China's Digital Landscape

J.WALTER THOMPSON CHINA DIGITAL LANDSCAPE 2015

INTERNET PENETRATION IN CHINA

Sources: eMarketer December 2014

47.5% of total population

For age 18-40: 85%

WITH ONLY 47.5% PENETRATION, CHINA STILL HAS ROOM FOR GROWTH

Sources: eMarketer December 2014

INTERNET USERS AS PERCENTAGE OF POPULATION

Source: CNNIC June 2014  

RURAL USERS DRIVING GROWTH

Source: CNRS  

ECONOMIC DEVELOPMENT SHAPES INTERNET BEHAVIOR ACROSS CITY TIERS

OVERALL CHINESE ARE AMONG THE HEAVIEST INTERNET USERS GLOBALLY

Sources: eMarketer August 2012; CNNIC 2014

FREQUENCY OF INTERNET USE BY COUNTRY

DAILY DEVICE USAGE

Sources: CNRS 2014

Sources: CNRS; 36 cities

THE INTERNET TAKES TIME AWAY FROM TRADITIONAL MEDIA TIME SPENT ON MEDIA (MINUTES / PER DAY)

DIGITAL ADVERTISING SHARE OF SPEND FINALLY OVERTOOK TV IN 2014

Note: excludes Hongkong; numbers may not add up to 100% due to rounding; **excludes digital Source: eMarketer, Dec 2014

％OF TOTAL MEDIA AD SPENDING IN CHINA

Of digital’s 37.2% 11.7% is mobile.

(up 6* YOY)

DIGITAL ADVERTISING SHARE IS EXPECTED TO ACCOUNT FOR MORE THAN HALF OF TOTAL MEDIA SPENDING

Sources: eMarketer, Dec 2014

THE CHINESE INTERNET

THE INTERNET, BUT NOT AS YOU KNOW IT

Source: Baidu Annual Report 2013; Alibaba Annual Report 2013; Tencent Annual Report 2013

EVERYONE’S TALKING ABOUT “B.A.T.”

BUILDING AN ECOSYSTEM

Sources: Kantar Retail Research and Analysis 2014

TO COLLECT YOUR LIFE’S DATA

FOUR KEY PRIORITIES FOR MARKETERS

1. MOBILE

MOBILE IS THE PRIMARY DEVICE FOR INTERNET ACCESS WITH MORE THAN 527 MILLION CHINESE ACCESSING THE INTERNET VIA MOBILE

Sources: CNNIC June 2014

DRIVEN BY RAPID ADOPTION OF HIGH SPEED MOBILE INTERNET

Sources: Mobile Provider Claimed Data

TOTAL 3G AND 4G SUBSCRIBERS IN CHINA (MILLIONS)

69% OF CHINESE HAVE BOUGHT ON MOBILE

Sources: Go Globe April 2014

Sources: Kantar Worldpanel Dec 2014

ANDROID DOMINATES IN CHINA

BUT iOS USERS SPEND MORE

Sources: Go Globe April 2014

CHINESE ARE FAR MORE LIKELY THAN AMERICANS TO WATCH TV ON THEIR PHONE OR TABLET

Sources: August 2014 polling by GfK for the Interactive Advertising Bureau (IAB)

AND THEY ARE MULTI SCREENING

Sources: Millward Brown Ad Reaction 2014

MINUTES PER DAY SPENT MULTI-SCREENING

FIVE REASONS MARKETERS LOVE WECHAT

MARKETERS GO MAD FOR “O2O” NOT TO MENTION 02020…

THE NEW PICK-UP LINE

Sources: CNNIC; NIELSEN 2014 H1

But did you know… Only 30% of China’s 550m mobile users use QR code.

2. E-COMMERCE

CHINESE LOVE SHOPPING ONLINE ONLINE SHOPPING RATES IN CHINA ARE MORE THAN DOUBLE GLOBAL PEERS

Sources: PWC 2012 Global multichannel consumer survey

11/11 SINGLE’S DAY PHENOMENON THE WORLD’S BIGGEST ECOMMERCE SALES EVENT 2014 SET NEW RECORDS

Sources: Kantar Worldpanel 2014

WHAT ARE PEOPLE BUYING? TOP 3 ONLINE SHOPPING CATEGORIES BY DEVICE

Sources: 2011 McKinsey IConsumer survey; McKinsey Global Institute analysis; McKinsey analysis

TRANSFORMING ALL LEVELS OF SOCIETY ONLINE SPENDING ACROSS CHINESE CITY TIERS

KEY ECOMMERCE PLATFORMS

Sources: China E-commerce Research Center

TOP 3 CHINA B2C E-COMMERCE SITES ARE TMALL, JD AND SUNING

Sources: Kantar Worldpanel MAT June 2014

FROM VALUE SEEKERS TO PREMIUM SEEKERS DIFFERENCES IN SHOPPERS ACROSS CHINA’S ECOMMERCE SITES

WATCH OUT ALIBABA! BAIDU+TENCENT+WANDA (CHINA’S BIGGEST DEVELOPER OF SHOPPING CENTERS) TEAM UP TO CREATE NEW 020 ECOMMERCE PLAY

3. SOCIAL

SOCIAL DOMINATED BY WECHAT & WEIBO

Sources: Tencent/Sina earnings report Q3 2014

CHINESE RELY HEAVILY ON SOCIAL PLATFORMS TO DISCOVER AND RESEARCH BRANDS

KEY CHARACTERISTICS SHAPE THIS SOCIAL TREND

OTHER SOCIAL PLATFORMS TO WATCH

4. VIDEO

GROWTH IN ONLINE VIDEO VIEWING

Sources: iResearch 2013

KEY ONLINE VIDEO PLATFORMS

FULL LENGTH SHOWS DOMINATE ONLINE VIDEO WATCHING IN CHINA

Sources: iResearch 2012

Sources: Youku 26/11/2013

VIDEO PLATFORMS INVEST IN ORIGINAL CONTENT STUDIOS AS WELL AS LICENSED SERIES AND MOVIES

5. OTHER TRENDS

PROGRAMMATIC IS EXPECTED TO GROW BY 8 TIMES IN 2015 AND 100 TIMES BY 2018

Note: includes digital display ads, digital video ads and mobile display ads, including video; *includes all digital display ad spending on upfront, programmatic direct deals secured using pre-existing, real-rime bidding (RTB) technology infrastructure Sources: International Data Corporation (IDC), “Forward Markets 2013-2018: Moving Direct Display Ad Sales onto the RTB Platform” sponsored by The Trade Desk, March 2014

PREMIUM PROGRAMMATIC DIGITAL DISPLAY AD SPENDING IN CHINA,2013-2018

DEFINITION OF CONTENT MARKETING STILL EVOLVING

Sources: PR Newswire,” Content Marketing Trends and ROI Impact Assessment by Companies in China,” Dec 6, 2013

CONTENT MARKETING TACTICS MOST FREQUENTLY USED AND CONSIDERED MOST EFFECTIVE BY MARKETERS IN CHINA, DEC 2013 % OF RESPONDENTS

J. Walter Thompson Shanghai [email protected]

FOR MORE INFORMATION: EUGENE CHEW CHIEF DIGITAL OFFICER

J.WALTER THOMPSON THANK YOU