what’s next for china’s connected consumers · ... digital consumer trends 4 mobile 5 social 8...

WHAT’S NEXT FOR CHINA’S CONNECTED CONSUMERS

A ROADMAP FOR DRIVING DIGITAL DEMAND

2 What's Next For China's Connected Consumers

CONTENTS PART 1: DIGITAL CONSUMER TRENDS 4Mobile 5Social 8E-Commerce 10OnlinePayments&Finance 12DigitalAdvertising 14

PART 2: HOW TO WIN 16TheRightPeople 17TheRightPlace 20TheRightMessage 24

PART 3: FUTURE TRENDS 27MachineLearningandVirtualAssistants 28Robotics,DronesandAutonomousVehicles 29VirtualandAugmentedReality 29FrictionlessPayments 30BigDataandPredictiveAnalytics 30LookingAhead 31

Copyright © 2018 The Nielsen Company 3

Chineseconsumersaremoreconnectedthaneverbefore.Today,therearemorethan750millionnetizensinChina–greaterthanthetotalpopulationofEurope.1Asthedigitalrevolutiontransformsbuyingbehaviors, thewaybrandsengagetheiraudiencesmustfundamentallychange.

Amidskyrocketingdemandforconvenienceandconnectivity,Chineseconsumersspendanaverageof27hourssurfingtheinterneteachweek.2Inlinewiththesetrends,Nielsen’se-commercetrackingshowsonlinesalesgrew28%in2017.Offlinesalesincreasedjust5%overthesameperiod.3

Consumers’willingnesstoembed innovations intheir liveshascreatedaburgeoningdigitalecosysteminChina,andit isestimatedthatthedigitaleconomynowcontributesmorethan30%ofChina’sGDP.4Astheinternetspreadsfurther,andnewtechnologiesaredevelopedandadopted,China’sdigitaleconomywillcontinuetogrowandthrive.

While thisoffersbrandowners significantopportunities, it alsobrings significantchallenges.Asconsumersdancebetweenonlineandofflineworlds,theycreatecountlesstouchpointsforengagement,advertisingandinformation.Inthisfragmentedecosystem,precisionisessentialtoachievingdigitalreturns.

TowininconnectedChina,marketersmustunderstandtheforcesthatdriveconsumptionandstayaheadofemergingdigitaltrends.Atthesametime,measurementandreal-timefeedbackwillenablebrandownerstofocusontargetpathswiththehighestreturnoninvestment(ROI).

Inthisreport,Nielsenprovidesaroadmapfordigitalsuccess.ByoutliningtheemergingdigitaltrendsdrivinggrowthinChina,andrevealingathree-pointplanforengagingtoday’sconnectedconsumers,thisreportstrivestoequipmarketerswithastrategiccompassforreachingtherightpeople,intherightplace,withtherightmessage.

AreyoureadytounleashChina’snextwaveofdigitaldemand?

1ChinaInternetNetworkInformationCenter.StatisticalReportonInternetDevelopmentinChina.June2017.2ChinaInternetNetworkInformationCenter.StatisticalReportonInternetDevelopmentinChina.June2017.3Nielsene-Commercetracking.Datafor34FMCGcategories.12-monthrollingaverageleadinguptoSeptember20174ChinaAcademyofInformationandCommunicationsTechnology,MinistryofIndustryandInformationTechnology.July2017.

WHAT’S NEXT FOR CHINA’S CONNECTED CONSUMERS?

4

PART 1: DIGITAL CONSUMER TRENDS China’sdigitallandscaperarelystandsstill.Thewayconsumersadoptandintegratedigitalinnovationsintotheir livesis inconstantflux.Understandingtheemergingtrendstodaywillbeessentialforsuccesstomorrow.

Whiledigitalwavesaretouchingshoreacrosstheglobe,thereareundercurrentsuniquetoChinathatarehavingamassiveinfluenceonconsumption.Today’sChineseconsumersareusingmobiledevices,socialmedia,e-commerce,onlinepaymentsanddigitalvideoindistinctivewaystoforgeconnections,accessconvenientshoppingroutesandunlocknovelexperiencesinChinaandbeyond.

What's Next For China's Connected Consumers

77

70

53

36

8

2013 2014 2015 2016 2017

MOBILE PHONE

DESKTOP COMPUTER

LAPTOP

TABLET PC

SMART TV

67

62

5733

8

7164

60

34

9

81

59

57

30

5

84

57

55

28

5

ONLINE SHOPPING PENETRATION BY DEVICE(%)


China is themobile capitalof theworld.According to theChina InternetNetworkInformationCenter(CNNIC),therewere724millionmobileinternetusersinthefirsthalfof2017.Theyaccountfor96%ofthetotalnetizenpopulation,upfrom90%in2015.5

Affordablehandsetscontinuetofloodthemarket,bringingconnectivitywithinthereachofmillions.AmidChina’srapiddevelopmentandurbanization,consumersnowleapfrogPCandlaptoppurchasestoaccesstheinternetthroughtheirmobiledevicesalone.

Today,mobileisanindispensabletooltoshop,keepupwiththelatestbuzzandaccessnewconveniences. Inthisnewlandscape,amobile-firstapproachisnolongerenough.Toengagetoday’sconnectedconsumers,brandownersmustdevelopmobile-centricstrategies.

MOBILE COMMERCE CONTINUES TO RISE Mobile isthenumberonedeviceforonlineshoppinginChina.Nielsenresearchshows84%ofconsumersusedtheirmobilephonetoshopin2017–upfrom71%in2015.Atthesametime,theproportionofconsumerswhousetheir laptops,desktopsandtabletstomakeonlinepurchaseshassteadilydeclined.

MOBILE

5ChinaInternetNetworkInformationCenter.StatisticalReportonInternetDevelopmentinChina.June2017.

Less than RMB 8,000

AVG MONTHLY HOUSEHOLD INCOME

RMB 8,000-10,999

RMB 11,000-17,999

More than RMB 18,000

13%

27%

34%

26%

MOBILE ONLINE SHOPPER PROFILE


Millennialconsumersaremostlikelytousetheirmobiledevicestoshop.Nielsenresearchshows29%ofmobileshoppersareaged26to30.Afurther22%areaged31to35.Theseconnectedshoppersaretypicallymarried,andhavesizeablesalaries,withmorethan60%earningahouseholdincomeofatleastRMB11,000permonth.

Assmartphonesbecometrusteddevicestoshop,mobilepaymentshavesoared.ThewidespreadadoptionofAlipayandWeChatWalletmeansshoppersnowfind itmoreconvenienttopaythroughtheirsmartphonesthanpaywithcash.Nielsenresearchshows70%ofconsumershaveusedWeChatWalletinthepast12months.Afurther92%haveusedAlipay.

AlipayandWeChatnowoffer thrivingonlineecosystemswhereconsumerscanusecountlessserviceswithinasingleapp.Bysuccessfullyharnessingtheseplatforms,brandownerswillhavethechancetoaccessandengageaballooningaudienceofconnectedconsumers.


MOBILE FUELS A SHARING ECONOMY ThealmostuniversaladoptionofmobiledeviceshashelpedasharingeconomyemergeinChina.Digitalpaymentsactivatedthroughmobiledevicesarehelpingconsumersaccessnewproducts,experiencesandconveniences.

AccordingtoareportreleasedbytheState InformationCenterofChina, transactionvolumesinthesharingeconomynowexceed$500billion. Itestimatesthatthesharingeconomywillaccountformorethan10%ofGDPby2020.

Consumersnowusetheirmobiledevices tounlockeverything fromelectriccarsandbicycles tomobilephonechargersandumbrellas.Asconsumers increasinglychoosecollaborativeconsumptionoverownership,mobileappsanddigitalplatformsarecreatingincredibleamountsofuserdata.Harnessingthepowerof thisdata toenable fasteriterationsanddeeperconsumerunderstandingwillbeessentialforstayingaheadofthisrapidlydevelopingmarket.


China’s fast-movingsocialmedia landscape is thriving.Around902milliondailyusersloggedintoWeChatduringSeptember2017,up17%year-on-year.6

Innovationfuelsplatformsuccess.Socialmediasitesarenolonger justatooltomakeconnectionswithfriends,familyandlike-mindedstrangers.Today,theyareadoorwaytoaworldofentertainment,commerceandutility.

Socialmedianowexertsahugeinfluenceonpurchasedecisions.Againstthisbackdrop,brandsuccesswill increasinglydependonwhethermarketerscansuccessfullyexecutesocialmediacampaignsthatconvertbuzzintosales.

SOCIAL MEDIA INFLUENCE BLOSSOMS SocialmediahasbecomeacorepurchasedriverinChina.Today’sconnectedconsumerscompletetheirentirebuying journeyonsocialplatforms–fromresearchingbrandstopurchasinggoodsandleavingfeedback.

Asplatformsevolve tooffernewshoppingexperiences, consumershavebecomeincreasinglyexposedtosocialmediaadvertising.Nativebrandmessagesnowblendwithnewsfeedupdatesandpostsfromfriends.Whilesuccessisnotguaranteed,socialmediaadvertisingcanofferbigopportunitiesforbrandownersinChina.

WeChat isakey influence.Nielsen’s2017OnlineShopperTrendReportshows51%ofconsumershaveopenedpushnotificationssentfromabrand’sofficialWeChataccount.Whenexecutedintherightway,thesealertscanhelpupliftsales;27%ofconsumerssaytheybuymoreafterreceivingthesemessages.

Asconsumersbecomemoreexposedtosocialmediaadvertising,brandshavetoworkhardertocutthroughthenoise.Data-poweredaudiencesegmentationwillbecomecriticaltocapturingattentioninacrowdedmarketplace.

SOCIAL

6Tencent.2017WeChatDataReport.September2017.

Official account on Weibo

Friends on Weibo

Official account on WeChat

Friends on WeChat

24% 24% 16% 13% 10%

13% 25% 24% 15% 14% 9%

12% 22% 27% 18% 14% 7%

14% 24% 25% 17% 12% 7%

13%

SOCIAL NETWORK INFLUENCE ON ONLINE SHOPPING

Base: Person time for different categories, n=8043 Source: Q37 When shopping online, how does the social network affect you?

INFORMATION ABOUT A BRAND OR PRODUCT FROM: INFLUENCE ON CONSUMERS’ ONLINE SHOPPING:Will make unplanned purchases

Will purchase if already had a plan for same category

Will purchase more than planned

Will change my plan and purchase promoted product

No influence on me

Have not seen this type of information


FAN ECONOMY THRIVESChineseshoppersshowaninsatiableappetiteforproductsandservicesthathavebeenendorsedbytheir latest idol.BrandsthatsuccessfullyusesocialplatformstoconnectChinesestarsandtheirfanscanachievesignificantsocialbuzz.

Forexample,fashionbloggerBeckyLirecentlyhelpedMINICoopersell100limitededitioncarsonWeChat.Thecars,whichhaveasalevalueofaroundRMB285,000,sold infiveminutes.Li’sabilitytowooChineseshoppersmeanssheisoftenreveredasamai shen,or"BuyingGoddess."Butsheisoneofmanyinfluencers.

China’s faneconomyextendsbeyondcelebrityendorsements.TheNielsenPost00sConsumerStudyshows28%ofteenagersarealsowillingtospendmoneyontheiridols.Idolsandrisingkeyopinionleadersnowhostlive-streamingcontentonplatformssuchasKuaiShouandHuaJiao.Fanscansendgiftsandrewards,whichareoftenexchangedforreal-worldmoney.

China’s faneconomyshowsnosignofbottomingout in theshort tomediumterm.Thisoffersnewopportunities forbrandawareness.Buteffectiveexecutionandclosemonitoring iscritical.Tooptimize investment,brandsneedtotranslateviralbuzz intopurchases.Themostsuccessfulcampaignswilldriveconsumerstoplatformswheresalescanbemadeandtracked.


ThespreadoftechnologymeansChina’sconnectedconsumersarenolongertetheredtobricksandmortarstores.Today,theycanunlockretailexperiencesathome,atworkoronthego.

E-commerceisthegrowthengineofChineseretail.Nielsen’se-commercetrackingdata,within34FMCGcategories,shows that ina12-monthrollingaverage leadingup toSeptember2017,onlinesalesgrew28%versustheyearbefore.Offlinesales increasedjust5%overthesameperiod.

“Today’sChineseconsumersarequicklyembracingadigitallifestyle.Againstthisbackdrop,e-commercesalesaresoaring.Nielsen’sConsumerConfidenceIndex(CCI)reportfoundthat47%ofChineseconsumersareshiftingtheirspendfromofflinetoonline,butonly7%saythatspendismovinginthereversedirection,”notedVishalBali,ManagingDirector,NielsenChina.“Keyreasonsforthisincludetheconvenienceofonlineshopping,aswellasthevastselectionoflocalandcross-borderproducts.Weexpectconsumerstofurtherincreasetheironlinespendinthenearfuture.”

CONSUMERS SPEND MORE ONLINE WhoareChina’sonlineconsumers?Andhowdotheycompare tobricksandmortarbuyers?Nielsenresearchshowsonlineshoppersaretypicallyyoungerandwealthierthantheirofflinecounterparts,andshopmoreoften.

Onaverage,onlineconsumersare33yearsoldandhaveamonthlyhouseholdincomeofRMB13,283–nearlydoubletheRMB7,809ofofflineshoppers.Theytypicallyshoponline5.1timespermonth.Bycomparison,offlineconsumersshop4.0timespermonth.

Consumerappetiteforconveniencecontinuestodriveonlinepurchases.Nielsenresearchshows53%shoponlinebecauseit iseasytocompareprices;36%sayitallowsthemtobeatthecrowds;and43%citetheabilitytogetitemsdeliveredtotheirhomes.

Asconsumerappetite foronlineshoppingclimbssharply,brandownersshouldviewe-commercesitesasmediaplatforms intheirownright.E-commerceadvertisingandproductvisibilitywillhelpincentivizepurchasedecisions.ThekeywillbetounderstandwhichplacementsandadformatsofferthebiggestROI.

E-COMMERCE

32%

2013

32%

2014

34%

2015

61%

2016

64%

2017

OVERSEAS SHOPPING PENETRATION


CROSS-BORDER TRANSACTIONS SKYROCKET InternetconnectivityhasbroadenedthehorizonsofChineseshoppers.ConsumersnowusetheirPCs,tabletsandsmartphonestoaccessproductsandservicesfrommarketsaroundtheworld.

Nielsen’s2017OnlineShopperTrendReportshowstheproportionofconsumersthatbuyfromoverseaswebsiteshasgrownfrom34%in2015to64%in2017.Youngershoppersdrivethetrend–18to35yearoldsaccountfor66%ofcross-borderbuyers.

Babyproductsare favored items tobuyoverseas. In the firsthalfof2017,Nielsene-commercedatafoundthatcross-borderpurchasesaccountedfor13%ofonlinebabyfoodsalesand13%ofonlineinfantmilkformulapurchases.Cross-borderpersonalcarecategorysalesarealsobuoyant.

Whilecross-bordershoppingoffersbigopportunities fore-tailers, italsobringsnewchallenges.Nielsenresearchshowsthatcross-bordershoppersremainfrustratedbylonglogisticstimes,communicationproblemsandtheinconvenienceofexchangingandreturningproducts.

Platforms that canaddress theseproblemareasaswellas successfullynavigateacontinuallyevolvingtradepolicyenvironmentwillunlockagrowingcohortofconsumersthatarewillingtospend.

TOP MOBILE PAYMENT ACTIVITIES TOP BARRIERS TO MOBILE PAYMENT

Online shopping 82% Payment and account security 58%

Money transfer 68% Prefer payment process on a PC 38%

Pay utilities and services 66% Payment apps are complicated 20%Receive and send

red envelopes 64% No need for mobile payments 18%

Physical retail shopping 57% Mobile screen is inconvenient 18%

MOBILE PAYMENT TRIGGERS & BARRIERS

Base: Payment app user, n=4360, non payment app user, n=40Source: Q62 What do you use payment app for? Q61 Why not using payment app(s)?


ONLINE PAYMENTS & FINANCEOverthe2017LunarNewYear,WeChatuserssent46billionelectronicredenvelopes,orhóngbāo,tofriendsandfamily.Therapiduptakeofdigitalhóngbāoisaclearsignalofconsumers’appetitetoadoptinternetpaymentservices,particularlyovermobiledevices.

Atthesametime,China’salternativefinancesectorispluggingthegapleftbylacklustercreditandlendingoptions,creatingnewroutestobuygoods,transferfundsandmanagewealth.Theemergenceof theseonlinetoolswill fundamentallychangeconsumptionhabitsinChina.

MOBILE PAYMENTS CATCH UP WITH ONLINEMobilepaymentshaveexperiencedextraordinarygrowthinrecentyears.AccordingtotheCNNIC,thenumberofpeopleusingmobilepaymentsmorethandoubledbetween2014and2017tohit502million.

Nielsenresearchshowsmostconsumersusemobilepaymentstotransferfundsorpayforonlineshopping.Overthepast twoyears, therehasbeenasharp increase intheproportionofconsumersthatusemobilepaymentstoreceiveandsendredenvelopes,aswellaspayforgoodsinbricksandmortarstores.


Despite thegrowingpopularityofmobilepayments, frictionpoints remain.Nielsenresearchshows58%ofconsumerssaysecurityconcernsareatopbarriertoadoption.PlatformsthattackletheseconcernstoofferwatertighttransactionswillberewardedbyChina’sdigitallysavvyconsumers.

FINTECH SECTOR FLOURISHES China’sfledglingalternativefinancesectorisflourishing.Limitedbankandcredit lendingopportunitiesmeanstoday’smiddleclassconsumersareturningtotech-ledsolutionstoaccessconvenientlending,insuranceandwealthmanagementservices.

Nielsenresearchshowsthat54%ofTierOneconsumershaveinvestedinonlinefinancialproducts.Afurther38%saytheywillincreasetheirspendingontheseproductsoverthenext12months.Favorableborrowingtermsandinterestrateswillcontinuetoincentivizetakeup.

At the same time, thewidespreadavailabilityofnew finance routes continues toencourageconsumption.Consumershavebeenquick toadoptshort-term loansandpaymentplansofferedbye-commercesites,particularlyduringshoppingholidays. Inafintechera,brandownershaveasignificantopportunitytoextendtheirmarketreach.

5346

36 34

2226

1824

2023

TV ADS NEWSPAPER/MAGAZINE ADS

OUT OF HOME ADS DIGITAL (PC) ADS DIGITAL (PHONE) ADS

2016

2017

LEVEL OF TRUST IN ADVERTISING BY MEDIA TYPE

data source：CCI Q2 Q408

% OF CONSUMERS WHO TRUST SPECIFIED MEDIA TYPE


DIGITAL ADVERTISING TheriseofChina’sdigitaleconomymeansbrandsmustnowreachtheiraudiences innewplaces.Asconsumers increasinglyshopviatheirmobiledevicesandsocialmediaplatforms,investmentindigitaladvertisinghasclimbed.

AccordingtoeMarketerforecasts,brandownerswillspendmorethan$62billionondigitaladvertisingin2018.Itpredictsthatthiswillrisetomorethan$83billionby2020.7YetasChineseconsumersbecomemoreexposedtodigitaladvertising,ithasbecomeharderforbrandownerstostandoutfromthecrowd.

INCREASING TRUST IN DIGITALThewidespreadadoptionoftechnologyandinternet-enableddevicesmeansconsumersarebecomingincreasinglycomfortablewithdigitaladvertising.

Nielsenresearchshowsthatbetween2016and2017,confidenceinmobileadvertisingincreasedfrom20%to23%.TrustinPCadvertsalsoincreasedfrom18%to24%overthesameperiod.

Bycomparison,trust intraditionaladvertisinghasbeguntowane,althoughconfidencelevelsarestillhigheroverall.Between2016and2017,trust inTVadvertisingwasdownfrom53%to46%,whiletrustinmagazinesalsofellfrom36%to34%.

7eMarketer.DigitalAdSpendRisesinChinaDespiteEconomicSlowdown.March9,2016

Althoughconfidenceindigitaladvertisingisrising,afragmentedlandscapemeansitcanbedifficultforbrandownerstofostertrueengagementwithconsumers.Targetingthemosteffectiveplatformsanddevices,andchoosingtherightadvertisingformatandtimetoconnect,willbethedifferencebetweenbrandengagementandgettingignored.


SEARCH ONLINE 39%ASK A FRIEND ABOUT IT 34%

VISIT THE BRAND WEBSITE 26%CLICK THE AD 25%

CHECK ONLINE REVIEWS 23%CHECK THE BRAND WECHAT ACCOUNT 17%

AFTER VIEWING AN INTERESTING VIDEO AD, WHAT DO YOU DO NEXT?

BUYERS ACT ON DIGITAL MESSAGES Today’sconnectedconsumerspaycloseattentiontobrandmessagestheyreceiveontheirdevices.Nielsenresearchshowsthat38%ofconsumersconsciouslychoosetowatchtheadvertstheyseeontheirmobile.Afurther30%ofconsumerswatchtheadvertstheyseeontheirPC.

Atthesametime,consumersarewillingtoactafterseeingadvertisingondigitalplatforms.Nielsenresearchfindsthatamongconsumerswhowanttofindoutmoreafterviewingadigitaladvert,39%willmakeafollow-upsearchonline,34%willaskafriendformoreinformationand26%willgotothebrandwebsite.

Inthisnewlandscape,brandsmustofferconsumersaseamlessjourneyacrossplatforms,with consistentmessages reinforcedateach touchpoint. Successwilldependonmarketers’abilitytoclosethepurchaseloopbytranslatingbrandawarenessintosales.

16

PART 2:HOW TO WINThe riseof connecteddevices, socialmedia,digital videoande-commercemeansmarketersfaceadizzyarrayofoptionstoengageconsumers.Inafragmentedandfast-changingdigitalworld,howcanbrandownersmakeanimpact?

TounlocktrueROI,marketersneedadeeperunderstandingoftheirtargetaudiencesaswellaseffectivemeasurementsolutionstotrackreachandengagement.

Atthesametime,simplificationandintegration iscritical.Brandownersmustanalyzemoreaccurately,targetacrossplatformsandfindwaystoseamlesslyblendtheironlineandofflineofferings.

Towin inconnectedChina,brandownersneedtoreachtherightpeople, intherightplace,withtherightmessage.

What's Next For China's Connected Consumers


THE RIGHT PEOPLETechnology isdrivingamarketing revolution.Digital connectivityhasempoweredconsumers.Withbrandsnolongerowningtheconversation,thewaytheycommunicateandbuildrelationshipsmustradicallychange.

Marketingmustshift frommassbroadcaststo individualengagement.Brandsneedtoconnectwiththehumanwholebyfindingnewwaystowinoverconsumers’minds,heartsandspirits.

REDEFINE YOUR TARGET AUDIENCE Today,mediabuyingmustbe individually targeted.Marketerscanno longer justrelyongeneraldemographicdata.Toreachtherightaudiences,theymustunearthricherconsumerportraits.

Thespreadof technologyprovidesa treasuretroveof information.Eachday,mobiledevicesproducethousandsofdatapointsaboutaconsumer’sonlineactivities.Socialmedia,PCsande-commercesitesaddthousandsmore.Marketersmustusetherightsolutionstoturnthisintosmart,actionableinsights.

“Over the past decade, digital technology has fundamentally changed consumer behavior while creating a massive amount of data. Nielsen sees this data as an enabler of success in today’s fragmented media landscape. By harnessing big data, it is now possible to carry out precision marketing and accurately measure campaign outcomes. Brand owners will be able to clearly see the results of their media efforts so they can make informed strategic decisions in real-time,” says Vishal Bali, Managing Director, Nielsen China.

DEMOGRAPHIC Gender/Age Education Job Marriage Children

LOCATION INFORMATION Residence/Workplace Preferred Business Area Offline Visit Rate

BRAND/CATEGORY PREFERENCE Category Preference/Search Brand Preference/Search

ASSET/CONSUMPTION INFORMATION Asset Level Estates Information Car Information High-end Consumption Preference

MEDIA PREFERENCE Media Platform Preference Media Type Preference Weibo KOL Preference APP Activity

CONSUMERPORTRAIT


PLAY TO CONSUMER ADVERTISING PREFERENCESGenderandageexertamajorinfluenceonconsumers’advertisingpreferences.Nielsenresearchshows65%ofdigitaladvertising impressionsseenbywomenareonmobile.Conversely,62%ofdigitaladvertisingimpressionsseenbymenareonPC.

Demographicsalsohaveabigeffectonmediahabits.Nielsenresearchrevealssignificantvariationsintheshowsdifferentconsumergroupsprefertowatch.Forexample,womenaged25to29,withlow-to-midincome,andwithoutchildren,preferhistoricaldramas.Butwomenaged25to34,withhighincome,andwithoutchildren,preferrealityshows.

Marketersneed tounderstand thesedifferences if theyare to successfullybuildawarenessamongtheirtargetaudiencesanddrivesales.Itcanbeachallengetoobtaindatathatallowsfortheaccuratesegmentationoftargetaudiences.Butthis istheonlywaybrandswillengagetheirmostvaluablecustomers.Withoutthisknow-how,marketingeffortswillbewasted.

OF DIGITAL AD IMPRESSIONSSEEN BY WOMEN ARE

ON MOBILE

65% 62%

OF DIGITAL AD IMPRESSIONSSEEN BY MEN ARE STILL

ON PC


TRACKING DIGITAL REACH Nielsen’s Digital Ad Ratings brings accountability to the new era of digital marketing. It helps marketers, advertising agencies and publishers quickly understand their true audience so they can optimize mid-flight.

Nielsen has found that when brands optimize spend on the right content and advertising placements, they can significantly increase the on-target percentage of consumers who see their advertising.

In one recent case, a brand was trying to reach women aged 18 to 29 by investing in advertising on digital video sites. It originally focused investment on pre-roll ads at the start of the streaming video content. This resulted in 24% of ad exposures reaching the target consumer segment.

However, real-time measurement of the campaign among its target group suggested that accuracy could be increased by shifting investment to mid-roll ads near the half-way point of the streaming video content. After changing its strategy, this brand was able to increase the campaign’s on-target rate to 37%.


THE RIGHT PLACEMarketingisatacriticalcrossroads.Theexplosionofdigitaltechnologymeansadvertisershavemoreways toreachconsumers thaneverbefore.But inanomnimediaworld,selectingtherightchannelhasbecomeamajorheadache.

Tomaketherightchoice,marketersneedtoaccuratelymeasurechanneleffectiveness.Theyneed tounderstandwhich investmentsdrivesalesandwhich investmentsarewasted.Withouttherightmeasurementsolutions,communicationactivitywillremainadhocanduncompetitive.

EVALUATE CHANNEL EFFECTIVENESS China’sconnectedconsumersinteractwithhundredsofmediatouchpointsbeforemakingapurchase.Asthebuyerjourneybecomesever-morecomplex,howcanmarketersknowwhichchannelshavethebiggestinfluenceonsales?

BrandownersneedaccesstounbiasedandconnecteddatatounderstandwhichpathsdelivertrueROI.BycollaboratingwithJD.comandanalyzingrealconsumershoppingdatainaspecifichomecarecategory,Nielsenfoundonlineconsumersfacemorethan10,000possiblepathstopurchase.Yetapproximately85%ofallsalescomefromaround35keypaths.

Traditionalmeasurement approaches that attribute sales to the consumer’s lastadvertisingexposuremissasignificantpartoftheonline journey.Whilethisapproachoffers insights into the finalstepsof theconsumer’spath topurchase, itdisregardsthe influenceofallpriortouchpoints.Marketersgetaskewedpictureof touch-pointeffectiveness.

TooptimizeROI,strategiesshouldincorporatetheeffectofallthetouchpointsconsumerscomeacrossbeforemakingapurchase.Thisapproachwillallowmarketers to focusinvestmentontheoptimalmediamixthatwillupliftreachandengagement,andclosethepurchaseloop.

LAST CLICK

SEARCH PURCHASE

ITEM PAGE CART

VS.

CATEGORYPAGE

PRE-ROLL AD

APPSOCIAL

LIVESTREAMING

CAMPAIGNPAGE

BESTSELLERS

MULTI-TOUCHATTRIBUTION


OPTIMIZE ACROSS PLATFORMS Nielsen’s Multi-Touch Attribution solution provides brand owners with detailed insights into how their digital advertising drives sales. In one recent case, Nielsen worked with a personal care brand within a specific product sub-category to supercharge its sales on JD.com during a three-month campaign.

During the full campaign, advertising efforts across JD.com’s PC and mobile e-commerce sites led to a 23% increase in incremental sales for this brand. Nielsen’s analysis revealed that nearly half (46%) of these sales were driven by advertising placed on the search page of the PC website. Ads placed on JD.com’s mobile platforms also proved effective, representing 45% of total incremental sales.

During this specific campaign, the PC search page drove the most sales. However, ad exposures placed on the mobile item page had an ROI that was more than six times greater than the PC search page.

By being in the right place and measuring the effect of various touch points, brands can focus on activity that most effectively meets their campaign objectives. This particular brand was able to significantly amplify sales as well as understand which touch points offered the greatest ROI.

INCREMENTAL SALES UPLIFT BY DEVICE

5.5%

0.6%

7.1%


CROSS-PLATFORM AND CROSS-DEVICEConnectingandoptimizingadvertisingacrosse-commercesitesandexternalwebsitescanbeadifficulttask.However,whenitisdoneeffectively,itcanhaveastrongeffectonbrandandcategoryawareness.

ArecentNielsenDigitalMediastudy found thatamongbuyersofacertainproductcategoryonJD.com,only23%wereexposedtoaspecificbrand’sadvertisingonexternalwebsites.However,onJD.com,theseconsumerswere61%morelikelytosearchforthebrandand41%morelikelytosearchforthesamecategorythanthosewhohadonlybeenexposedtothebrandadsonJD.com.

Awell-executedcross-devicemediamixcanalsoignitesales.Chinesehouseholdshaveanaverageoffour internet-enableddevices.Tomaximizeengagementandimpressionefficacy,marketingstrategiesmust target themosteffectiveplatformson themostappropriatedevices.

Inonecase,Nielsenfoundthatwhenabrandowner invested ineitherPCadvertisingorsmartphoneadvertisingexclusively,sales increasedby0.6%and5.5%respectively.Butwhenthebrandownertargetedbothdevices,sales increasedby7.1%.TargetingconsumersintherightplaceisessentialtosecuringcontinuedROIinChina’sfast-movingdigitallandscape.

IMPROVEMENT INON TARGET RATE

THE RIGHT DEVICE

+19%49%

7%

44%

13.5%16.0%

23% 23%

54%

% OF IMPRESSIONSBY DEVICE

AD BURST 1 AD BURST 2

ON TARGETAUDIENCE %

PC TABLET PHONE


MONITOR IN REAL-TIMEIn the minutes and hours after an advert is launched, marketers need access to solutions that can reveal whether the content is reaching its target audience. By keeping an eye on the reach of a digital ad campaign, brands can optimize media support on the most effective devices and platforms.

In one recent case, Nielsen identified which devices were most effectively delivering on-target ads to a brand’s target audience. In the first advertising burst, it concentrated the majority of its spend on PC. However, by shifting the media mix towards mobile advertising in the second burst, it was able to increase the percentage of target consumers it reached by 19%.


THE RIGHT MESSAGEBillionsofdollarsarespentgloballyonadvertisingeachyear.Buthowmuchofthis iseffective?ToincreaseROI,marketersmustunderstandhowconsumersareengagingwithcampaignmessages.

In-flighttrackingandoptimizationhasbecomeanimportantdriverofsuccess.ToconnectwithChina’sdigitalconsumers,marketersneedthecapabilitiesandtoolstotracktheiradvertisingmessageeffectivenessinreal-time.

ITERATIVE MARKETING SOLUTIONS Brandownersneedtobenimbleandflexible if theyarewin inafast-changingdigitalworld.Theymustadoptaniterativeapproachtomarketing,takingquick,smallstepstoconnectwithconsumers.

Communication strategiesmustbe radicallyoverhauled.Annualmediaplansareoutdated.Today,strategiesmustbecontinuallyreviewed,withfreshmediaplanscreatedregularlythroughouttheyear.

Theabilitytosensechangesinconsumerbehaviorsanddesires,andkeepimproving, isfundamentaltosuccess.Marketerscannolongerplan,execute,evaluateandoptimizetheircreativeindistinctstages.Theseactivitiesmustnowtakeplacesimultaneously.

LOSS RATE AFTER 8 SECONDS

TOTAL

PC

MOBILE

VIEWER RETENTION RATE AND LOSS RATE BY LENGTH OF AD

38%

35%

39%

1 SECOND (BASE: CONSUMERS THAT HAVE WATCHED AT LEAST ONE SECOND OF AD)8 SECONDS15 SECONDS

VIEWER RETENTION RATE BY LENGTH OF AD

100%

100%65%

63%

100%61%

58%

62%59%


FAST CONSUMER CONNECTIONS Brandownersonlyhavea fewsecondstoconnectwithconsumers.Nielsenresearchshowsthat52%ofconsumerspreferadvertisingthatrunsfor lessthan15seconds. Incomparison,just11%preferadsthatare30secondsorlonger.

Inarecentdigitalcampaigncasestudyofahouseholdbrand,Nielsenalsofoundthatnetizensdonotalwayswatchanadvertfromstarttofinish.Afterjusteightseconds,38%ofviewershaddroppedoff.By15seconds,thishadrisento41%.

Toensuremessagesreachtherightpeopleintherightway,short,focusedadvertsmustbecomeacriticalelementofcampaignactivity.Concentratingkeymessagesatthestartofdigitalvideoswillalsohelptocaptureconsumerattentionandbuildawareness.


Inafragmentedlandscape,thewaybrandownersreachandengagetheiraudiencesmustfundamentallyadapt.MarketerswillneedalaserfocusiftheyaretoincreasedigitalROI.Simplificationisnowcriticaltosuccess.

Nielsen’sframeworktoreachtherightpeople,intherightway,withtherightmessagewillhelpbringaccountabilityandordertothenewworldofdigitalmarketing.Byharnessingmeasurementandreal-timeoptimizationtools,brandownerswillbebetterplacedtounderstandhowtheirmarketingefforts influencesales.Thisdata-drivenapproachwillhelpbrandownersstayaheadasnewtechnologiescausefurtherdisruptiontoChineseconsumptionhabits.

UNDERSTANDING CONSUMER REACTIONS Understanding how consumers react and engage with content and advertising has traditionally relied on self-report methodologies. Today, consumer neuroscience offers an opportunity to drive marketing effectiveness by measuring brain activity.

Nielsen Consumer Neuroscience uses EEG technology to capture the signals emitted by the brain over 500 times per second. By measuring the second-by-second emotional engagement of consumers on a 1 to 10 scale, Nielsen can identify the most relevant parts of a video advert.

In a series of video ad tests conducted over a one-year period, Nielsen helped VIP.com, a major China-based e-commerce retailer, improve the effectiveness of its 30-second video ads.

Ad testing showed that between two of VIP.com’s ads, the message used in the voice-over had a very large effect on engagement. Negative wording in one ad, “I’m worried about buying fake products,” led to a low emotional engagement score of 1.1. However, positive wording in another version, “All the brands you love,” raised engagement to 9.2 during the voice-over portion of the ad.

By using feedback from consumer neuroscience, VIP.com’s latest ad from 2017 performed better than 80% of the ads in Nielsen’s 4,000 video ad database. This marks a significant improvement compared with the previous ad in 2016, which performed better than around 30% of the database.

27Copyright © 2018 The Nielsen Company

PART 3: FUTURE TRENDS Overthepastdecade, theriseofsocialmedia, internet-enableddevices,e-commerceandonlinepaymentshavetransformedChinesesociety.Now,emerginginnovationsarepoisedtocreatefurtherdisruptiontoconsumerbehavior.

Marketersneedtounderstandthedirectionoftravelandstayaheadoftrends.Asthepastdecadehasshown,Chineseconsumersshowaninsatiableappetitefor innovationsthatmaketheirliveseasierandmoreexciting.Thepaceofdigitalchangeisabouttoaccelerate.NielsensetsoutthekeyemergingtrendsthatwillfurtherdisruptconsumptioninChina.


Someofthebiggestchangesoverthenextdecadewillnotcomefromnewinnovationsbutthespreadofexistingtechnology.

Chinaisalreadyaglobalfrontrunnerwhenitcomestotheadoptionoftheinternetandmobiledevices.But,withthousandsofruralhouseholdsyettocomeonline,penetrationratesstillhaveroomforgrowth.

AccordingtotheCNNIC,theinternetpenetrationincitiesreached73%in2017.Inruralareas,itisjust27%.Overthenext10years,thisdigitaldividewillreduce.Asinfrastructureripplesfromurbanareastothecountryside,aburgeoningcohortofconnectedconsumerswillbeunlocked.

DIGITAL TRENDS WILL INTENSIFY

MACHINE LEARNING AND VIRTUAL ASSISTANTSComplexalgorithmsareabletomakecomparisonsandconnectionsthathumanscannot.Inthisnewworld,consumerswillnolongerneedtosearchforinformation.Informationwillfindthem.

In-homeoperatingsystemswilldetectwhenproductsrunlowandautomaticallyorderreplacements.Virtualassistantswill recommendrestaurants,newshowsorthe latestfashions. Increasingadoptionofwearabletechnologieswillallowconsumerstoreceivetheseupdateswherevertheyare.

“As technology adoption in China continues, innovation will accelerate. We are already seeing how machine learning is able to speed up the process of product iteration and testing, allowing brand owners to understand which items are most relevant in the market. However, while data-driven concepts may spur the creation of go-to-market plans, consumers will still have the final say,” says Vishal Bali, Managing Director, Nielsen China.


ROBOTICS, DRONES AND AUTONOMOUS VEHICLES Robotics and driverless vehicleswill revolutionize logistics and supply chains.Manufacturerswillbecomemoreefficientasautomatedmachinesreducecostsandproductiontimes.

Inthisroboticera,deliverytimeswillshrink.Droneswilldropofforderswithinminutes.Driverlesscarswilleasecongestioninmajorcities.Togetherthismeanstomorrow’sonlineshopperswillenjoyalmostimmediateconsumption.

Autonomousdeliverieswillalsounlocknewconsumermarkets.Thespreadofproductswillnolongerbelimitedbygeographyoraccessibility.Brandswillbeabletogrowfasterthaneverbefore.

Virtualandaugmented realitywilladdadigitaldimension toconsumers’analogueexperiences.Applicationswillenrichtheirsensesandcoverallaspectsof their lives,includinghowtheyshop,play,learnandtravel.

Chinawill likelyenjoymassadoptionofVR technologies.GovernmentsupportandmarketcompetitionwillreducehardwarecostsandbringVRheadsetswithinthereachofconsumers.

Digitaloverlaysonglasses,screensandheadsetswill transportconsumerstoaworldwheretheycantouchandinteractwithproducts.Immersiveexperienceswillunlocknewroutesforengagement,helpingbrandsmakedeeperandlonger-lastingconnections.

VIRTUAL AND AUGMENTED REALITY


Increasedconnectivitymeansconsumerswillcreatethousandsmoredatapointseachday.Marketerswilldiscoveraricher,deeperandmoreaccurateunderstandingoftheirtargetaudiences.

Brandswillgetclosertoconsumersandbetterpredicttheirbehaviors.Individualtargetingandreal-timepersonalizationwillmovewithinreach.Andmorerelevantconnectionswillcauseloyaltytosoar.

AccordingtoIDC,thebigdataandbusinessanalyticsmarketwillgrowto$203billionby2020–doublethatof2015.9Towininadigitalworld,brandsmustfindwaystotransformbigdataintosmartdata.

Thebiggestwinnerswillbethosethatusethisinformationtotransformeveryconsumertouchpoint–fromcommunicationstoin-storeexperiences.

BIG DATA AND PREDICTIVE ANALYTICS

Theendofacashlesssocietywillbecomeastepcloserasnewpaymenttechnologiesemerge.Smartphone-activatedpaymentslikeQRcodeswillbereplacedbyautomaticfaceandretinarecognition.Transactionswillbecomesmootherandfaster.

Theadoptionofbiometrictechnologiesisalsoemergingasawayofincreasingsecurity.Alipay isalreadytestingfacialrecognitionpayments inaKFCbranch inHangzhou.3Dscannersallowdinerstoauthorizetransactionswithjustasmile.

Likewise,HSBChas introducedfacialrecognitiontoallowChineseconsumerstomakepayments.Itsaysmorethan60%ofChineseconsumersthinkbiometricswillbetheonlywaytoaccessbankingserviceswithinthenext10years.8Adoptionandapplicationswillspreadacrosscategories.

FRICTIONLESS PAYMENTS

8HSBC.SelfiesAreTheLatestWaytoPay.September2017.9Nielsen.What’sNextinTech.2017.

Copyright © 2018 The Nielsen Company

China’sfast-movingdigitaleconomyoffersbigopportunitiesforbrandowners.Technologyhastransformedconsumers’habitsandbehaviorsandopenednewroutesto increasereach,awarenessandengagement.

Butbrandswillneedtoadapttheirmarketingapproach if theyaretowin inthisnewlandscape.Measurementisnowthefoundationofbusinessgrowth.Robustanalyticswillhelpbrandownersbetterunderstandtheiraudiences,targetacrossplatforms,optimizetheircontentinreal-timeandachievetrueROI.

Byreachingtherightpeople intherightplacewiththerightmessage,brandownerswillbeequippedtowinoveragrowingcohortofconnectedconsumers.Therulesofthegamehavefundamentallychanged.ThosethatfailtoadaptwillstruggletorealizethefullpotentialofChina’sdigitalrevolution.

LOOKING AHEAD

31

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providesacomprehensiveunderstandingofwhatconsumerswantandbuy.Nielsen’s

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servicesforalldevicesonwhichcontent—video,audioandtext—isconsumed.TheBuy

segmentoffersconsumerpackagedgoodsmanufacturersandretailers the industry's

onlyglobalviewofretailperformancemeasurement.Byintegratinginformationfromits

WatchandBuysegmentsandotherdatasources,Nielsenalsoprovides itsclientswith

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inmorethan100countries,coveringmorethan90%oftheworld’spopulation.Findmore

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