Consumer Protection Comes to Chinese eCommerce

All new industries get a grace period from regulation as authorities catch up to the new reality. Social media in the US will likely face government regulation in short order after a decade of freewheeling.

New regs from the Chinese government reflect the end of that grace period for eCommerce operators who have had no regulation until now in spite of tremendous growth in the five years ending in 2017 and 40% plus growth projections for the end of this year.

There are three types of operators recognized by China’s new law: platform operators, operators on platforms and online sellers. Here are four areas covered by the new law:

  • IP protections are strengthened by requiring that e-commerce businesses must be licensed by the State Administration for Industry and Commerce. Unlicensed entities face potentially strong fines and copyright thieves will be identified.
  • Regulations regarding unfair competition limit the market power of companies that have either a user or technical advantage over their competition by “prohibiting platform operators from imposing unreasonable restrictions, conditions, or fees on merchants.”
  • E-commerce platforms will now share responsibility, along with individual merchants, for the sale of counterfeit goods sold on their sites with heavy fees for transgressors.
  • Consumer rights get new protections. Sellers are required to disclose selling rules and “cannot assume consent from the consumer.” In addition, merchants must protect consumers from fake reviews regardless of origin – outside contractor or incentivized consumer.

Assuming these rules are enforced, it is a good day for intellectual property owners, for competition and for consumers.  Source: Dezan Shira & Associates China Briefing

http://www.china-briefing.com/news/china-new-e-commerce-law-businesses-ready-new-compliance-norms-2019/

Maximizing the Digital Video Rage

There may be lessons about video advertising that can be drawn from the gaming world and applied in the broader advertising world. Here’s the logic. When asked which type of ad was preferred, gamers designated rewarded ads by far. The reason is obvious; users get something in return for the interruption. And because of the reward, there is a documented completion rate of 90% for rewarded ads and impressive recall and association rates as well. Add those facts to data that strongly recommends a six-second preference for pre-roll ads and you have a formula for successful advertising beyond digital gaming. Reward ad viewing and keep it short. Source: AdExchanger

Toughest Regs from the Biggest Player Rules

The nature of government or quasi-government regulation is that the biggest player with the toughest regs rules the day. Examples: The Texas State Board of Education has inordinate power over the history taught in US text books because of the size of the Texas market and California has the same leverage over auto emissions because of the size of its market. California often supersedes national regs.

In the digital marketing space the biggest, baddest dog today is European Union with its General Data Protection Regulation (GDPR). In 2020 a set of GDPR-like regs go into effect from California. Because it’s difficult to follow privacy rules for every individual jurisdiction, the tougher of the two will be the standard.

Advise: Except the toughest privacy rules from the biggest market as your company’s standard rather than trying to piecemeal it.  Source: New York Times Review of Books

Resistance on the Positive Side

All recent news on China’s economy has focused on a downturn in the manufacturing sector due to the trade difficulties with the US. Manufacturing used to dominate the Chinese economy, but that has changed in recent years. The service sector controls a larger share of the economy today. It’s more local and far less affected by international trade. Hence, as long as the service sector and the Chinese consumer remain positive, the effect on the overall Chinese economy from the trade issues will be moderated.  Source: Markit Economics

Management Lessons from Alibaba

The growth numbers for Alibaba are mind-bending – “more than 50% year-over-year revenue growth for each quarter in the past two years.” That’s for an already giant company, for a company through which 45% of China’s population discovers or purchases products. How can that growth be sustained?

Here’s how. Last year we wrote that both Alibaba and its only competitor JD.com were building infrastructure to expand their presence in the more rural areas of China as a way to find future growth. It doesn’t end there. Now that they have penetrated those regions, they recognize a difference in the levels of sophistication between urban and rural, between established and new customers.

Using AI to psych out users, Alibaba is delivering one of two forms of their app. For the user deemed to be sophisticated there is one version that’s been embellished with elements of social networking allowing users to interact and post product reviews. By contrast, the version for the novice is more basic. It emphasizes best value for the money and products more focused on basic needs. The strategic thinking behind the approach is supported by the numbers. The lesson for all companies is that you are never finished; you should never accomplish a goal without an eye to the next horizon.  Source: The Motley Fool

The Mobile Challenge

In an article from AdExchanger, Jeremy Steinberg, CRO of Yeldmo, lays down the gauntlet for advertisers to make the mental adjustment required for the obvious, mobile is where consumers live. Therefore, he argues, creative adjustments have to be made to accommodate mobile form factor realities.

Challenges

  1. Proper rendering for the hundreds of phone variations is essential for effective messaging.
  2. Creative “needs to be built for the thumb [for] how consumers scroll, swipe and tilt, or walk and touch.”
  3. Content needs to be “optimized for the mobile experience and properly deployed”
  4. “Interstitial ads pop up randomly”
  5. “Large format ads will break the page and confuse users”
  6. “Adhesion banners [are over used] and deliver unintentional clicks”
  7. “Audio-on video formats pummel users”

Advertisers that embrace these challenges and adjust for them will win the mobile medium.  Source: AdExchanger

Why Mobile?

Mobile has two advantages over the web for advertisers. First it’s where the shopping eyeballs are. Data suggests that 82% of shoppers check their phone before buying in a store. Combined with all the mobile sales where the consumer never leaves their phone, the place to be visible is where your customers are right before they purchase. And mobile is that place whether the purchase is made online or on premises.

Second, the in-app environment carries inherently less fraud because, unlike the web, every app has gone through some level of verification by either Apple or Google in order to get into their respective download stores. Add to that third-party quality assurance from companies like comSore or Nielsen Digital Data Ratings and trust in the mobile ad process is enhanced to levels comparable to the best, best practices on the web.

Viewability is an issue in mobile. That’s because each app has to carry a SDK that allows for viewability, which means the vast majority of existing apps are likely not equipped. But even that’s changing; the VAST 4.1 format has viewability designed into it. The gap is about to be closed.   Source: Marketingland

For Game Developers: A New Revenue Balance

2018 saw a major change for in-game advertising. According to a DeltaDNA survey of 336 game developers, the number of games getting at least 40% of revenue from advertising is up 15% while the number getting more than 81% of its revenue from ads has jumped 29%. That changes the balance of revenue tracks streaming into the genre. The purity of free-play gamers has been shifted by the reality of income.

The graph shows that rewarded video ads are, by far, the preferred in-game ad format.  Source: VentureBeat

China’s Service Sector Leaps Back in Rocky Three Month Ride

China’s service sector since July 2018 has been up and down, but the last three months have rocked reflecting the instability created by trade tensions with the US. At no time in this period has the Index fallen below the 50-point positive threshold. In December it sits comfortably above the 13-month average of 53.0.   Source: Markit Economics

New Media Combinations & Permutations

Our discussions are always focused on the latest digital marketing approaches as if traditional marketing is so old fashion as to not matter. So it is refreshing to see writing that recognizes old ways haven’t completely disappeared and likely won’t. It takes to view that combining old and new media might yield the best result. Consider the following media combining strategies:

  1. Billboards with geo-targeting – to focus on people passing through your specific location
  2. Newspapers and online ads – to focus on a local community’s permanent population
  3. Magazines with digital content – to take advantage of a magazines specialized audience by advertising in both their print AND digital versions
  4. TV and video – Television ad costs have come down in recent years and YouTube ads are cheap, so the key is to produce a TV ad that can be also be cut down to 6-second and 15-second pre-roll times and spread the same budget on both mediums.
  5. Radio and streaming ads – As with TV, radio ads costs have come down allowing the same budget to compliment your morning drive time presence with a streaming presence on Pandora or Spotify or on selective podcasts.

These strategies point to a sophisticated, purposeful omni-channel approach to advertising.  Source: Business.com