Umeng+ (pronounced “you mong” in English) is a widely used analytics platform for mobile applications in China. Founded in 2010, the Alibaba-owned but independently-managed company serves developers who require statistical tools to help them analyse mobile data, understand their users’ in-app behaviour, and cross-promote apps via their app networks. As of 2020, Umeng+ services two million mobile apps, of which Chinese ones form about 65%.
As part of the WARC series ‘Rethinking brand for the rise of digital commerce’, the company’s COO Lv Zhi Guo reflects on the split between traditional brand building and data-driven performance activity, and whether that division has been inhibiting companies’ growth aspirations.
On the pressure of short-term ROI after the pandemic
Because of ROI pressure after the pandemic, everyone will look at short-term performance marketing effects. The results can be seen more quickly and directly, but we still think that everyone should pay attention to the long term. It is best to integrate brand and performance through the essential awareness-interest-purchase-loyalty process.
When we build a brand, we cannot see the effects in the short term, but only in the medium and the long term. When consumers have a demand for something, they will think of your brand. There is a reason why a brand becomes a brand. A brand’s value actually depends on the brand assets accumulated daily.
The main impact of the pandemic on consumers has been a fall in purchasing power. This has made brand advertising all the more important as consumers are becoming increasingly cautious when buying products due to their diminished levels of disposable income. People need to have confidence that what they are buying will serve the required purpose.
On the limitations of offline/outdoor advertising
Traditionally, people have often used outdoor advertising in a very inefficient manner, wasting both time and money. In the past, when brand advertising was done through outdoor, brands had no way of knowing how many people had been exposed to the advertisements, how many of those exposed were in the brand's potential audience, and whether these people had been influenced by and had interacted with the brand. They also had no sense of the overall impact on branding in different locations.
There has been a dearth of data on outdoor advertising over the years, with information about traffic around outdoor advertising screens only being available through third-party research. This has meant that it was difficult to connect with target demographics and, by extension, amplify the value of a brand. Now, however, we can provide a digital marketing platform to help brands do potential customer mining, media selection, budget allocation and ROI evaluation.
On the complementary roles of offline and online advertising
After a consumer has been influenced by offline or outdoor advertising, the next step is often to bring them online. The main driver of business for many companies is online and after the potential consumer has been influenced by the brand’s offline presence, the goal is to have that consumer move online. Online and offline advertising have become increasingly complementary in recent years, and online advertising can be used to gather data to help offline placement of advertisements, with these offline ads in turn driving more people to engage with the brand online, working in a symbiotic relationship. In another change from the past, the increase in data gathered from online to offline advertising can be used to properly optimise future campaigns, leading to an increase in advertising efficiency.
On the advantages of having a stronger brand in e-commerce
Brands with high levels of brand power are more likely to be favoured by consumers in an e-commerce environment. From a consumer-psychology point of view, all brands must be known and trusted before a consumer will pay for them. In many cases, when we choose something, a branded item will be chosen due to personal preference. Many consumers are loyal to brands due to their reputation, especially women.
So doing brand advertising is essentially part of doing business, while doing performance-focused advertising is not really doing business. By business, I don’t just mean selling goods, I also want to have a loyal consumer following. But performance-focused advertising relies on online traffic, which is like tap water – it is available when the tap is turned on, and there is no traffic if the tap is off, so this means you must budget for performance ads all the time.
However, to build a brand is to make people believe in you without the need for any performance tactics. Brand advertising makes consumers trust the brand and if they do, then the brand doesn’t need to do anything else because the consumer will just continue to buy. That is the power of the brand. So brand advertising has to continually emphasise the safety of the brand’s products, like a water glass or crockery, maternal and infant products, children’s toys, automobiles, etc. For these categories, brand advertising has to be done well from the start.
When we do brand advertising, we cannot see the effect in the short term or we can see only part of it – it’s important to remember that brand value is a medium- and long-term concept. That is to say, if I influence a consumer, then when that consumer has a need, the first thing they will think of is that brand. When a consumer is actually going to have that need is uncertain, so it’s important to monitor long-term brand exposure.
On the conflicts between marketing and sales departments
The requirements of a company are very straightforward: at the topline they want sales and turnover.
Very often, brand work is what the marketing department is doing but they are doing not only that. Sales people don’t always necessarily understand the brand’s value but people in the marketing department are very clear on this point. There would be differences in opinion between different departments and so management’s decision on how much to invest in branding and how much to invest in performance settles the problem each year. Striking a balance between the two can be difficult: should we allocate more of the budget to branding or more to performance? This is decided at a corporate level, based firstly on the company’s business needs, and secondly on what stage the business is at.
For many successful brands, if you look carefully, the reasons for their success are often different in terms of strategy and approach. For instance, Genki Forest, a beverage company – did they first stress sales or brand marketing, or was it a combination of the two? How was a domestic beverage brand able to command a price higher than Coca-Cola or Fanta?
In the end, it must relate to brand value, right? If they just blindly aimed for sales in the beginning, then maybe they would have been able to boost sales at a lower price, and in the short term, sales may have gone up. But they would also probably have lost out in terms of the entire market amid competition. So that shows Genki Forest did a good job in branding terms. They achieved this not only through advertising but also through KOLs and content riding on popular topics. This eventually contributed to everyone thinking that this brand is very trendy, and its basic concept of “0 sugar 0 fat 0 calories” was also widely accepted. Genki Forest's strategy suited it but is not appropriate for another brand, so there is no standard answer.
A capable marketing department is aware that doing short-term advertising has a positive impact on the long term and that long-term advertising can also have a positive impact in the short term, and that there is a direct connection between the long term and the short term. Some people responsible for e-commerce and digital sales are also interested in seeing more investment in brand advertising offline, which can help the transition through to digital commerce online.
So, there is a connection between branding and performance – it is not a competitive relationship.
On the longevity of branding (and dilemma of acquisition)
Ultimately, if brand advertising has no positive impact on the business and cannot boost the positioning of the brand, then doing such advertising is meaningless. The longevity of brand strength differs depending on the category, which affects various activities with regard to sales. Why are Coca-Cola and Sprite doing TV commercials, and all kinds of brand advertising all year round? In theory, everybody already knows about them. But they do it because they want to maintain the brand strength, given the short cycle for this kind of product. Soft drinks are something which can be too readily replaced, and the loyalty of consumers for this kind of product can shift too easily. Such brands must continually do brand advertising and there is no way they can stop if they want to maintain market share.
Customer acquisition is an eternal requirement for performance marketers but customer acquisition is much more difficult now in China because there is no significant dividend from acquiring one more customer. Everything is increasingly related to cost. In the past, the price for doing it could be very low. Then the price of customer acquisition became higher for everybody. Some brands are now starting to build their own data centres or cooperating directly with big data companies such as ours. These are the ones taking advantage of the situation, creating growth and achieving breakthroughs.
On the relationship of online creativity and online data
Creativity must always follow the data. That is why online creativity is so individualistic because it is all about data. Offline should also go in this direction, perhaps it wouldn’t be as individualistic but the creative must be clearly based on insights on your potential audience. Who are these people? You have to clearly understand who they are before you can move them with your creativity. So I think data will become a very important support pillar behind creativity, something that empowers creativity.
There are only two reasons why people are willing to click on your ads: first, whether the ads are creative enough and second, whether there is enough precision in the way the ad is targeted at people. Behind all of this is how data is used to support creativity. There are many operational aspects involved here. Essentially, marketing is about saying the right thing to the right person in the right manner at the right time. Those are the necessary factors for success.
For consumers who spend a lot of time on a platform, the effectiveness of the same ad is going to change with time. There will be a need for something new, for instance, a change in the ad creative, a change in price strategy or a change in media placement. There is no way that one approach is going to work forever without any change. Firstly, competitors are changing. Secondly, through long-term media placement on a single platform, many of the users of the platform will have been reached over time.
On using search advertising as a defensive strategy
You still need to invest in search advertising no matter what.
First, it provides a safeguard for the brand because nowadays, most users search for general keywords – not directly for a brand but for a category.
Secondly, from the perspective of maintaining your brand presence, when a user searches for certain products and enters a brand’s owned channel or flagship store online, then the brand experience is personalised for that user.
Another reason why I think it is important to continue doing search advertising is because competition is now so fierce in China. There are so many new hip brands that you don't know which company is going to fall and be beaten by another new company. So even if it is just a defensive strategy, you still have to do it.