This interview is part of WARC's Marketer's Toolkit 2022, launching soon. Click here to register your interest.
- There is a need to create unified standards to promote the integration of the Artificial Intelligence of Things (AIoT) resources at a wider level to create not just an AIoT ecosystem of one company but a smart city.
- It is more effective to provide consumers with emotional appeal and satisfaction rather than product specifications, but stories and scenarios must be what consumers are used to and what they like.
- Catching the hot trends is important but fads will always pass, so high quality products that delight people with a simple and easy user experience are the way to go.
It is clear that Skyworth is bravely shifting from being a traditional brand to one featuring AI big screens. What do you see as the biggest difficulties that old brands need to overcome in the process of transitioning to the new OTT approach: personalised streaming? As a brand with so many years of practical experience, what advantages does that provide you with in this process over new brands?
The older brands have been around for a long time and accumulated market awareness early on but older manufacturers are still mainly based on processing and production, so in terms of some hardware product technology, the old brand is more deeply embedded. Just as with our patents, our sophistication and accumulation of experience on some basic functional needs are very deep.
But now, with the change in the times, the impact of AI and commercialisation, people are increasingly concerned about intelligent and connected experiences. In the past, the traditional manufacturing industry was more inclined to development in the direction of greater depth in their core skills but now many new brands, including some internet platforms, are instead focusing on surface and systemic issues like ecology, content and software systems. It’s like you can fight alone but when you fight as a group, you find that there are not enough people with you. The traditional manufacturing industry is similarly very inflexible.
The future demographic dividend is limited, and the value of users and average revenue per user (ARPU) are also limited, so competitiveness in the future depends on who can extract a greater ARPU value from a limited number of users, generate more value from the same user, generate continuous repurchasing or more multiple product sales, etc. It is inevitable that the ecosystem and overall layout will be stressed.
In other words, even if a user comes to you once to buy a TV set, they may not need a second or a third TV and your connection with that user will weaken or disappear. Therefore, the challenge for us lies in areas where we previously invested little energy in, such as greater involvement and exploration in diversifying the product range, software ecosystems and the build-out of intelligent systems. Skyworth has already accumulated a lot of experience in this area. As one of the three leading colour TV makers in China, it has always had a good market reputation with its large-screen display products. With the increasing improvement of technologies such as 5G, Al and VR, competition in the colour TV industry is gradually shifting from hardware manufacturing and sales towards software, content and ecosystems.
AIoT (Artificial Intelligence of Things) capability with large screens will become an important competitive element. In comparison to other traditional TV manufacturers, Skyworth's Coocaa Systems has a leading position in the industry and technology, providing strong software and hardware technical support for Skyworth's farsighted and comprehensive transformation and the establishment of the large-screen AIoT ecosystem, Swaiot. This year, it is already waiting for a stock market listing. Our hope is that the next step will be to establish a Family AIoT interconnection scenario through Swaiot and the scope of the Coocaa system will be extended and not limited to the home. As long as there is a screen with connected display capabilities, we hope that everything can be installed within the entire Coocaa ecosystem.
Since the AIoT ecosystem is in its infancy in China, it is certainly not simply up to one manufacturer or end-user but involves the whole chain. From your perspective, what are the top challenges that we need to collectively overcome in this product chain in China?
We need to put more emphasis on addressing some industry standards and supply chain resource integration issues. Each brand will make its own small home appliances, like refrigerators, air conditioners, washing machines, etc. Especially in the last two years, we’ve seen global fluctuations and a very low level of stability in terms of supply chain pricing and raw material supplies. So there is a need for the state to create some unified standards on a wider level to improve the efficiency of society as a whole and to promote the integration of AIoT resources at a wider level, so that it is not the AIoT ecosystem of any one company but a smart city, a smart country and so on.
There is a need to establish common standards – first, in terms of the hardware supply chain for products and second, in the definition of the AIoT semiconductor chips and software connectivity standards, etc. In terms of payments and various other aspects, manufacturers will probably establish their own standards to create their own closed-loop ecosystems, which is called enterprise ecosystems. But if you look at the bigger picture, you need higher level organisation to drive this process.
What is Skyworth doing now in the area of smart cities?
We now have a range of products including intelligent street light poles, intelligent lighting and intelligent bathing, and they are doing quite well. They may not be eye-catching but our company is now very competitive in these specific market segments, including intelligent displays, intelligent commercial products, etc. Only some are business-oriented (B2B) and on the consumer side (B2C), perhaps we don’t do so much advertising, so people have a relatively limited idea that it’s there.
Going back to the user experience, in terms of the AIoT ecosystem user experience, how does Skyworth balance the need to deliver a good experience for the average user and at the same time meet the revenue requirements when targeting both the average audience user and the brand customer?
In terms of this system, we used to be more inclined towards corporate revenues and did indeed operate in that way, including the kinds of materials included in advertising content. This is because our logic used to be that when users are watching TV, these are part of the delivery. But this challenge now is getting bigger and bigger, and as the industry develops, users have more and more choices. They used to have to watch TV but now it is a matter of if you make me feel uncomfortable, then I can stop watching TV and do something else. Once you’ve lost the user’s confidence, the damage to the business may be ongoing. The impact of word-of-mouth is also huge and for us in the e-commerce world, users can write any reviews they like and the reviews can't be deleted, which has a long-lasting impact on the brand as a whole.
So now we are very clear internally, that everything, including the whole Coocaa software content part of the company, needs to be directed in line with user needs and user standards. For example, users can remove the advertisements delivered when the TV set is turned on and the company cannot take that revenue. There are also some users of high-end machines where there was a mismatch in many levels of advertising provided but because there was revenue, we pushed the ads at them anyway but no longer. If something does not match the requirements of the group, then we remove it. We can't say we’ve been totally thorough in this area but it's clear that we must be guided by the requirements of users. If we annoy users in the short term, then we will definitely have big losses in the long term.
Now in the construction of the AIoT ecosystem, Skyworth also carries out crowd expansion through cooperation, such as cooperation between Skyworth and Huawei and Midea in AIoT products. Through Swaiot technology, it is easy to connect hardware under different systems to achieve cross-brand and product ecosystem connections. In the future, it will be possible to use the intelligent visualisation capability of large-screen products with small home appliances, while also achieving crowd-sharing and intelligent product capabilities through other product categories.
In the long term, what are some of the innovative user experiences you are looking to introduce to compensate for the impact of the short-term revenue cuts you say must be made?
With some of the AIoT connected services we are doing now, including the content we push out to people on the Coocaa system, there is useful and free content that is being recommended to users at specific times. Our logic now is: the core is still to serve users like you, not to make as much money as possible from them as soon as they appear. As long as users are interested in your product, interaction and content, they will be willing to spend more money with you in the future.
Skyworth created a livestream of a New Pants concert with TV cameras to promote the A20 high-end cloud social media intelligence screen, which was watched by three million people. Twenty groups of VIP music fans interacted with the band and 2,097 people eventually bought additional Skyworth A20 TVs. We will continue to make use of this kind of creativity.
Previously, the average age of TV buyers was older but now we lean as much as possible towards a younger demographic and keep providing more emotional appeal and satisfaction to some of the specific user groups that have been identified. This is far more effective than just telling users how many pixels there are and how saturated the colours are because young people nowadays don't value these configurations very much. We now have to do more in terms of emotionality or tell more stories but, most importantly, the stories and scenarios must be what users are used to and like.
You did a live broadcast with Han Qiaosheng last year. How did you feel about it? Is it something you'll continue to do?
TV people are in a traditional industry but they are actually very diligent and it’s just that people can't see the explosive growth of this industry. Years ago, it was a RMB 100 billion industry and today it is still a RMB 100 billion industry, while the annual revenue of e-commerce is RMB 10 billion. There is not much variation, unlike some companies that have 10 billion in the first year, 20 billion in the second year, 30 billion in the third year. So in such situations, we will tend to try new things. For example, last year, we tried livestreaming with hot stand-up comedians Yang Li and Luo Yonghao, and KOLs like Veya.
I think that's better because there is a group behind each of these livestream host anchors. For example, after livestreaming with Han Qiaosheng, I found that the people who contacted me were from my father’s generation, including the founder of Skyworth, Huang Hongsheng. After the live broadcast with Veya, I found that more girls from among my own friends came to ask me questions. The fan base for each anchor is different and this is an experiment to see how our products really affect these different groups of people.
Different brands in different categories certainly have different strategies in e-commerce. What is Skyworth's e-commerce strategy as a traditional home appliance brand? What is the trend in Skyworth's e-commerce revenues and how does the company’s corporate structure fit in with the requirements of e-commerce?
E-commerce is not the same as offline, there’s nobody there, only so-called “lonely sales” or the use of pictures and videos to communicate. So at the core of our e-commerce strategy are two factors:
Firstly, we ensure that our products are leaders in their category. We have always advocated ourselves as a professional visual screen products leader, to be the best in the audio-visual space and the visual experience of the big screen. Therefore, the first issue is still to ensure that our products lead in terms of both technology and expression. Professionalism in this field is our characteristic and Skyworth's core emotional point and foothold.
Secondly, how to re-tell the story around this core point in different ways to promote it to the target group. So when defining a pop-up in e-commerce, it is important to define the leading aspects of the product clearly for the demographic and to package and promote it to different groups of people through a sub-division strategy.
For televisions, e-commerce now accounts for close to half of the revenue within Skyworth.
In terms of organisational structure, e-commerce itself is a full-chain organisation. The e-commerce centre includes the channel department, marketing and product department, sales department, and also the promotions department and the data analysis department, as well as the supply chain, finance and design, which completes the chain and enhances communication efficiency.
At the same time, we have some new sales organisations and departments. Skyworth's strength is not only its products but also the fact that it has tens of thousands of shops offline. In any township where you can see home appliances being sold, you will definitely see Skyworth, with Skyworth's employees and Skyworth's brand. Therefore, we have combined the capabilities of the tens of thousands of offline staff with our online product and marketing capabilities through some new models and new organisational assessment incentives in terms of offline experience, achieving more coordinated internal communication. Structural integration can be achieved through organisational assessments and the setting of organisational performance targets.
Is that Skyworth's strategic approach, whether in Tier-1 or Tier-2 cities or in the lower markets?
Yes because the television set itself is a mass consumer product that covers all channels. The total volume of the entire Chinese market is so big and Skyworth makes more than 10 million TV sets a year, so if we only hit one market segment, we can't meet our revenue targets. We can look at this as a responsibility or as a burden. A total volume of so many means selling to everyone, only it’s necessary to make products that suit different people and create lifestyles that suit different people.
It's hard to give up on any one demographic. Skyworth now has ranges of products aimed at high, middle and low levels of the population. For example, we acquired the German brand Mezz, which was showcased at the China Household Electric and Consumer Electronics Expo (AWE) and which is aimed at the high end of the market, with a Mezz TV costing around 400,000 yuan. At the same time, as a national product, Skyworth's Coocaa brand is aimed at young people, similar to the market approach of other brands in the industry, with a higher price/performance ratio and cooler products.
So it is through different products and different brand positioning that we will present the brand in both omnichannels and omnimarkets.
What is the e-commerce strategy for emerging platforms such as Xiaohongshu, bilibili and Douyin?
This is where I have spent most of my energy in the past two years as the general director of Skyworth's e-commerce. Our core focus is still on the demographics and traffic volume, especially because for big home appliances such as ours, new customers and new traffic have the biggest impact. Repurchases of TVs don’t make much difference and the decision cycle there is very long, so we need a large number of new customers to create a relationship with us and become interested in us.
But we find that traffic is now increasingly fragmented. About 20 or 30 years ago, we could deal with one channel and people would buy our products; 10 years ago, when we were doing e-commerce, we also only needed to work with one or two platforms. But in the future, the increased dispersal of traffic is an inevitable trend and will become more and more intense. For different consumers, some buy here and some buy there, some may just watch a video on a short video platform and then buy, and these platforms also have closed-loop payment. The future is a multi-touch, decentralised business and we are now building omnitouch channels, and establishing omnichannel, omnitouch operational capabilities. For these new social e-commerce platforms, we are now putting a lot of effort into pushing them.
Private domain operations are a hot marketing tool at the moment. How does Skyworth view the cascade of private domain assets on WeChat mini programmes or other social platforms and what is the long-term value of this for the brand? How can Skyworth provide greater value to consumers or loyal users in such an environment?
Whether it's Levi's AIDA (Awareness, Interest, Desire and Action) marketing model from over 100 years ago, Dentsu’s AIDSAS model of consumer media consumption as a user interest sharing model, or Alibaba's AIPL brand crowd asset conversion model, all are about building brand power through users' interests and shaping a long-lasting and effective brand momentum to bring about sustainable product conversion and price premium capabilities. The flow dividend is disappearing and the cost of public domain traffic is getting higher and higher. For brands, the private domain traffic imported from various internet platforms can supplement the public domain traffic, forming their own user pool and better realising user repurchase or pulling in new conversions. Deep and valuable user operations is the key to solving the problem of the long-term value of the brand.
In such an environment, Skyworth hopes to serve each user well by providing better products, a better service system and more refined operations to achieve efficient conversion of traffic, precipitate private domain traffic and provide greater value to our users. For users of high-end products, we use innovative technology, leading-edge products and quality services to win the user's word-of-mouth support and ultimately allow the user's word-of-mouth to achieve increased user loyalty.
Nowadays, sales people are anxious about traffic volume and you also talk about expanding the presence in omnichannels but the glass ceiling of traffic volume is unavoidable. So how do you configure your content strategy for so many new and differentiated platforms? On these platforms, are you now focusing more on direct conversion or on long-term brand reputation with consumers?
This anxiety about traffic volume is inevitable. Flow is people and any place where people gather is worth trying. Whether it's a new platform or an old one, whether its traffic is large or small, as long as there are people there and as long as its traffic shows a relatively fast growth trend, we are optimistic about its future and I think such platforms can be tried.
Of course, there are many platforms with a lot of traffic and not enough commercialisation or poor conversion prospects which I think are still worth looking into. The painful part for us is a lack of people but where there are people, we can't achieve conversion, which requires us to work harder on marketing and operations, and basically we will push ahead with that approach.
What specifically will you be working on more in the future?
We have now set up a new channel development department for all new channels and we have also deployed a special organisation, matched with special investment, to link up with different platforms. In the past, we were mostly working on platforms that we were already cooperating with but now we are actually deploying our best and brightest to develop relationships with new platforms. In developing new platforms, I basically go and talk to them personally and we spend more energy on this aspect.
In addition, the characteristics and attributes of users on social media platforms or new traffic platforms are now more obvious, so we will still use the livestreaming format because there is a group of supporters behind each host anchor and there is the short video format, a relatively new form of expression, combined with the platform's crowd characteristics and custom content, for continuous seeding.
The future of traffic is such that it flows across multiple touchpoints; you simply don't know at which point the user will naturally close the deal, so we have to work on each point and continue our “sub-crowd” strategy.
As for anxiety about traffic, yes, the pond of the whole TV industry in China is only so big and you may feel like there is a ceiling when you toss in different platforms. Then, if you still want to break through in a certain industry or category, you have to break into the circle in terms of the demographic, consider whether people who like music are likely to become consumers of TVs or the scenes created by TV, consider whether a certain function of your product is likely to appeal to people who like crayfish or people who like bouncing around in a disco.
You talk about Skyworth generating close to half of its TV product revenue on e-commerce but there is no denying that offline still occupies an important position. From your area of responsibility, how can online and offline support each other better from an omnichannel perspective, forming a closed loop for consumers to access the brand and purchase products? In terms of supply chain and after-sales, will you adopt some digital intelligence or a more human perspective to enhance the consumer experience?
Although online purchasing is now the mainstream consumption mode, offline sales can achieve face-to-face communication and a better user service experience. Consumers may not be very sensitive to the price of the product but they may be more concerned about the experience of using the TV after buying it and whether it is good value for money. So we will have some online and offline linkage marketing, and the product, channel and user need to be fully integrated to reduce the distance between online consumers and the brand, to achieve zero distance interaction and communication with consumers, with product experience forming the basis of review feedback into the online sales system.
But also allowing consumers to enjoy quality offline service, focusing on improving the consumer experience, so that consumers’ perception of the company also enables consumers to enjoy quality service offline, focusing on improving the consumer experience, allowing consumers to form a complete closed loop, from awareness to purchase to after-sales.
Will there be a difference between Skyworth’s online and offline consumers, and will there be a difference in the products sold?
For the mobile internet era, especially in the TV industry, where online sales are already mainstream, users are actually not divided into online and offline. Online and offline are only the consumer touchpoints for users and also the connection point between users and brands. Therefore, we have built an effective product system addressing the differences between online and offline consumer contact points. The products sold online emphasise more the value and configuration of the products. Simpler design and higher configuration are the pain points for online users, who are more sensitive to price. Offline consumers have higher consumption needs and high requirements on user experience. They also have more training needs on product usage experience, so we have launched a premium service of engineer home visits for measurement and product trainer home visits to explain the product.
To this end, Skyworth has initiated a programme to normalise user operations. For example, when a user first activates a product, they can send a request to Skyworth's user operations team via a QR code. Once the product is activated, Skyworth will arrange for a sales consultant from the user's nearby offline sales network to get in touch with the user, asking if the customer needs help with in-home installation or teaching them various usage functions, etc. As it turns out, most users are very willing to recommend Skyworth's products to others around them after receiving this kind of service.
Regarding the creation of so-called "hot products", Skyworth TV started with AI on the one hand and innovation in niche areas such as gaming TV on the other. What are the essential points in catching the wave of popular trends?
At the insight stage, Skyworth will grasp industry trends, starting from the industry pain points, user needs and other aspects, thinking about how to meet user needs while leading the industry. Take for example our A20 Pro, a product with outstanding functions and performance in the gaming scene.
In the preliminary conceptualisation stage, we will make trade-offs between the product experience and distinctions about the product’s strengths. When the product is officially launched, we will bring the product to consumers through a content-heavy youthful marketing approach and also with some celebrity cooperation, such as endorsement by Tan Songyun.
In terms of how to accurately grasp market trends, the most important thing is to continue to maintain active communication with consumers, in addition to long-term exploration and study of the industry, and understanding the industry thoroughly enough to see the market trends more clearly.
Skyworth is a leading TV enterprise, with 33 years of profound understanding of the products, supply chains and sales channels. But after catching the market trend, we also need to have the ability to continuously iterate and innovate in order to go further, which is also the advantage of Skyworth's many years of technology accumulation.
Catching the hot trends is important but fads will always pass. High-quality products that make people squeal with delight, and a simple and easy user experience are the way to go, something that Skyworth has always insisted on sticking to.
This year, both the Chinese government and international platforms such as Apple have increased regulation on data tracking. Will Skyworth shift its focus on online marketing in response to the new environment and will it make any adjustments in its surveying measures? What optimisations will be made to address possible challenges in terms of understanding customer needs through data within the online system as well as online and offline. For example, will there be ways to access and process more zero-party data and first-party data?
Skyworth is the industry's leading company adding cameras, sensors, far-field voice, artificial intelligence, AIoT and other electronic components and software ecosystem aspects to TVs, with the aim of creating more and richer application scenarios for users. Through the advantages of large-screen information display, TVs are assuming the role of home audio and video centres, gaming centres, smart home centres, entertainment and karaoke centres, and fitness and health centres, and the use scenarios of TVs will be further expanded in the future.
While adhering to data compliance and user privacy protection compliance requirements, we will make use of some third-party data supervision platforms such as zero-square data and first-party data to understand and explore user needs, while also accepting supervision from professional platforms. This data will help to better solve problems encountered by users in the process of using product, and also to improve the user experience.
In this context, what are the tools or policies that you, as a brand, would like to see from the domestic digital platforms, especially the top ones, to provide a better marketing environment for brands?
As the marketing environment changes, brands need to reach consumers more efficiently and accurately. We hope that in addition to providing data empowerment, the top platforms in China can also help brands build a full-chain marketing loop and help them better realise the link between quality and effectiveness.
Based on the consumer environment of users' full-domain consumer touchpoints, we hope that each digital platform can launch tools that expand the scenario of full-domain consumer operations, connect online and offline, strengthen the linkage between public and private domains, and enable personalised and accurate consumer insights, expansion of the user base and operations. In addition, our core concern is also how to improve the whole chain of consumer operation capabilities to achieve long-term business improvement and accelerations.