Media Fragmentation Continues as Spending Shifts to New Channels
Content Marketing Draws Consumer Attention
Media investment has remained steady overall during the past several years, but the way advertisers allocate their media investment has changed substantially, with a decline in traditional channels and an increase in new digital channels.
Investment in print declined most significantly over the past four years, with newspaper and magazine spending dropping 39 percent and 31 percent, respectively, in 2016 alone. At the same time, Internet spending increased almost 18.5 percent, and spending on cinema ads spiked, growing 64 percent in 2015 and 45 percent in 2016, according to CTR Market Research, a partner of Kantar Worldpanel.
More than half of the brands in the BrandZ™ Top 100 Most Valuable Chinese Brands 2017 have increased their spending on new digital media, specifically elevator (digital TV and posters), in-store video, and cinema. CTR Market Research found that these media together reach almost 84 percent of trend-setting, high-potential consumers, age 20 to 45.
These higher income consumers, age 20 to 45, are members of China’s growing middle class who desire – and can afford – premium and quality products and experiences. They are more willing to try new things, and to share their reactions with others. Advertisers targeting this group of consumers can expect higher ROI on their media investment.
No single media channel dominates, however. Across China, and among all age groups, consumers access multiple media channels. Media is most fragmented in China’s largest cities, where people consume an average of three different media channels, but lower tier cities are not far behind.
The character of the information consumed is changing as well, with a rise in content marketing – brand messages presented in a tone that is more informational than promotional. In 2015, the proportion of ad budgets devoted to content advertising ranged from 4-to-15 percent, according to WPP research. By the end of 2016, some advertisers allocated as much as a quarter of their ad spending to content marketing.
In addition, Chinese consumers are somewhat more receptive to branded content marketing compared with global consumers. Chinese consumers are more likely to say that they enjoy content from brands on social media and benefit from ads tailored to their needs. And Chinese consumers are also slightly less likely to become annoyed when brands seem to follow them online.
The reason for the shift to content marketing seems to be that it works, according to GroupM research. Content marketing, or brand-sponsored programs, exceeded every other type of advertising, other than TV and Internet commercials, in levels of both trust and reach.
AD SPENDING REMAINED STEADY...
Total ad spending has fluctuated only slightly over the last three years. Despite slower economic growth, advertisers spent only slightly less in 2016 than they did a year earlier.
… AND ADVERTISERS INVESTED IN DIGITAL MEDIA…
Investment in traditional media channels decreased in 2016, as advertisers spent more on new digital channels, including cinema and elevator TV and poster ads.
… NEW DIGITAL MEDIA REACHES TREND-SETTING CONSUMERS…
New digital media – elevator (TV and digital posters), in-store, and cinema – reaches almost 84 percent of China’s trendsetters, middle class consumers age 20 to 45, who desire and can afford quality, and are willing to try new things.
… BUT PEOPLE CONSUMED MULTIPLE MEDIA CHANNELS
Across China, and among all age groups, consumers turned to multiple media channels for information. Media is most fragmented in China’s largest cities.
AD TONE SHIFTED TO CONTENT MARKETING…
In 2015 the proportion of ad budgets devoted to content advertising ranged from 4-to-15 percent, according to WPP research. By the end of 2016, some advertisers allocated as much as a quarter of their ad spending to content marketing.
... CHINESE CONSUMERS ARE RECEPTIVE TO CONTENT MARKETING…
Chinese consumers are somewhat more receptive to branded content marketing compared with the global average for all consumers.
… AND CONTENT MARKETING SCORES HIGH IN TRUST AND REACH
Content marketing, or brand-sponsored programs, exceeded every other type of advertising, other than TV and Internet commercials, in levels of both trust and reach.
Media is in flux. Chinese consume multiple media channels all the time. And no single media channel reaches both broad and targeted audiences. It is important to use a mix of media and experiment with new digital channels such as cinema and elevator TV and posters. Elevator TV ads often are found in stores and shopping malls as a component of experiential marketing. An elevator ad viewed by consumers with smartphones can lead to immediate purchase and payment. These new media deserve to be part of the mix, especially for reaching young people.
It may take a few attempts to optimize the use of these media, but it is critical for brands to remain engaged and to move quickly. This advice applies especially to global brands, which may be inclined to advance cautiously. In addition, execution should not be limited to major cities but extend to China’s lower tier cities, where consumers have embraced these new media. The tone of the communication makes a difference. Like consumers in many parts of the world, Chinese are receptive to brands that attempt to be helpful and informational, rather than only promotional.