Talking it up online

Social networking gives firms a growing presence in rising Chinese market, Lin Jing and Chen Yingqun report in Beijing.

Given the wide disparity in their lines of business, it's not often that Mercedes-Benz, Starbucks and Nokia share the same marketing platform. However, in China, these companies share a common goal: becoming a key influence in the "virtual town square".

In this case, the virtual town square is the micro blog, a platform that is now an integral part of China growth strategies for global companies.

Mercedes-Benz knows the power of the platform. In January, when the German luxury car brand decided to sell a limited edition of its Smart cars, it decided to do so through a micro blog. All 666 units of the Smart 2013 New Year Edition offered via Sina Weibo were sold in around eight hours.

Of course, Mercedes-Benz isn't the only company that has gained from initiatives like this. In the past three years, social networking companies such as Sina Corp and Tencent Inc have become important tools for a number of international companies looking to establish or consolidate their presence in China, according to experts.

Sina said there were about 260,000 active company accounts on micro blogs in 2012, and more than 1,000 of them belonged to multinationals such as Nokia, Mercedes-Benz and BMW.

Unlike developed Western markets, where SNS marketing lags behind traditional means, in China micro blogs have become a handy way for companies to reduce spending on conventional advertising.

Since their Chinese debut in August 2009, micro blogs have developed into a huge online society where people from all walks of life share personal experiences, participate in social activities and voice opinions on topics as diverse as politics, business and celebrity gossip.

But from a commercial perspective, the power to influence opinion and ultimately increase purchases makes micro blogs appealing to Western companies.

According to statistics provided by the Data Center of China Internet, or DCCI, the companies using Sina Weibo are spread across 22 different industries. A recent survey also indicated that nearly 23 percent of companies present in China are keen on using the platform for marketing-related activities, such as enhancing communication with consumers, launching business campaigns, delivering positive information and brand building.

To understand the potential of micro-blog marketing, one need look no further than the success of the US-based global coffee chain Starbucks.

The company's Sina Weibo account, opened in May 2012, now has more than 700,000 followers in China. Like many of its peers, the coffee giant initially started with routine marketing campaigns, but quickly discovered that targeted campaigns can be converted into real-time store purchases.

"What the fans have to say about the brand is often critical for a company. News travels fast in the digital world and our aim is to be more connected with our fans," said Marie Han Silloway, chief marketing officer at Starbucks China.

Last year, the company started a campaign to boost frappuccino sales on its micro blog, which has since become a main sales driver for the line. During the warm-up campaign (May 7 to July 9), Starbucks put up more than 60 posts, which generated 234,541 re-posts and comments, according to JWT Shanghai, the advertising company that conducted the campaign.

In terms of quantifiable returns, the company's 500,000 yuan ($80,600) micro-blog campaign has resulted in more than 95 million friend-to-friend recommendations, and sparked a 14 percent year-on-year growth in sales in China.

'A dual role'

Micro blogs are also an important tool for many companies to gauge customer feedback.

The Swedish furniture retailer Ikea set up an official account on Sina Weibo in October 2010, just as micro blogs were beginning to make an impression in China.

"SNS has a dual role for us - listening to suggestions from consumers and giving positive, timely feedback on their concerns and needs," said Jay Lin, a social media specialist from Ikea.

The daily schedule includes answering netizens' questions, forwarding complaints to relevant after-sales departments, supervising key words and overseeing comments relating to sensitive topics on micro blogs that could affect the company, Lin said.

The number of micro-bloggers in China is believed to have reached 309 million by the end of 2012, a rise of 58 million from 2011, according to a recent report by the China Internet Network Information Center. During the past year, the number of monthly visitors to micro blogs has exceeded 200 million, excluding smartphone traffic.

The latest research from the DCCI shows that micro blog users aged 19 and older account for more than 88 percent of all Chinese netizens. More than 70 percent of them surf their accounts at least once a day.

Eugene Chew, director of digital strategy at JWT, said big brands are attracted to social media because it's relatively low-cost, compared with TV and print advertising. "It is like a consumer database, where word of mouth is the most important tool for brand building," he said. "Lots of brands realize that they need to build online communities for brand lovers, especially new brands that have a limited marketing budget."

Yao Fang, marketing director of Royal Caribbean China, a unit of Royal Caribbean International, the global cruise ship company based in Florida, said that unlike traditional marketing channels, micro blogs come at a lower cost and serve as supplementary marketing channels. She said it's difficult to quantify the exact contribution but there is no doubting the boost the SNS gives to overall turnover.

"Micro-blog marketing is the next big thing, because Sina has become a stable platform with a daily growth in user numbers and viscosity. It's a huge marketing opportunity," she said.

Silloway said that although Starbucks has outlets in 16 provinces, it is difficult to establish a pan-China presence because TV marketing is expensive. "The micro blog is market-efficient, low-cost and interactive, and also gives us instant feedback on the general perception," she said.

According to statistics from eMarketer, a US digital market researcher, spending on social network advertising in the Asia-Pacific region will grow by 48 percent from $1.38 billion in 2012 to around $2.5 billion this year. In the US, it is expected to reach $4.1 billion this year and $5 billion in 2014.

For China, the percentage is higher. As the world's biggest SNS market, the advertising spend on social media will experience a rapid increase of 51.3 percent from 2012, reaching $612 million this year, said eMarketer.

Although micro blogs are immensely popular in China, they have also received flak for their similarity to global SNS platforms such as Twitter. Both sport distinctive layouts with similar features for posts, referrals and comments. But Chinese micro blogs differ from their Western counterparts in terms of the added features they offer.

Jeremy Webb, a digital strategist at Ogilvy PR Worldwide, said the real difference between the two platforms lies in Twitter's relatively low penetration rate in the US market. Of the 74 percent of US adults who use the Internet, only 8 percent use Twitter, according to a recent study by a US think tank, the Pew Research Center. In contrast, by the end of 2012, the proportion of micro-bloggers among netizens in China reached 54.7 percent.

Moreover, Sina Weibo allows users to watch videos and view pictures seamlessly, unlike platforms such as Twitter, where video and pictures are often presented in the form of a hyperlink that has to be clicked to access the content.

"Platforms like Twitter have a limit of 140 letters for one piece of information, whereas Sina Weibo allows 140 characters and various other features like pictures, videos and hyperlinks. This helps create more vivid marketing campaigns for companies," said Gao Xiang, communications manager of Nokia China.