are completely different – primarily due to the fact that all major Western social media platforms are blocked in the Mainland.

They are also big on online shopping and, primarily on mobile and they prefer branded products. Here is more on that.

Chinese millennials market and online behavior infographic

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According to China Internet Network Information Center, the number of live-streaming users reached 325 million as early as in 2016 － nearly half of China’s total internet population of 710 million. According to a report released by China International Capital Corporation, the market size of China’s streaming industry reached 25 to 30 billion yuan in 2018, including hosting platforms, video production and other support services.

It is estimated that Chinese personal live streaming market will be worth $8 billion in 2019 – only half the size of the country’s mobile gaming market.

Panda TV, Douyu Tv, YY, Inke and Momo, portal and micro blogging giant Sina, Youku, Tudou, LeTV, iQiyi, Yizhibo are just some of the Chinese live streaming platforms.

Most live streamers broadcast their daily lives, share activities like playing games, telling jokes, putting on makeup or giving away fashion tips. For many, it has become a full time job.

Curiously, live streaming in China is more popular in lower tier cities rather than 1st tier ones which probably reflects the fact the extra income it provides goes further there than in more expensive cities:

Investors also feel excited about new opportunity: the reports lists 14 live streaming startups that have raised between 1.5 and 390 million dollars each.

Why live streaming in China has become so attractive?

The main reason is its proven monetization process, in other words a relatively easy way to make some cash. In fact, many Chinese users are making more money live streaming than with their regular jobs. It has even provided an extra income to people living in the country side as The Economist has recently reported.

How do Chinese live-streamers make money?

There are generally two ways: virtual gift selling and advertising.

Virtual Gifts

Virtual gifting is how viewers reward streamers for good performance or interesting content. Gifts accrued by streamers then become a streamers’ virtual assets, which can be cashed out based on the specific conversion rates set by live streaming platforms.

During cash out process the platform takes its share, often more than half which is one of their revenue sources.

Most full time streamers make about 500 dollars per month on average from virtual gifts while some can earn up to 2,000. This is not however the only income they can potentially generate. Some of the top streamers also sell goods or act as affiliates. The most successful ones are able to pull income of 20,000 dollars and more from advertising contracts and affiliate commissions.

Advertising

This is another opportunity to earn income for streamers as well as another lucrative revenue source for live-streaming platforms. As more traffic they receive – higher the advertising value of those sites. Ecommerce platforms like Taobao and JD.com are already taking advantage of the phenomenon with their own live streaming in China. According to Taobao Live, the Conversion Rate of Content on the live-streaming site is 32 percent which is practically unheard of in the business.

Some well-known personalities and celebrities help attracting more viewers to those platforms that can results in thousands and, in some cases, millions of purchases in the matter of hours.

According to CNBC Asia report, the trend has spawned support services, such as one run by Ma Tingting, 25, who manages an agency of more than 100 contracted live-streamers in Chengdu, China.

“E-commerce stores come to me and I will assign live-streamers to promote their products,” Ma told CNBC Asia. “Top streamers in my team can help sell more than 1,000 items within a day.”

Live streaming in China is giving rise to a new type of KOLs (key opinion leaders) that can drive and engage with audiences in real time. Also, this type of KOL can often come across as more genuine and more responsive – something that is often not the case with KOLs operating on WeChat or Weibo.

If live-streaming becomes another powerful marketing tool, the effectiveness and the reach of live streaming KOL will only grow. There is no doubt that those users who already got into live-streaming business and are building loyal following are soon going to be sought after by brands, perhaps at the expense of traditional KOLs.

If you are a foreigner and would like to get into live streaming in China we got bad news for you. According to Mashable, foreigners are now having their accounts suspended on big streaming platforms. As it turns out, Chinese officials enforced a new set of regulations last year, stating that non-Chinese streamers had to first apply to the Ministry of Culture before starting their own live-streaming channels.

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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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Astonishingly, 76.3% of surveyed users have indicated that they prefer the freedom and interactivity of online videos over China’s state television. Here are some more facts:

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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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