Jack Yin, President of Ogilvy Experience in China, was recently interviewed by the American Chamber of Commerce in Shanghai (AmCham Shanghai) and featured in their Insight Magazine. He talked about digital marketing, the rise of AI and data processing among Western and Chinese companies.

Are Western companies in China lagging their Chinese competitors when using digital marketing?

We work with Western and Chinese firms operating in China, and with Chinese firms going global. Overall, at the strategy and at the concept level, there’s no lag. Most successful companies understand how digital works. What’s different is the Chinese ecosystem and the way that Chinese companies approach innovation at the execution level, which is quicker and nimbler. They are also more willing to try new things. For example, about two years ago, Douyin, the Chinese version of TikTok, started to let brands do closed-loop selling on their platforms. Chinese brands started to use Douyin’s e-commerce functions earlier, whether or not they were doing the right stuff.

What explains why Western companies are slower to embrace new platforms or ideas?

There are a couple of things I have observed. One is that Western companies in China normally have different structures — it depends on whether departments like sales, marketing or digital are structured as part of the global organization or of a more China-centric organization. If it’s China-centric, there tends to be quicker decision-making at the China level. If it’s more regional, then they report one level back; they have to explain to a regional leader or a global leader what Chinese culture is like, and that takes time.

The second aspect is that even if you have local decision-making, because global owns the brand, you still often need go to global for approval. It slows things a little. That’s not necessarily a bad thing. Do you shoot and see what works, or do you aim and then shoot? Some brands have done well by aiming and shooting; it’s better than just jumping on the bandwagon right away and then learning lessons.

Among the foreign businesses that you have advised, what percentage must work with their head office before launching marketing campaigns in China? What percentage are liberated to run marketing independently of head office? Are you seeing more delegation of this authority to the China satellite office?

There is more delegation to the China team to run campaigns and digital marketing in general. Some of that is because brands not only need to deal with a Chinese ecosystem that is getting more and more different from the rest of the world — we use WeChat, mini programs, scan QR codes, etc., — but also because data privacy laws and regulations are becoming more important. The Chinese ecosystem and data are becoming their own pool, which will force companies to make decisions locally.

Regarding what percentage, there’s different behavior for different segments. For consumer goods companies, like P&G, there’s been local decision-making for a long time. For luxury goods, their IP is very important, so they still need to go through a lot of reviews; sometimes the campaign is designed globally and implemented locally. At Ogilvy we talk about glocal – global ideas and local execution. There’s no one way, but you have to act locally because of the ecosystem and because of the data [issue].

In the digital context, do Chinese companies have natural strengths versus their Western competitors?

I haven’t observed big differences at the strategic level, just at the execution level. One example: new Chinese brands. These companies are born digital, they don’t have a legacy; their thinking is digital from top to bottom. At the digital level, they know the customer very, very well. Older Chinese brands have similar issues as Western brands. Some have done well by allowing their digital team to try new things, to be more agile, to summarize what’s working or not working, to continue to improve and allow the digital team to fail.

Some Western firms have run into issues. They tried to use digital for three or six months, but it did not work, and then they changed direction. That’s too short. You need to allow digital marketing, the new way of doing things, to sink in. You need this learning process. The other challenge for the China market, in particular, is that our ecosystem and our behavior are changing too fast. What worked two years ago might not work today or tomorrow…or be applicable to your segment. That requires companies to be quicker in execution.

To develop new digital products, is it better to have three or four teams compete internally or have one team?

For digital assets or key channels that a brand owns, either your WeChat account, your WeChat mini-program or your brand website app, it’s really one integrated digital experience for the entire China market. You cannot have three different teams, but you can try three different ideas on your WeChat mini-program, or Douyin, for example, and see which one works. But this is not the key differentiator.

What’s the difference between someone who does digital marketing well versus somebody who struggles? If a company has prestigious products and services, but their digital experience is plain vanilla, or there’s no VIP look and feel, that normally is not good, because your brand and your digital strategy doesn’t match... or if you’re doing something very different than the message you’re sending via other channels.

The other mistake is doing more than you can handle. There are many different channels in China — there’s industry media, Douyin, Xiaohongshu, Zhihu, WeChat, etc. So make choices that fit your brand and image, focus on where you want to play and do it differently from your competitors.

Do Chinese firms release products faster than their Western competitors? Do they have shorter product cycles? How does this tie to digital marketing?

I was once a product manager with a global firm. There’s strategic choice regarding how fast you release your product or whether to make a few products or a lot of products for different customers. Chinese consumers like Apple and Tesla, but Apple doesn’t push out many phones. Oppo and Vivo have different phones for different customers — phones for pictures, phones for senior people, phones for second-tier and third-tier younger generations.

It’s important that brands use digital strategy and digital marketing to understand what the target audience is telling them — the signals customers are giving you to improve your product design, how they are using the product, and how that ties to your own technology.

Are there good examples of Western businesses that have surpassed their Chinese competitors in digital marketing in the last two or three years? And if so, what worked well?

The first one is some of our work for Sprite. We recently made a campaign based on a meme that originated from a 2014 Chinese New Year TV Gala comedy sketch in which Sprite was compared to a $25,000 bottle of Chateau Lafite-Rothschild red wine as a more affordable alternative to relax in style. Quickly achieving viral status, the meme had the message “let me have a glass of 1982 Sprite to chill out” and continues to be used on social media by millions of Gen Z and Millennials. The campaign created a lot of sales, and it showed that you need to understand the Chinese market and the Chinese culture.

Another example is La Mer, the high-end skin cream, and how they used a Chinese channel for marketing. They did two things when they started with Douyin: they only promoted one entry-level item to be sold on the ecosystem, and they made all the Douyin videos for that item very consistent. The second thing is they created a phrase: “You’re 24, you deserve something better.” The idea was that a 24-year-old woman has begun earning money, so she deserves a higher-end cosmetic. The 24-year-old topic became a discussion and people associated it with that product. The phrase converted college students into working professionals who could afford something more expensive.

La Mer knows the platform and knows what they want from the platform, and they don’t want to dilute their brand. Douyin is not the natural platform for La Mer, but they use it for converting the younger generation, creating entry-level customers. It’s a good way of creatively using Douyin for branding, but also for generating interest, a discussion topic and sales.

Is there an observable gap between Western and Chinese firms in how data in China is used, collected or accessed for marketing purposes?

First party data — the data created from interaction with customers — is getting more and more important. The common challenges for Western and Chinese firms are how to use data. We collect data from interactions on a WeChat mini program, from official accounts, and on commerce platforms. We are good at collecting profile data, but we don’t have insights. Why are companies doing this? You want a value-driven or business-driven approach to your data collection and usage; that means you process and then use data for what you need rather than collect whatever you can.

Many companies have more data than they can effectively use as opposed to the other way around. We want to help brands make the online brand-customer interaction more fun, with more gamification, so that not only do we understand who the customers are, but we also understand why they’re doing this. Brands are all collecting data — there’s no clear gap.

A lot of foreign and Chinese firms use the big platforms to market their products. How willing are those platforms to share the data that they get?

A few years back, if you invested a lot of media dollars with a platform, they allowed you to exchange data or gave you more data. With the tightening of regulations on data privacy, the platforms are less and less likely to share data that’s not pertaining to your brand or category.

If you have your own store on a platform, then the traffic to your store, the behavior in the store and what people buy, you can get that data; it’s yours. In some cases, brands are no longer allowed to use platform tagging to target customers, so you have to use your own tagging. Let me give you an example: WeChat used to allow you to find people who run once a week, but you can no longer do this. You have to do your own tagging and first-party targeting. The implication is that brands need to invest more in their own WeChat accounts, their own mini program, and in tracking future customer behavior. The amount of data is smaller, but it more accurately represents how your customer is interacting with you.

The other set of data that’s new and interesting to look into is that more and more products today have intelligence — it’s no longer, for example, an ordinary [coffee] cup; in the future, the cup will have intelligence, it will tell you that you have had three cups and need four more. The mirror will say you’re out of shape. Companies are making these types of devices to be able to use data to make better products, to better serve their clients. It will be more cost-effective for you to apply that knowledge to the platform.

In the next few years, how important is AI going to be for marketers and in what ways?

Let me address it as a general marketing professional and from an agency perspective. Overall, digital means more content. In the past you did one television commercial or a few a year. Today, not only do you need television commercials, but you also need videos, social content, user-generated content and brand-generated content.

As a marketer, if I want to keep up with my competition, I need to push out more content. Artificial intelligence-generated content (AIGC) can help me improve the efficiency of content production. It can allow marketers to try ideas and gain inspiration, greatly accelerate the whole process, and help you test ideas so much faster.

The second thing is about mass production for a brand. For example, social content. In the past you had to spend time working with a key visual. But these days, it’s possible to ask AIGC to create brand-consistent images and in a much faster way if you train the model. If you want to have slightly different content, for example for Xiaohongshu, I can create those in a quicker way. For example, if I used to do 20 articles on Weibo, now I can do maybe 60 for a similar cost.

Agencies will mainly be using AIGC to improve our idea conceptualization and working process. We believe AIGC will change how we work and as a firm we are openly embracing AIGC. Because of the efficiency gain, it will allow artists to be more focused on the core value-added part and remove some of their burden. If you pair a good artist with AIGC, wow!

But AIGC will face a lot of challenges in China in particular. For text, how can we ensure that it complies with regulatory requirements. There’s a long way to go.

Who is doing online to offline well?

McDonald’s, KFC and Starbucks are all very good at online to offline. They created their own customer base, and I believe that brands need to have a measurement of the percentage of sales going through their own channel, or their own landing page, versus going through a platform like a Tmall store. If online sales reach 20 or 30% of their total sales in China, that means you have direct connection with your customer. You know what they like, you know what they are spending, and that gives you a wealth of opportunity to improve and perfect. To who’s doing this right, I will be looking at brands who entice the customers through a device, a pop-up store or a brick and mortar experience center to drive traffic to their own channels.

That’s the right formula because it’s getting more and more costly for brands to operate the Tmall store of their platform store. From a data and traffic perspective, the more successful you are in linking your offline experiences with your own channel, the greater your future success.

When I was in Wuxi the other day, the first floor of a shopping mall was auto brands. People aren’t doing test drives, they are just sitting there experiencing the product, and playing with their cellphones, while brands are tracking their behavior onsite, leveraging CRM to process data information and increase conversion rate.

A lot of brands have to do online-to-offline. Even B2B clients, as they experienced during the lockdown. The only way to connect with their clients was through digital.

Did the lockdown accelerate use of digital?

My parents are 80 years old. Before the lockdown, they didn’t buy things from digital channels. They used to use their phone for pictures, and they did not believe they should spend money on their phones. But the lockdown forced everybody to use digital for shopping. Now their behavior has completely changed. My 80-year-old Dad keeps buying stuff online!