Local digital advertising agencies have upper hand in China

Marketing China
Sep 19, 2017 · 3 min read

Global businesses dominate numerous factors of China’s advertising industry, but in terms of digital, area players contain the higher hand — an edge that places them squarely during the M&A crosshairs.
One reason nearby gamers have thrived is the country’s unique internet ecosystem. Global platforms like Facebook, Twitter and YouTube are blocked by China’s “Great Firewall,” replaced by dozens of neighborhood gamers in a highly fragmented space, made more complicated by the language. Even Google are blocked, Chinese use a similar search engine, Baidu.
“It’s not just a matter of adapted Facebook and Twitter (campaigns) for China, it’s creating something new for China and that’s something the regional agencies have done really well,” said Greg Paull, principal at Beijing-based agency consultancy R3.

Additionally, area businesses were quicker to build digital capabilities and benefitted by strong personal ties to media owners who provided them with better rates and deals.
Eager to catch up, holding companies have been gobbling up neighborhood digital companies. R3 calculates about half of the agency mergers and acquisitions in the last two years were in China — and about half those involved digital businesses.

Global shops are trying to catch up by hiring locally versus importing foreign talent, but Tony Wang, founder of Beijing-based agency A4A, is pessimistic about that solution, suggesting that numerous talented Chinese digital leaders want to run their own businesses. “The way things work in China, the really capable people go out and start their own organizations,” he said.

Here’s four hot neighborhood digital agencies in China that are worth keeping an eye on. At the rate of acquisitions though, they may not stay independent for long.

Founder Amber Liu notes with pride that he’s never worked at a big 4As-member agency. Rather, his advertising career started with a freelance gig designing presentation slides for an Amway executive, which led to more work for Amway, then other clients. Today his 70-person eponymous shop is a full-service digital agency with offices in Beijing and Shanghai.

Amber Communications broke out in 2010, creating Coca-Cola’s “online pavilion” at the Shanghai World Expo. While other brands offered virtual tours of their physical pavilions, Coke’s “Happiness Factory” engaged visitors with a variety of games. Similarly, Amber’s London Olympics campaign in China for Coke brand Glaceau Vitamin Water featured a series of Olympic-themed exercises linked with a mobile app.
Mr. Liu’s second job as a professor of digital media at a Beijing university gives him access to bright young digital natives. “There’s basic things you have to teach them, like presentation skills. But that’s not [as] important. Ideas can’t be taught. They know digital and media better that you,” he said.
Everyone is a minority at im2.0,” CEO Chris Tung said.

He’s referring to the mix of backgrounds of the 230-strong staff: One-third are digital creatives, one-third former marketers, one-third alumni of the product side of Chinese dot-coms.
This makeup reflects the skills needed for digital marketing today, where it’s not just creating a slogan for the internet, but innately understanding what online platforms can do, he said.

“A lot of people say advertising companies are moving from Madison Avenue to Silicon Valley,” Mr. Tung said. “It’s no longer the traditional [TV] model of advertising, which was idea-led. It’s now engagement-led.”
The show was founded by Susan Wang, a co-founder of Renren, China’s version of Facebook. It was her fourth start-up and she’s since turned over the reigns to Mr. Tung and chief operating officer Yi-Chung Tay, both former internet marketing VPs for PepsiCo Greater China.

With offices in Shanghai, Beijing and plans to open in Guangzhou, with 2.0 clients include Budweiser, Adidas, Mondelez and Haier. One of its best-known campaigns is the Dell piggybank on social media sites, aimed at cash-strapped college students. Users choose the online model they want to buy and friends can them help earn money toward the purchase by clicking “support,” watching videos or posting Dell content on their social media pages.

Marketing China

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