WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA'S 'SUPER APP' - CROWD
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
WeChat for your
brand: harnessing
the power of China’s
‘super app’
1
WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
Introduction
This significant difference is largely due to a
China’s economy has grown and social networking app in China, sometimes called
developed at an incredible rate over ‘the app of everything’ - WeChat. WeChat was
the last 35 years, making it one of launched in China in 2011 by media company
the richest countries in world. It is Tencent as a mobile equivalent of its PC-centric
estimated that China will become app QQ and began as a messaging app. It
the world’s largest economic system enjoyed success with Chinese consumers very
within the next ten years. quickly given its voice messaging functionality.
Over the last few years, WeChat has completely
transformed how people communicate, find
China currently has a population of 1.37 billion information, shop, work and manage day to day
people, 93% of which regularly use a mobile life. The complex functionality and capabilities
phone.1 The Chinese population is spending of WeChat set it apart from any other social
3.7 hours a day on the Internet2, which is 20% network in the world, and given the size of the
higher than the average US consumer.3 More consumer market in China, it is easy to see
staggeringly, is the difference in time spent on why it has captured the attention of many
social media. While in the UK and US, social Western marketers.
media accounts for on average 33% of all time
spent online4, in China it is 91.8%.5 In this white paper, we will explore what the
platform is capable of, discuss how brands
can really harness its power and look into the
future of WeChat.
Sources: 1. Statista, 2018 | 2. China Internet Development Report CNNIC 2018 | 3. Q1 2018 Nielsen Total Audience Report | 4. Global Web Index, 2017 | 5. China Internet Development Report CNNIC 2018
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
What is WeChat
At its core, WeChat is an instant messaging app, but over the
last few years it has grown into a vast ecosystem of features
from communications to shopping, gaming, banking,
appointments and travel.
It essentially
allows you to
do anything
you’d want to
do online
and has the equivalent functions for many popular Western
apps such as Slack, Tinder, Uber and other services.
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
How does WeChat work?
A USER DESCRIBES ITS IMPACT ON HIS LIFE:
“WeChat is in all parts of my life. I
use it from morning to night, mainly
the chat and payment functions, but
also to see how my friends are doing.
I use it to order food, call a taxi, buy
movies and train tickets and pay my
utility bills.
I also follow the official accounts
of other companies that are in the
same industry as mine. Honestly, I
have no idea how many times I use it
each day because it is integrated into
my life. There is no other app that is
as widely used by all my friends.”
Dong Jian, 30
WeChat User
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
What WeChat offers
SOCIAL TEXT VIDEO WECHAT VIDEO
GAMING SERVICES UTILITIES SHOP
NETWORK MESSAGING CHAT PAY CONTENT
Before we go any further, it is important to
understand the different WeChat features, as
summed up below by Econsultancy in its 2018
‘Understanding WeChat’ briefing:
Moments: This is a personal social news feed
from WeChat contacts. It allows users to share
music, pictures, post comments and post “likes”
etc, with various privacy levels built in to it.
Shake: WeChat’s ‘shake’ function allows users
to connect with any user or corporate accounts.
Users can connect with each other if they have
activated the feature and are actively shaking
their phones. Offline retail businesses, including
MBS Singapore and ION Singapore have used
this feature to send personalised offers based on
the user’s location.
WeChat ‘mini programs’: Mini programs are
lightweight apps completely contained within
WeChat that do not need to be downloaded
and installed separately.
WeChat Pay: A digital wallet service that is
incorporated into WeChat, enabling mobile
payments and contacts to send each other
money. Over 200 million WeChat users have
linked WeChat Pay to their accounts (Business
Insider, January 2018).
WeChat Out: A Voice over Internet Protocol
(VoIP) service that allows users to make low-cost
calls to mobile and landlines via WeChat.
Enterprise WeChat: A special version of
WeChat intended for business communication,
management and work purposes. This feature
allows employees to track their annual leave
days, expenses and reimbursements and
clocking in and out.
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
• 1 billion monthly active users.1
• 60% of users open WeChat 10 times a day -
and 1 in 5 users open it more than 50 times
a day.2
• 85% of users are aged 18-35.3
• WeChat has 93% penetration of smartphone
users in China’s tier one cities.4
• Just over 1 in 6 (17%) of users spend more
than four hours a day on the platform.5
It has been reported in the WeChat Social
Commerce Report 2018 from Youzan and
Newrank that the growth rate of users on
WeChat is slowing down, but this just reflects its
saturation in the Chinese market. Time spent and
engagement on the app continues to increase.
There are two different types of official WeChat
accounts available to brands and individuals:
SUBSCRIPTION SERVICE
MESSAGES SHOW ON MAIN FEED
MESSAGES SHOW IN SUBSCRIPTION FOLDER
POST ONCE A DAY
POST FOUR TIMES A MONTH
MESSAGES RECEIVE AND REPLY
MENU
ADVANCED INTERFACE
PAYMENT FUNCTION
While a service account allows brands to utilise the more sophisticated
functions, such as WeChat Pay, and supports content formats such as
HTML video and mini programs, it restricts publishing to four times per
month. A subscription account supports only basic functionality but
posts can be published once a day.
Sources: 1. Tencent, 2018 | 2.&5. The StartUp, 2017 | 3. Statista, 2017 | 4. Business Insider, March 2018
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
The choice between these types of accounts
really depends on the nature of your brand/
service and what you’re looking to achieve on
WeChat. For example, many luxury fashion
brands such as Mulberry and Burberry have
used WeChat service accounts to develop rich
and immersive experiences for their followers
to drive awareness, engagement and build
loyalty via a customer database. However,
services or news orientated businesses
such as BBC Radio or GQ Magazine use a
subscription account to reach their audience
on a more regular basis with up to date
information.
Burberry has made use of the ‘shake’ feature
to allow followers to send and then unwrap
customised gifts and greetings and also to invite
followers to exclusively virtually attend new store
openings and events.
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
The power of the
mini-program
As we introduced earlier on, WeChat mini-programs
are applications that sit within the WeChat ecosystem,
facilitating a wide range of advanced functions
without
the need to
download or
install separate
applications to
the phone.
For brands, it presents an opportunity to give consumers a more
immersive experience and build a deeper connection with their
audience.
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
Mini-programs were launched in January 2017
and according to a report from Business
Insider (2018), 580,000 were launched
within the first year. It is now estimated that
170 million people use mini-programs every
day, spending on average 2 minutes and 48
seconds on each program.1
City Experience has built a mini program in
collaboration with Tourism Australia, Visit
Britain, Dubai Tourism and Destination DC
(Washington) which helps Chinese travellers
to explore destination guides, interactive
maps, audio guides, restaurants and tourist
attractions before and while they visit the
destination.
Bicycle rental service, Mobike, partnered
with WeChat to integrate its service into the
WeChat Wallet function. This began as a
mini-program, but now gives the brand the
opportunity to reach all of WeChat’s user
base, rather than building its own followers.
Sources: 1. Aladdin Index and Goldman Sachs analysis, 2018
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WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
The Quest Mobile 2018 TRUTH Data Set report
shows that mini-programs now account for 28%
of all ecommerce mobile web traffic (253 million
people). In the travel sector, this increases to
40% of all sector traffic (234 million people).
This year’s Chinese 618 shopping festival in
June attracted 53 million new mini-program
users, resulting in a 66 times increase in orders
placed via mini programs.1
Many Western brands are reaping the benefits of
building ecommerce mini-program applications
into accounts.
For example, Montblanc tapped into the
significance and popularity of Chinese
astrology and the phases of the moon to
raise awareness of its its Meisterstück Heritage
Perpetual Calendar and Bohème Perpetual
Calendar Jewelry watches, which each come
with a feature to track the wax and wane of
the moon on the watch dial.
Followers of the brand could input birthdate
and gender into the app to receive a tailored
message about how the moon phase at the
time of their birth affects their work, personality
traits, hobbies and relationships, creating an
innovative and interactive way to excite and
communicate with customers.
Sources: 1. Aladdin Index and Goldman Sachs analysis, 2018
10WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
WeChat and social
commerce
Social commerce is a nationwide phenomenon in China
and is becoming more dynamic as the market grows and
more brands and stakeholders are entering it. The credit card
was never adopted in China and the ease and convenience of
mobile payments, via QR codes now dominate.
It is fair to say that WeChat took
a significant
step forward by
launching its
‘digital wallet’
WePay in 2014,
taking on the then market leader, AliPay (owned by the
Alibaba Group). Together, both services now account for
92% of the Chinese mobile payment market (China Mobile
Payment Report, 2017).
11WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
The two companies have tensely moved onto
WeChat Pay’s seamless integration each other’s turf, and while WeChat has now
with other functions of the app has become a force to be reckoned with, Alibaba
now helped it grow to over 600 has not been as successful at building social
million users, compared to AliPay’s functionality into its service.
450 million.1
In the WeChat Key Trends Report 2017, Mark
Brennan of China Channel summed it up as
follows:
“WeChat is a social app that has
successfully transitioned into
a payment platform, Alipay is a
payment platform that is trying
desperately to become a social app.”
Mark Brennan
China Channel
Sources: 1. WeChat Social Commerce Report 2018 from Youzan and Newrank
12WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
There are now more than 10 million online
stores operating on WeChat1 and according to
the WeChat Social Commerce Report 2018
from Youzan and Newrank, the number of
social commerce stores have increased 68%
year-on-year.
Mr & Mrs Aysh is a national restaurant chain in
China and an example of a company that has
completely embedded WeChat into its business. Social commerce used to be more centralised in
Visitors to the restaurant are encouraged to sign tier 1 cities (39%) in 2017, but this is now growing
up to the membership program which gives beyond that. In 2018, more second (tier 2) cities
them access to 360 degree restaurant tours, have joined the social commerce trend. Tier 1
in-branch wifi access, discounts and branch cities have been diluted to 29% while tier 2
details. Customers can only pay for items via cities have increased to 18% of the total share
WeChat Pay and via the membership program (from 11% in 2017). (WeChat Social Commerce
on WeChat, people can place orders, pay and Report 2018)
top up their account.
The WeChat Social Commerce Report 2018
also states that between Q1 and Q2 of 2018,
the transaction volume on WeChat shops
grew by 134%. The rate of growth has slowed
compared to 2017, as penetration is now high,
and this still presents a healthy increase.
As the market matures, running a profitable
WeChat store is becoming more challenging
as the competition for attention on the
platform is on the rise. Brands will need to
combine high impact creative with optimised
promotion techniques to stands out in such
a ‘noisy’ market.
Sources: 1. (Yang, S., Chen, S. and Li, B. (2016). The Role of Business and Friendships on WeChat Business: An Emerging Business Model in China. Journal of Global Marketing, 29(4))
13WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
Advertising
Paid promotion on WeChat has been available to brands since
2015 and to date, it has only accounted for 15-20% of Tencent’s
overall revenue - that is compared to 70% for Facebook. By the
end of 2018,
eMarketer
predicts that it
will triple to
$11 billion.
Advertising formats are similar to what we have seen on
Western social media channels, with promoted content in
news feeds (Moments), banner advertising, video ads and
coupon ads. Brands can also promote mini programs at the
top of the users’ home page.
14WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
Mercedes Benz created interactive and
‘weather-responsive’ banner ads which
allowed the user to tailor the ad creatively
and put the car to the backdrop of their
location’s conditions.
15WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
What does the future
hold for WeChat?
There is no doubt that WeChat is a dominant channel in China and
we expect it to become even more significant for international
brands in 2019 and beyond.
WeChat’s
ambitions have
been bold and
it has evolved
from a social
channel to a
‘super app’
in a short period of time. We will now explore what the future may
hold for WeChat and what this means for brands.
16WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
International expansion
This is one area where WeChat has struggled
over the last few years. There are three main
reasons for why this has happened:
1. LATECOMER TO THE INTERNATIONAL MARKET
By the time that WeChat was well established in China and ready to move outside the country,
platforms such as Facebook, Twitter and WhatsApp were already widely adopted and popular.
These platforms are banned in China, enabling WeChat to capitalise on this market.
2. LIMITED FUNCTIONALITY OUTSIDE CHINA
Coupled with the strong competition from platforms above, the international version of
WeChat has only been available with reduced functionality, meaning that foreign users cannot
benefit from the more advanced features beyond messaging.
3. LACK OF LOCALISATION
While WeChat has a deep understanding of the Chinese consumer, it has failed to invest
in localising the services, capabilities and user experience when trying to launch into other
markets, resulting in limited adoption.
While WeChat has seen growth in some other
Asian markets, such as Vietnam and Malaysia,
these obstacles above continue to hold it back
from global dominance. However, with the
scale of its dominance and influence in China,
the question is whether global expansion
needs to be a priority?
We know that Tencent is focusing more on
building business partnerships and monetising
its user base to enable more Western
businesses to launch and grow in China, as
opposed to international user growth.
Sources: 1. Statista, 2018 | 2. China Internet Development Report CNNIC 2018 | 3. Q1 2018 Nielsen Total Audience Report | 4. Global Web Index, 2017 | 5. China Internet Development Report CNNIC 2018
17WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
TENCENT WILL FURTHER INTEGRATE
WECHAT FUNTIONS TO MONETISE
GAMING PRODUCTS
Tencent has developed several popular
games, including the 50 million players-a-day
Honor of Kings (with which they have done
a deal with DC Comics). In 2016, Tencent
acquired Finnish mobile game development
company Supercell for $8.6 billion, which
has Clash Royale, Boom Beach and Clash of
Clans in its portfolio. As it looks to grow its
gaming credentials and offering, there is an
opportunity for WeChat social functions and
WeChat Pay microtransation functions to be
easily integrated into other popular games on
the platform.
KOL MINI PROGRAM ECOMMERCE STORES
WILL BECOME THE TOP CHANNEL FOR
LUXURY BRANDS
Luxury brands in sectors such as fashion,
beauty and lifestyle have started to create
more meaningful partnerships with some
of China’s leading KOLs. While influencer
marketing is not a new concept, these
partnerships will now go to a different level
with KOLs opening their own ecommerce
stores on behalf of brands.
Top three online luxury channels (2019)
BRAND WEBSITE 66%
BRAND WECHAT MINI-PROGRAM 62%
KOL WECHAT MINI-PROGRAM 57%
Fashion brand LOOK has partnered with 30
of the top KOLs in China, 90% of which are
exclusive to LOOK, and have a combined
audience of 20 million people. The brand
benefits from the reach and influence of leading
KOLs promoting their products, while the KOL
benefits financially from any sales - meaning
they’re likely to promote products and brands
much harder than they currently do.
18WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
EVERYONE IS A MICRO-COMMERCE SOCIAL SHARING IS THE NEWCURRENCY
CHANNEL ON WECHAT
Individuals can now open their own mini We have started to see ‘share to pay’ as a
program store, using store template software method for people to transact with products
to be up and running in minutes. Each person and services. For example, publisher Mint
can select the products they wish to sell and Reading requires people to pay a subscription
set the price point, taking a percentage of fee to access content, but offers refunds
commission on any sales made. when people share that content to their own
We will start to see more revenue sharing network.
models on WeChat ecommerce stores which
in turn leads to a more social-centric We will see brands start to capitalise on this
commerce approach rather than the more trend by offering discounts and incentivising
traditional commercial approach. the most engaged and socially active of their
fans and followers.
19WECHAT FOR YOUR BRAND: HARNESSING THE POWER OF CHINA’S ‘SUPER APP’
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