Douyin’s digital takeover in China

China's media market is more complex and fragmented than ever. It is also unique. China’s online apps are not just different from those in other markets, but their significance in the marketing mix is also distinctive. Whereas TV advertising accounts for 29.8% of media spend in the US, and similar amounts in countries like the UK and Canada, it draws just 3.1% of budgets in China according to Guideline SMI data. On the other hand, 81.9% of marketing is spent online in China – almost double the share spent in Australia and NZ.

For foreign brands, recognising the importance of digital marketing in China is one step, but understanding the value of each digital touch point and how they shape the customer journey is even more important.

When dissecting China’s digital landscape, it is hard to ignore the importance of Douyin in the marketing mix. Its value was recognised in the latest BrandZ Index, which placed Douyin as the fourth most valuable brand in China – 22% more than last year, and among China’s top-10 fastest growing brands overall. It’s not hard to see why. Over the last two years, its share of digital spend has increased from 16% to 25%.

The popularity of Douyin has brought an overabundance of content creators all vying for mindshare. Consumers can swipe through thousands of videos a day on Douyin, but few are remembered. Most of those brands that really make consumers stop, think, interact and remember, come up with something that is differentiated, connecting to an intrinsic need of their target audience.

Many of the most popular Douyin videos are not polished, and some are popular for being unconventional. Yet many of the most-viewed videos and livestreams are supported by spending on precision ads, Key Opinion Leaders (KOLs) and grassroots influencers. This is alongside user-generated initiatives from hashtag challenges to selfie opportunities, supported by other online and offline touch points beyond Douyin. But behind it all, is usually a real understanding of their viewers’ needs.

Understanding which content will resonate is imperative, and in many cases, so is how to translate that content into a willingness to buy. Whilst Douyin started off as a short video platform for entertainment and information, it has fully morphed into a sales machine. Over 40% of Chinese urban households purchased FMCG products on the platform last year. In the first quarter of this year, L’Oréal’s sales on Douyin were larger than Tmall. It is also a formidable channel for sporting goods and fashion. In many categories, Douyin sales now exceed those of traditional e-commerce platforms.

Whilst sales through China’s bricks & mortar channels are almost twice as large as those online, the importance of ecommerce shouldn’t be sneezed at. Retail grew 3.5% in the first seven months of this year, entirely driven by online sales, which jumped 9.5%. Douyin was a significant contributor to that growth.

Yet the temptation of a sugar hit of sales appears too great for most brands. Most Douyin strategies are focused on transactional, short term results, feeding at the bottom of the funnel - at the expense of balancing longer-term brand building.

While foreign brands were initially slower to recognise Douyin as a marketing and sales channel, most are now engaged with the platform. But many could be doing it better. The large share of marketing budget spent on Douyin could have more sustainable returns by brand-building and understanding how their target audience uses it, how it fits with other touch points, and what to say and how to say it, to stand out and be resonant. China Skinny can assist with that.