China’s Great Data Paradox

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by Sophie Loras

The way data is collected, shared and used by marketers in China is still evolving, as agencies and clients work together in a test and learn environment.

China is still years away from reaching Western levels of data management and use, but this hasn’t stopped it from developing its own thriving and innovative technology systems.

Opacity, fraud and “walled garden” third-party data platforms continue to be major hurdles for marketers operating in China, but a willingness to learn and understand how data can be captured and used to maximum effect is a top priority for publishers, brands and agencies alike.

“Data collection, management and analytics methods in China have progressed in the last few years, but it is still early stages compared to other markets in terms of robustness,” says Shanghai-based Chris Maier, head of research and analytics at ZenithOptimedia China.

However, in what Maier calls the paradox of China, he cites the rapid advancement of the country’s world-leading technology companies, including Baidu, Alibaba and Tencent (BAT), which simultaneously have a near monopoly and control, as suppliers of data to the market.

“China is one of the most technologically advanced and progressive countries in the world, it is entrepreneurial, but at the same time, it’s the untamed wild here,” he says.

For instance, WeChat (Weixin), the Tencent mobile communication app, has in just three years accumulated more than 500 million monthly active users (MAU), who use the platform for messaging, video and image sharing, gaming, online shopping, or to pay bills through its WeChat Wallet capabilities.

“It’s one of the most explosive communications apps – it’s a testament to China. But the relative lack of transparency makes it harder to authenticate or validate the data here,” says Maier.

The questionable quality of the data creates challenges for those looking to run analytics.

“Data management is a big topic. But you need to resource your business – establish who is the audience, make sense of it and evaluate it. The architecture is there, it’s just how to put it together,” says Maier.

Beijing-based Wen Jia, head of platform logistics, Annalect, OMD China, says data is becoming more important by the day in China.

“Marketers are actually seeing the importance of the data, but the difficulty, or the challenge, or the gap, is that they are only just becoming familiar with third party tracking tools,” she says.

Brands using their data well in China include Intel China and Cisco, says Jia. “Both are technology brands and both have adopted good use of third party tracking tools whether it is on their media promotion side or on their official sides,” she says.

For Intel China, data is not just being collected, but applying the data into a remarketing strategy and feeding it into a data management platform (DMP).

“The system Intel China is using is a very comprehensive taxonomy to segment all the cookie-level information data. This year they were also able to apply those segmented audience cookie-data into second-time retargeting and also use the data to understand which kinds of creative messages the audience would like to view and which kind of content the audience would like to engage with,” says Jia.

While this is not uncommon in more developed markets, it is a sign of things to come in China, adds Jia.

“The good thing is that we are encountering clients in China who are having similar visions as the West and they are seeing the importance of the data and they want to use it for better insight and performance,” says Jia. “Some brands in China may be afraid to enter the water as beginners. They want to see other successful examples first and follow that.”

Annabella Yang, chief digital officer for MEC China, agrees that China is making moves around data, but says it still has some way to go.

“The difference between China and other more advanced markets is really about how the data is collected and how they are using the data. China marketers are still mostly using the third-party as a resource for the quantity of ‘reach’.”

She says in China, for many big brands, the data journey starts with the collection of first party data, where data analytics will be used to optimize marketing planning, even though many will not know how to connect the dots to put it to best use.

Another challenge is the silo and fragmentation of first party data and third party data. First party data needs to be managed, integrated and analyzed in a more holistic way, and the relationship between first and third party data has to be strengthened, says Yang.

The role of agencies is to guide the client through the consumer journey and the market context to help them to arrive at the vision of their digital strategy, says Yang.

“But for China that’s not always an easy sail. In the China market – where everything evolves constantly, yet some parts move particularly slowly – I would have to say, the client and agency relationship is more of a hand in hand relationship,” she says. “It’s co-progress process. Test and learn is a must in this relationship.”