After the United States, China is the largest media and advertising market in the world, with ad spending projected to reach US$ 198 billion in 2023. While traditional advertising channels, such as print and broadcasting, continue to shrink, online advertising has been booming and will represent 92% of total ad spending by 2027.
According to Statista, the digital expansion is mainly driven by rapid technological advancement and a mobile-savvy population in the country. The largest segment is TV & Video Advertising with a market volume of US$60.29 billion in 2023.
Traditional advertising refers to the dissemination of commercial messages through media channels to a large audience. Film, television, magazines, newspapers, outdoor, and radio advertising are the various categories of traditional advertising.
The market for traditional advertisements in China stood at US$ 21 billion in 2021. Traditional advertisements grew marginally by 1% in 2021 as the country was among those hit hard by the COVID-19 pandemic, which prevented a quick recovery.
In recent years, advertisers in China have reduced ad spending on traditional media. This decline is particularly distinct in newspaper advertising. Between 2013 and 2020, newspaper ad revenue fell from 42.5 billion yuan (US$5.9 billion) to only 5 billion yuan (US$ 700 million).
Magazine advertising is also on the wane. In comparison, traditional broadcast ads still maintain a considerable market share. Television has been the most favorable advertising medium, especially among pharmaceuticals, cosmetics, and personal care brands.
The entry of new and small companies boosted the demand for traditional advertising. China ranks second among all countries in terms of market size for traditional advertisement and contributes 9% to the traditional advertisement market globally.
The traditional advertisement market in China recorded negative growth of 10.89% during 2017–21, and it is forecast to slow down as the online advertising market captures a greater share and budget of the ad market.
The outbreak of the COVID-19 pandemic in 2020 forced many companies to reduce their advertisement spending as the demand for non-essential services decreased.
As the world’s second-largest advertising market, China offers countless opportunities, yet it also presents unique challenges shaped by cultural nuances, fast-paced digital innovation, and distinct consumer behaviors. These characteristics require a deep understanding of the market and a willingness to adapt to its rapid evolution.
Out-of-home (OOH) advertising, particularly subway ads, is an effective offline-to-online (O2O) marketing medium. The metro advertisements in China often include QR codes, which direct consumers to the brand’s WeChat page.
Another common advertising format in subways in China: zoetrope, a digital imaging system installed in metro tunnels. Passengers can see a series of moving images inside the train on the window, which looks like a 15-second video. With these technology changes, OOH ad spending amounted to over 70 billion yuan (US$ 9.8 billion) in 2021.
The Chinese ad market is characterized by its constant evolution, and that is why it is essential to do the necessary research before entering it in order to have the best ROI (Return On Investment).
In a country with the largest online community in the world, the internet has gained a higher market share in the Chinese ad market. E-commerce, search engines, and social media advertising have been booming.
China has strict rules related to online access. Consumers cannot access many of the websites that are popular in the rest of the world. In China, platforms such as YouTube, Instagram, Facebook, and Google are not accessible to the general public.
To design an effective digital marketing strategy, a brand needs to advertise on channels that are accessible in China, such as WeChat, Baidu, Sina Weibo, Toutiao, and Tencent Channels.
WeChat, the most popular app in China, plays a major role in brand promotion. Its Mini Programs provides advanced features to consumers, such as e-commerce and task management. With its significant market penetration and conversion rates, WeChat would likely remain as the most important channel for online advertising in the next few years.
However, it is worth noting that ad fraud is more prevalent in China than other countries. In 2021, almost 30 percent of the online ad traffic in China was fake or invalid. Industry reports have shown that over 80 percent of the global fraudulent inventory came from China, costing a loss of US$ 18.7 billion for advertisers in 2019.
In China, the way a brand appears and communicates its message to its target audience goes far beyond its content. It is essential to understand how the ads are going to be perceived both by Chinese consumers and local authorities.
In September 2015, the Chinese government updated its advertising law to protect the interest, health, and safety of its citizens by limiting brands to do fake promotional campaigns. Under this new law, on top of the 49 existing laws, 26 were added defining advertising guidelines.
Staying updated with the latest Chinese laws and regulations is essential to successfully advertise products and services in the country.
Since February 2018, WeChat punishes accounts that publish vulgar and false headlines and content. With tighter regulations, it is more important than ever to ensure that a brand’s WeChat content and ads meet the advertising law’s requirements.
With the rising use of smartphones and the booming app economy, mobile advertising contributed to 57% of the media ad revenue in China in 2019 and it is expected to exceed 70% by 2023. According to GMA’s report, in 2021, almost 60% of total media ad expenditures and close to 84% of digital ad spending was dedicated to mobile advertisement thanks to the BAT companies (Baidu, Alibaba, and Tencent) which represent more than two thirds of China’s advertising market.
Considered the “Chinese Google”, Baidu is the most popular Chinese search engine and stands as the 5th most consulted website in the world. As of 2023, Baidu has around 60% of the market share, which means that more than half of the Chinese audience uses it to search the internet.
Given the incremental growth in mobile users, Baidu will certainly continue to invest heavily in its mobile ecosystem to bring a better user experience. This provides a lucrative opportunity for marketers to reach a wider and more engaged audience base.
Baidu cannot be ignored in China. About 60% of all first-stage research is conducted based on this search engine. However, to have effective advertising campaigns on Baidu, the use of Mandarin Chinese keywords is necessary to enhance website traffic.
Unlike Google, Baidu’s DSP/Media Banner ads are not particularly used as most online advertising is PPC (Pay-per-click). In fact, PPC search results are also perceived differently in China with more trust in paid search compared to the West. One reason for this is the predominance of PPC throughout the development of Baidu’s platform with Chinese digital players monetizing their websites.
There are some limitations to Baidu ads, notably for health and pharmaceutical products. The effectiveness of PPC depends on the sector, either high-value investments or relatively low-scale purchases will thrive on Baidu PPC (e.g. Real Estate & FMCG). Cosmetics are also typically associated with Baidu PPC, as many Chinese customers look for cosmetic product reviews on the search engine.
Baidu’s traffic profile is a qualified set of users who seek to look for information extensively. PPC is one side of reaching out to this audience whilst SEO (Search Engine Optimization) is also a major part of Baidu’s success.
In order to create a Baidu’s PPC advertising account, the following documents are required: Chinese website, business registration proof, company bank details, and a copy of the company chop/seal applied to all documents.
Another effective eCommerce option is Weibo. Launched by Sina Corporation in August 2009, Weibo is an innovative platform and one of the biggest social media channels in China, with over 600 million users (224 million daily users).
In terms of its functionality, Weibo is akin to Twitter with micro-posts, hashtag functionality, and content/video links making up most of the posted content.
In terms of advertising infrastructure, it is closer to Facebook than any of its rivals. It is also more cost-effective, with a lower minimum ad price than WeChat. Weibo benefits from a profitable partnership with Alibaba when it comes to e-commerce ads.
However, if a company plans on advertising on non-Alibaba e-commerce apps, there is a limitation to that practice.
Fan tunnels are the most targeted way of reaching new consumers and followers. It can be used to promote either a specific post or an account. It works like a ‘headline’, appearing at the top of the user’s news feed.
This type of Weibo ad is particularly effective to build a large following quickly, especially for a brand that is new to China or this platform. Fan Tunnels focus on the Weibo community, not just existing followers. It will put content at the top of news feed based on targeted audiences defined by age, gender, region, interests, and even device types.
A brand can specify the interests of followers and target accounts in similar niches. For example, target users who follow specific fashion news and fashion-related posts. In terms of budget, Fan Tunnels works with CPM (Cost Per Mille).
Display ads on Weibo come in various dimensions on different pages. They are optimized for both the mobile and web versions (although mobile is predominantly used). When users click on the ads they are redirected to the advertiser’s homepage. Pricing depends on the page placement, size, and keyword association.
Weibo allows a targeted approach with keywords selected for visibility based on user searches. A brand can also feature displays on other relevant accounts that boast followers in the same niche. Display ads are mainly put on the search page (in the Discover section), on the Weibo homepage as well as on the side of the user’s news feeds (like Facebook Ads).
Weibo users are young, with 68% of them between 15 and 30 years old. This is an important factor to bear in mind regarding brand and product placement.
Weibo is a very active and animated community, dominated by Key Opinion Leaders (KOPLs). Users expect a high level of engagement/quicker response times. Paid ads are one thing but capturing the attention of expectant Chinese consumers with an active account is another.
Introduced in 2011 by Tencent, WeChat is one of China’s top tech companies. With 1.2 billion monthly active users, it is the most popular messaging app, and it can be used to do everything from hailing a cab to booking a hospital appointment. Payments can also be made by WeChat Pay.
WeChat is a closed platform and account holders can see only what their friends post, which means brands can interact with subscribers on a personalized level.
There are three types of WeChat paid ads, which can be selected depending on the budget allocation. WeChat ads require a higher level of initial investment than other popular social media platforms and their main objective is to attract followers while engaging new ones.
Experts believe that there is a magic number when it comes to WeChat: 10,000 followers. This number is an important key factor for future growth with more re-posts, shares, and an animated community engaging with the brand.
WeChat moment ads were launched in 2015 when 25 brands including Coca-Cola and Mercedes-Benz took part in the first testing campaign. Moment ads tend to be best for brands that already have a certain level of engagement in China.
WeChat Moments Ads include: Brand name and profile picture, up to 40 characters and description, link to an html5 webpage hosted on Tencent’s server, and up to 6 pictures or 6-15 seconds of short videos. Companies can target users according to their location, interest, age, gender, device, and phone network.
When it comes to the location, there are three categories including Beijing & Shanghai, 35 first and second-tier cities, and non-specific cities.
For small/medium companies or companies in the service or B2B industry, social media advertising channels such as KOL, WeChat banner ads, and Tencent ads on QQ may be a smarter choice.
There is another form of advertising on WeChat called “banner advertising”. These banners are like the ad banners you would see on a website. In the context of WeChat, they are featured at the bottom of a message written by an Official WeChat Account, either a subscription or service account.
This option has three components:
WeChat article: WeChat banner ads appear at the bottom of a WeChat article written by another WeChat Official Account.
Ad banner: the banner contains a logo, account name, and headline. When clicked, it takes the users to a page containing additional information about the brand/product.
Call to action: this takes users to another landing page.
The banner ads can drive users to follow WeChat Official Account, download an app, claim a coupon code, buy a product, signup for a link, or to a customized landing page.
WeChat banner advertising is the most used way to grow WeChat followers with a stable ROI. Thus, it is important to run a few test campaigns with different content to calculate the CPA. It is a good method to get started on WeChat.
Another successful platform es Douyin, the Chinese TikTok. As one of the most popular short-video apps, Douyin is expected to reach 800 million daily active users in 2023. Both Douyin and TikTok are owned by Bytedance, a Chinese tech company.
Douyin literally means “vibrant music” and its short-form videos (less than 60 seconds) allow users to combine dynamic background music and creative filters.
A verified business account is necessary to operate in Douyin’s sphere. A company will need to visit Douyin’s official website, to verify the business account by providing information such as the type of account, its category, account operator information, and relevant company registration information and documents.
There are 2 types of ads on Douyin:
Brand Takeover: The Ad Appears on the loading page of the app for a day and redirects to a brand’s landing page or hashtag challenge on Douyin
Native Ads: Native ads appear in users’ feeds. They can be video or picture with a duration range between 5 to 15 seconds. This type of ad supports CTA and can redirect users outside of the app.
Toutiao, China’s buzzfeed, was launched in 2012 and can be translated as “Headlines”. Toutiao was developed by the same company as Douyin, Bytedance Chinese tech company, and is one of China’s largest mobile apps for content creation and news aggregation. It recorded 1 billion monthly active users as of July 2023.
Toutiao is an effective way to get Chinese consumers’ attention. In fact, they are spending more time on Douyin and Toutiao than on WeChat. The company’s algorithm models generate a tailored feed list of posts for each Toutiao’er.
There are three types of paid ads on Toutiao:
Take Over Ads: displayed on full screen when opening the app
Streaming feed Ads: video format ads that blend into users’ feeds for a seamless experience.
Feed Ads: feed ads appear in users’ feeds. They can be in various formats. This type of ad supports CTA and can redirect users outside of the app.
Kuaishou is the biggest competitor of Douyin and one of the most famous short video apps in China, with more than 300 million daily active users. About 80% of users are born after 1990, among which the average of using time can achieve more than 60 minutes per person per day. Moreover, 19 million people have earned income from Kuaishou.
In the user distribution, users in first-tier cities only account for 10%, while users in second and third-tier cities are the main users of Kuaishou.
Launched in 2011, Zhihu stands out from its competitors by providing high-quality questions and credible answers. Instead of turning to their friends for answers, the Chinese are asking questions on Zhihu.
As of 2023, it had 200 million registered users, and over 120 million answers becoming China’s largest knowledge-sharing community. Zhihu recorded an impressive 45 million ADU, 45 million questions, and 1.2 billion answers.
The tagline “Discover a bigger world” is an important source for Chinese netizens to obtain expert knowledge and insights into various topics. Through this platform, a company can reach more sophisticated users, who have a high income, high consumption power, a strong educational background, and can discuss more high-level, technical, and premium topics.
In 2020, the COVID-19 pandemic had a great impact on Taobao Live’s development. The number of new merchants on Taobao Live increased by 719% from January to February. Other platforms and apps also benefited from this increase in demand and all live-streaming platforms are trying to follow this trend.
Platforms like Douyin and Kuaishou, which have a huge number of users, are also promoting brands and products on their platforms.
For instance, Li Jiaqi (Austin Li), known as the “King of Lipstick” in China, sold 15,000 lipsticks in just five minutes through the Taobao Live app. He has a large community on social media, with more than 40 million fans on Douyin, where he usually live-streams his recommended beauty products.
Live streaming is removing barriers between brands and consumers in the advertising industry. While it is focused on driving short-term sales, it enables local and international businesses to improve their marketing efficiency by combining brand marketing and performance marketing.
Live streaming shows are a new generation of ads. Because it is live, audience members can interact with the influencer, who can charm the audience to purchase more. It is an excellent way to get closer to the Chinese consumer and demonstrate a product live, promoting the brand and obtaining immediate feedback.
In China, influencers are referred to as “key opinion leaders” (KOLs). An influencer is a respected person in the field who advertises the product on popular social media platforms. These key opinion leaders can influence their audience, often due to their own position and credibility.
While fashion and beauty blogs often feature young social media models, these KOLs may have more robust backgrounds, such as tech backgrounds or healthcare providers. Because these people have credibility in their field, they are often able to influence consumers to follow their advice and purchase certain products.
However, a KOL China marketing strategy is often expensive because these influencers usually work for large sums of money. It is not uncommon for a brand in China to pay hundreds of thousands of dollars to establish one KOL campaign on a platform like WeChat. KOL marketing is a key component of a business’ marketing plan.
When considering a KOL marketing campaign, it is important to ensure that the influencer is suited to promote the brand. There may be major celebrities that have widespread recognition, but maybe a less famous influencer who is particularly relevant in a certain field is better for a specific marketing strategy.
The digital media market share in China will continue to expand, with 80% of total local advertising spending expected to come from digital media by 2024.
Businesses, marketers, and advertisers need to stay informed of the latest trends and developments. The advertising space does not stand still.
Experts have identified four media trends for 2024: data and tech will empower precise marketing, full-chain solutions will be prevalent, short videos will shift from being a trend, to a new norm, as well as KOL will reshape the rules of content seeding.
Companies that want to target the 1.3 billion Chinese consumers must understand the characteristics and dynamics of the market.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
Talk to an expert
Schedule a 30-mins complimentary, no-obligation call to see how Woodburn can help you. Book a call with our Head of Business Advisory - Kristina Koehler-Coluccia.
Topics we can advise on include:
Company Registration
Cloud Accounting & Financial Reporting
Cloud Payroll Services
Tax & Audit Services
Recruitment
Employer-of-Record
Visa Application
Trademark Registration
Switch to Woodburn
Partner with Woodburn (cross referral)
Our calls are automatically scheduled via Zoom - or via Teams, WeChat or WhatsApp upon direct request.
Our advisory calls are available from Monday-Friday from 8am to 5pm CEST and Wednesday until 9pm CEST.