The Rise of Private Traffic and Owned Channels in China
by Dan Zhang
posted on 04-24-2020
“Private traffic” (私域流量) is the latest buzzword in China’s digital marketing sector, coming up at almost every marketing event throughout 2019. Digital marketing professionals wrote countless articles to introduce the idea along with associated best practices. Martech companies raced to claim they had solutions to help brands manage and derive value from private traffic.
So what is this new phenomenon, why is it important, and how can brands operating in China get ready for it?
What is private traffic?
“Private traffic” in China is mainly applied in the context of e-commerce.
It describes an online audience generated where brands have more control: for example, the traffic to a brand’s website, brand apps, and brand social accounts on WeChat and on Weibo. Brands today want to generate more revenue from private traffic, reduce the cost of customer acquisition and increase their return on investment.
Public traffic, on the other hand, means the digital traffic and interactions within marketplaces such as Tmall and JD, and social content platforms such as TikTok and Little Red Book). Traffic on these platforms is usually shared by all brands that use them for e-Commerce. Most platforms establish distinct rules around traffic distribution.
Why does it matter now?
It’s useful to understand China’s unique online commerce landscape to fully grasp the importance of private traffic.
- China is the largest e-Commerce market in the world. China’s online retail market is larger than the next 10 markets combined, but is dominated by a few giant players including Taobao, Tmall and JD. For instance, Tmall and JD account for more than 80% of overall business-to-consumer e-Commerce in 2019.
- Chinese consumers spend much more time on social platforms than people in other countries. According to a 2019 McKinsey report, Chinese consumers spend as much as 44% of their time on social media apps including WeChat, Weibo and Douyin (TikTok).
- Brands need data to fuel their digital transformation, while the scale of available second-party and third-party data is rapidly shrinking since the rollout of the European Union’s General Data Protection Regulation and China’s Cyber Security Law. Outside China, platforms such as Lotame and BlueKai can enable brands to conduct second-party data exchange or acquire third-party data, but this is almost impossible to achieve in China.
More e-Commerce players, more competition
With these China-specific opportunities and challenges in mind, let’s talk about the traction of the private traffic trend.
First, the increasing overhead cost of leading e-Commerce platforms is becoming a major pain point for many brands. Due to increasingly saturated marketplaces, the competition for advertising inventories on top e-Commerce platforms has become fiercer in the past few years, in turn dramatically pushing up the costs of customer acquisition dramatically on these platforms.
Based on a report from WPP entitled Content, conversation and commerce, advertising and promotional expenses for leading e-commerce platforms also increased dramatically between 2015 and 2018. The trend in cost-per-thousand impressions has jumped from RMB35 in 2015 to RMB100 in 2018 (about $A7.70 to $A22.17) – a 286% increase that only continues to rise. At the same time, operating costs for the top e-Commerce platforms in China has doubled.
Second, brands need to build their image and cultivate relationships with customers, and it’s difficult to achieve these two objectives through the big e-Commerce platforms. In those marketplaces, every brand is competing with an increasing number of its peers for the customer’s attention. Impact is diluted. And when customers buy products through these marketplaces, they are building relationship with the marketplace channel, not the brand.
WeChat mini-programs has become a new direct-to-consumer channel enabling brands to engage with customers. Reports show WeChat mini-programs are driving 25% of awareness in the digital consumer’s decision-making journey.
Brands in China are struggling to get meaningful consumer data. The only possible data available at scale is the anonymous advertising tracking data, which normally indicates users’ advertising viewing behaviour – who viewed which advertisement on which platform. This kind of data might be helpful when optimising media spend, but it has limited value for lower-funnel activities, such as conversion or loyalty.
With owned sites, apps, social accounts (WeChat, Weibo) and WeChat mini-programs, brands can collect valuable leads and nurture customer relationships by developing personalised experiences. Also, by collecting this first-hand data, brands can gain deep, real-time insights into marketing efficiency, then optimise campaign strategies and product offerings.
In short, paying more attention to private traffic is a straightforward decision.
How are advertisers putting private traffic into practice?
Let’s take a look at some use cases from international brands.
Nike funneled traffic to its Nike+ app, brand website, WeChat official accounts and WeChat mini-program, and attracted fans through high-quality training sessions and trending topics in sport. The company even collaborated with Tencent Kandian to live stream training sessions in its WeChat mini-program.
Through these owned channels, Nike is building direct relationships with fans and converting them into customers. Beyond increasing its fan base, Nike is accumulating reams of customer behaviour data across these owned channels. This data brings Nike both real-time and in-depth insights that are impossible to acquire elsewhere.
Besides a brand website and app, appliance manufacturer Dyson invested substantially in its WeChat channel. It built several WeChat mini-programs for an e-Shop, membership, repairs and support services, product guides, and product remote control. It’s a closed ecosystem within WeChat that nurtures consumers from interest to purchase, post-sales service and a loyalty program.
How Adobe can help harness its value
The above brand examples reveal some key factors for success:
- Improve your first-party data by attracting more visits into owned channels, then stitch the data across channels to optimise the customer journey.
- Offer personalised engagement with customers across multiple channels, especially WeChat.
- Provide a curated shopping experience at the right moment. For example, within WeChat, at the brand’s site, or in the brand’s app.
- Deliver consistent, high-quality, and relevant content to multiple channels.
Through interactions and feedback from customers, Adobe recognises the huge market opportunities for our clients and their need for a digital technology infrastructure that can cater to their unique needs. With this in mind, Adobe has invested heavily in building more infrastructure locally as well as integrations with local ecosystems.
Adobe facilitated a major Analytics release in China in 2019, with the aim of improving performance and data accuracy. With this release, Adobe is leading its competitors with better page-load performance and more accurate data.
In September 2019, Adobe also launched Adobe Experience Platform Mobile SDK for WeChat Adobe Analytics and WeChat mini-programs. With this new mobile software development kit, brands can analyse user behaviour across channels and, importantly, analyse and optimse their WeChat mini-programs. International companies that are existing Adobe Analytics clients have a standard data analytics platform and unified data insights for all regions.
In 2019, through collaboration with JD Cloud, Adobe built a solution to harness the value of private traffic generated through WeChat channels. During China’s 6.18 Shopping Festival in 2019, clients that piloted this solution achieved an increase of sales efficiency of more than 50% and a revenue lift of up to 60%, by leveraging an integrated solution of Adobe Campaign with JD’s customer insights. This allows brands to acquire and activate WeChat followers through personalised messaging with the insights provided by JD and reach them at multiple channels including WeChat, SMS and JD’s ecosystem.
Adobe is aware that owned e-Commerce channels across Website, App and Social platform is a key factor when implementing a Private Traffic strategy. Adobe Commerce provides full integration with local eco-systems, including payment, shipment and more through partners. This enables customers to setup a commerce capability which completely fits in China eco-system and a short time to market.
A unified Content and Experience across different channels is important. With Adobe Experience Manager’s content fragments and experience fragments, brands can push content to any third-party social platform such as WeChat mini-program. There are also partners who provide WeChat connectors to manage and deliver content into WeChat official accounts.
At each step from content creation and delivery to personalised customer engagement, conversion and repurchase, Adobe provides integration with WeChat and other local ecosystems, either through out-of-the-box features or partner-provided services.
We look forward to exploring more possibilities with our customers in China.