What is the budget to allocate for digital marketing in China.

China with a billion and a half inhabitants and a growing economy, is one of the most coveted markets by foreign companies, but also one of the most difficult to conquer, especially due to the marketing investments necessary to build and affirm the identity of the brand.

One of the most common mistakes that western companies make with respect to their marketing strategy in China, is to think that the investment must be less than that made in the West. Precisely this approach has prevented over time the real expansion of foreign brands in China. The truth is that deciding whether or not to allocate a marketing budget in China is no longer an option, but a necessity.

Another fact that is often ignored is that today, when we talk about marketing in China, we are talking for about 80% of digital marketing.

The Chinese digital landscape is truly unique and the buying habits of Chinese consumers are also different from those of their Western counterparts.
There are more than 800 million active users on the Internet in China, more than the entire European population. Chinese online users are digitization experts and feel comfortable using social media, e-commerce, mobile payments, QR codes and so on. This makes digital marketing a not only important but dominant part of the marketing strategy for companies in China.

According to a ‘China Digital Marketing Trends 2019′ report by AdMaster which interviewed 110 marketers and 130 digital marketing professionals in China , 79% of advertisers increased their digital marketing spending budget in 2019. Almost a third of respondents increased their spending by 30%, but the average increase in spending is 20%

As a result, digital promotion budget in China became more important than traditional media channels and will represent up to 78.9% of total average promotional spending in China over the next 5 years, a larger share than in any other country.

But let’s try to understand what are the trends that dominate the Chinese digital scenario.

Digital in China means mobile.

Chinese residents spend almost 4 hours a day – or 58.6% of the average daily time – on mobile digital devices. Specifically, the Chinese population spends 77.0% of the daily digital time on their mobile phone, and the remaining 23.0% on the computer.

81% of marketers interviewed by AdMaster increased their marketing budget on mobile devices in 2019.
In a nation obsessed with doing everything on smartphones, the importance of mobile for marketers cannot be overstated.

Social Marketing and Content Marketing continue their rise.

Social marketing is becoming crucial in the Chinese promotional system.
Spending on social marketing will grow on average by 21%, continuing a trend already started in 2018. KOL, short videos, live streaming and official WeChat accounts are the most popular social marketing formats at the moment.

Furthermore, 39% of marketers plan to increase content marketing spending. In particular, short videos (such as those by TikTok) have beaten TV series and online videos in terms of consumers’ favorite content.

Artificial intelligence and Big Data: a growing trend.

60% of digital marketers have been interested in big data marketing in 2019, making them the most followed marketing technologies.

Artificial intelligence and DMP remain relevant considering that more and more companies have started a process of digital transformation.

So what is the budget to allocate for digital marketing in China?

China has changed dramatically over the past five or ten years, becoming very competitive for all brands, and its consumers are increasingly sophisticated and require more creative and elaborate marketing approaches.

The average annual marketing budget for brands of different sizes should look like this:

• Very small: 22,000 – 90,000 euros

• Small: 90,000 – 270,000 euros

• Medium: € 270,000 – € 1,000,000

• Large: 1,000,000 euros or more

In terms of launching a social media campaign, even a very small brand must spend at least € 14,000.

For campaigns launched during the holidays, based on the product category and the chosen platform, the budget would range between 7,000 – 40,000 euros.

Budget allocation depends on a number of factors such as the nature of the business, the final objectives, the target audience, brand recognition and maturity in the Chinese market. However, there are some tips for deciding where to spend the digital marketing budget for China.

For small and new brands:

If you have recently entered the market, interaction with consumers and the use of social media can help you understand which direction to take before making large investments in Influencers and online advertising. Trying to grow your user platform organically and then proceed with advertising campaigns is our suggestion to avoid unnecessary expenses.

If you are a medium / large brand:

Try to distribute your budget in different areas of digital marketing.

For example: 30% on social media, 20-30% in advertising, 20-30% on influencers, 10% on data collection and 10% on offline activities.

Influencer? Only if the strategy is right.

The influencer marketing also known as KOL marketing is one of the most effective promotion techniques at the moment.

Large (Chinese) companies spend 15-40% of their marketing budgets on KOL, while small companies allocate much more, around 50-80%.

However, KOLs can be expensive and not as effective as expected if the brands don’t have the right strategy.

Companies often focus on the number of followers of a blogger, without assessing their quality and above all if the relevant audience of that influencer is suitable for their products.

In recent years there has been a trend towards the use of micro-influencers, more specialized and with more trust from their followers in terms of purchase choices. Since their follower base is not so large and generic, the rate of involvement with the public is generally higher and therefore the public is more loyal.

Not only Online.

It is also very important for brands to direct online traffic to offline stores where customers can physically interact with the brand and enjoy fun shopping experiences, so it is important to invest in events that connect online and offline, such as livestream or bring fans in stores for gifts or short training courses.

Web sites are less and less relevant.

With the evolution of user behavior, websites are becoming less and less relevant in China, replaced by WeChat mini-programs.

This does not mean that websites are unnecessary, but that the role of it in this market is not as relevant as in the West one.

Even relevant content needs advertising to reach a wide audience.

Another key area where you need to allocate the budget for digital marketing is paid advertising.

Algorithms on social platforms in China are constructed in such a way that brands are forced to advertise, so relying exclusively on organic promotion will not generate enough exposure. In the same way, poor contents promoted by paid campaigns will not generate the word of mouth effect and therefore the investment would be empty. We can see content marketing and advertising as two sides of a coin that cannot be separated without cancelling the other.

These are generic guidelines and each brand needs a tailor made promotion strategy driven to enforce the company sales plans. Our advice is: never make “random” promotion in China, it’s like throwing a drop of water in the ocean.