How Brands in China are Leveraging Affiliate Marketing As Economy Reopens
During the lockdown, many businesses and industries across China were severely impacted, especially those without a significant online, e-commerce presence. As consumer shopping and spending habits shifted online, brands have become increasingly aware of the importance of having both an online division of their business and the value of the pay-on-performance model that affiliate marketing offers.
Here are some successful strategies we have seen brands in China implement through affiliate marketing campaigns as their economy reopened:
Balancing online and offline sales
Throughout the height of the COVID-19 pandemic, brands with brick and mortar stores had to shut down. As many brands around the world did, they refocused their efforts to sell products online.
As the economy reopened, brands gradually returned their focus to their brick and mortar stores. However, for many, this meant they were suddenly in competition with their online stores.
It was not uncommon for these brands to see their online sales decline by 20% to 30% in the first week of reopening their stores.
To halt this downward trend, many online stores offered free shipping and additional coupons and vouchers as incentives to retain shoppers. Another event that helped was JD.com’s “618 Grand Promotion,” China’s first national shopping festival. Brands were able to leverage this event to plan and execute attractive campaigns between 1st – 18th June.
Live streaming also emerged as the most effective channel for driving sales and revenue in China over the past few months. Mingzhu Dong, the chairman of Gree Electric Appliances, sold over $1.4 billion of products through livestreaming on Kuaishou platform on the day of 18th June.
Most marketing channels saw budgets trimmed during COVID-19, especially those without cost-control measures in place through pay-on-performance compensation structures. For example, Baidu, the top search engine in China, saw a 13% decline in first-quarter revenue year-over-year from its core search business, a sign of declined investment in paid search by businesses.
Brands have had to remain creative in maintaining brand exposure via pay-per-click campaigns (PPC) and have realized opportunities to do this efficiently and cost-effectively through affiliate partners. Some brands continued part of their paid search through their affiliate programs by allowing the affiliates to bid on selected brand keywords. The affiliates absorbed the costs from the PPC campaign and were able to gain more traffic and higher rankings in search engine result pages (SERP) for the brand. By paying-on-performance only, brands were able to maintain a substantial share of voice, while getting more sales through their affiliate partners.
Concentrating on content
Screen time certainly increased during COVID-19 as Chinese users adjusted to an indoor lifestyle. As such, content and social media viewership on smartphones increased. Qutoutiao, a mobile content aggregator app, registered a 24.2% growth year-over-year.
In light of increasing users and time spent on social media and apps, content partners have become one of the largest affiliate segments during COVID-19. As the economy reopened in China, many brands continue to engage with content affiliates to maximize their exposure as well as pre-plan content in phases to ensure continued visibility.
As COVID-19 came under control in China, and people slowly started to focus their shopping locally or domestically, brands had to take new approaches to target their audience by location. Today, we see brands in China increasing, their investment in geo-targeting and focusing on areas where restrictions have lifted or where demand continues to be.
For example, the travel industry, which saw a significant decline during COVID-19, has seen an uptick in people going on “staycations” or taking short-distance trips. To capture this trend, online travel agencies (OTAs) and travel service platforms in China launched marketing initiatives related to short-distance trips and promoting local travel products with attractive discounts.
Some OTAs planned the promotions by cities and engaged their content partners to help them maximize their geo-targeted exposure campaigns through their affiliate program. In addition, many of these OTAs also leveraged live streaming to promote these initiatives. With support from local governments, key opinion leaders (KOLs) in China were invited to host live streaming shows demonstrating the unique features of local attractions, which helped drive sales of local travel products.
As China’s economy begins to recover from the COVID-19 pandemic, brands in the region are exploring new ways to reach consumers online and offline. We expect to see similar trends in Europe and the U.S. Now that a massive shift to online shopping has taken place throughout China and the world, many brands realize the important role affiliate marketing plays in helping businesses raise brand awareness, efficiently sell products and acquire new high-value customers.
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