Find here the China paradigm episode 19. Learn more about Elijah Whaley’s story in China and find all the details and additional links below.
Full transcript below:
Matthieu David: Hello everyone, I am Matthieu David, the founder of Daxue consulting and its China marketing podcast, China paradigms and today I am extremely happy to welcome ParkLU on the show and its CMO – Elijah Whaley.
Thank you very much for being with us so early at 8 am China time, and I’ve been looking at ParkLU for some time. I mean ParkLU is everywhere. So many conferences, when talking about the Chinese influencers, talking about Key Opinion Leaders in China, anyone would talk about ParkLU, so I’d like to understand better what ParkLU is and how you have developed the business, I know you have joined a little bit later, not at the start, but still you should have a pretty good understanding of what happened.
So, ParkLU is a platform; it’s an influencer marketing platform in China, it’s an app, it’s a desktop website, it’s an app as well which is connecting KOL in China – key opinion leaders in China, with brands. Mainly as far as I understand – YouTube brands, lifestyle brands, cosmetic brands. Together to actually promote products, promote a message, promote the campaign, promote a brand. And, you have a database of – if it’s correct – more than 20,000 KOLs in China as you mentioned on the website – across – and that’s something I’m not very sure, you’re going to tell me – seven or thirteen different social media. I got seven on some websites; I got 13 on some others, I guess it’s often updating. Thank you very much for being with us, and please correct anything I said if you have to correct.
Elijah Whaley: Sure, thank you so much for having me Matthieu, it’s really nice to speak with you in this new episode of China Paradigm. So, I’m trying to track through that – there’s a couple of misconceptions there, in that – we actually have 40,000 Chinese influencers right now, across 13 social media platforms, 12 of them being native Chinese platforms and one of them being Instagram, because we cover a little bit of Hong Kong, for our clients. Yeah, I joined ParkLU six months after they launched the influencer marketing platform in China and since then I’ve definitely, definitely among international audiences and clients, ParkLU has become the predominant influencer marketing platform in China. I was just saying yesterday that we had a client who in multiple sources, came to us and – you know at this point it’s a little bit like all roads lead to ParkLU.
We’ve done a really, really good job of educating the market through content and being very focused on providing value first. Before I ever joined ParkLU, I did a bit of consulting for them and my main objective for the brand was – for them to practice what they preach and that is that – to become KOL’s of KOL marketing in China and to realize what KOL’s in China are really doing, and what KOL’s are really doing is providing value through content and I believe that the ability to disrupt the end market to customers in a traditional sense, that time has passed and the rise of KOL’s is really the acknowledgment of a new method of reaching and communicating with audiences by providing value. Just like this China business podcast, which is a source of value through content to people which raises awareness, affinity, and preference for a brand before you ever engage with the brand’s services or products.
Matthieu David: Thanks, one thing I’m not sure of. You said that you don’t apply 6 months after they launched, but Parke was started in 2011 if my information is correct, so are there different steps in the story of ParkLU? Was it first a blog and then it became a platform and that what you’re saying, that basically, you joined when the influencer marketing platform in China was launched?
Elijah Whaley: Correct, so Kim Leitzes the founder is an American and she came over with her husband in 2011, and she had come from – she is a Wharton business school graduate and MNA on Wallstreet background and when she came over she really had the ambitions of becoming a fashion blogger and unsurprisingly someone with a finance and business mind, wasn’t able to really hack it as a creative, but she did find she was really good at connecting Key opinion leaders in China with brands and making those collaborations happen.
So shortly after launching that, she more developed into an agency and then she realized also, she didn’t really like – unsurprisingly she didn’t like agency lifestyle, so she decided to raise a seed round to build this influencer marketing platform in China which at the time, nothing like that really existed, and for several reasons, we don’t see a lot of competition in our vertical, which is very different to the rest of the world which in North America alone there are 200+ platforms that look essentially exactly like ParkLU.
Matthieu David: Is it because of its cross border, and you feel that in the cross-border space you have less competition?
Elijah Whaley: No, no, in general, there’s not too many tech platforms dealing with KOL marketing in China. Our direct competitors are less than half a dozen, and nobody actually has a solution exactly like ours, so it’s something that – in the world of copycats of China, it’s something a little bit that exposes how different the market is here, whether it be how customers interact with this type of marketing and the data – access to data. Access to data abroad is much, much easier than it is here, where you can tap into API’s, and there are much fewer data acquisition difficulties and so – which creates a significant barrier to entry into the market.
Matthieu David: Yes, for those who are listening to this episode of China Paradigm, it’s not direct, but for those who are going to listen to us API is basically a language code that’s on a website created to communicate with other app and give information. Basically, we talked about it; media talked about it indirectly when Facebook shared a lot of data with apps through some API’s. I understand that. Talking about numbers – because you begin to talk about competition and numbers, could you give us an idea about the size of the business now, ParkLU – could be revenues, could be clients – as a team, how many people are you?
Elijah Whaley: Sure, so it has been two years – or its been I guess maybe three years – it’s been 2.5 years since the platform was launched. We are up to – we’re really increasing employees – we’re hiring very quickly right now, we’re in a nice stage of growth. We’ve really hit; I think to stride in the last 6 months as far as clients and building up that aspect of the business. We’re at about 30 employees, and if you’re looking for a job, I think we have like – I know I’m increasing the sales team by like 7 people just this year, so we’re really hiring really fast at the moment. So, if you’re looking for jobs in sales, marketing, program, accounts, we’re hiring across the board.
And so, we’re very dominant right now in cross border, so really serving international clients coming into China, that’s really our bread and butter, and about 70% of our clients are brands, and the other 30% are agencies and distributors. All of our clients are very large, we do not serve startups, we really can’t serve or do not serve SME’s, small and medium enterprises, and it simply comes down to – we’re a premium solution. Our influencer marketing platform in China is expensive, and the barrier to entry to launch in a campaign is high, essentially, we don’t really accept clients that don’t have a campaign – starter campaigns of less than 25,000$ USD and so that makes that barrier to entry a little bit difficult for most startups and small businesses.
Matthieu David: I see, you said 70% of your clients are brands and 30% are agencies. So how many clients so far have you served?
Elijah Whaley: Well, we’ve served over 1000 clients in the last two years.
Matthieu David: Wow, not campaign, clients.
Elijah Whaley: Clients, and so it’s been very significant – and that’s one of the advantages of having a tech solution, we are a SaaS product and so we do provide full service but in very limited cases and also only for startup – typically only for a 1 to 3 months period, we will run the campaign and essentially what we’re doing is we’re training our clients to operate the platform and also how to do KOL marketing in China better, because there’s a lack of internal knowledge at most organizations.
Matthieu David: That’s something I didn’t get actually by going on your website, you’re saying that you’re a SaaS, but actually from the understanding that I get from your website, its written subscription, but it’s only one out of three options, that’s how I remember. It gives me the feeling that you have different options or maybe I misunderstood from the website, it gave me the feeling that you pay only when you want to campaign or you pay only when its activated but actually what you tell me that your main model or your model is a SaaS, so its subscription and then you only have subscription access to the data or activation to a number of data? I saw that you have three packages, one with like a weekly update, one with a monthly update, with a limitation of the KOL you can see, could you give us more understanding how your business model and the different pricing.
Elijah Whaley: Correct, so it is a subscription model and we essentially only accept year-long subscriptions to the platform, and we have a standard package which allows… I actually need to go on there and look at it myself.
Matthieu David: I checked just before, and you don’t disclose pricing.
Elijah Whaley: Correct. Yeah, we don’t disclose pricing for several reasons, and some of it has to do with the psychology of getting people in the door and starting conversations, and then also there’s flexibility in there depending on the customization of what client’s needs. But our standard package essentially gives brands a thousand profiles, so there’s unlimited search, but there are a thousand profile views that they can click on per month, the actual KOL profiles – it allows you to – we have a very robust – it’s actually been one of the most appealing and one of the biggest progress we’ve made in the company is our analytics tool, which is a form of social listening, except its only listening across KOL’s in China and across these 13 social media platforms. And what we found through correlation data is that when KOL’s are talking about a brand or a product, we see correlations anywhere from 40 to 70% in movement in sales, in spikes in sales. And this has been so significant that actually some of our biggest clients – in the last 12 months have been financial institutions who actually buy our data from us and it’s based on correlation – so we now have four of the world’s largest financial institutions who buy and work with us from a data and analytics perspective and then – yeah, that’s one of the stories that a lot of people don’t understand, everybody is looking for direct marketing instead of brand marketing and so they’re looking for direct conversion.
We need to see – we put in this much money in this side of the machine, we crank the wheel and this much comes out and that’s an old school, internet marketing layover from Google and Facebook where everybody believes that direct marketing is the way to go where really KOL marketing in China is brand marketing. Which means you’re establishing the brand; you’re creating conversations online, and the natural outpouring of that is increasing in product sales. However everybody is looking for directly attributable sales through building in link – tracking mechanisms or wanting to work with KOL’s on commissions where some sort of structure like that, but I actually think that that is not what KOL’s were built or designed to do and it’s one of the reasons why actually key opinion leaders in China have been more successful in building their own brands in comparison to KOL marketing by other brands.
Matthieu David: I see. Going back on your pricing – so you have three packages. At least you communicate this on your website, standard, enterprise, full service; I guess you have a bit of flexibility, I feel from what you are saying. But the standard is 1000 profile views per month and analytics for three brands.
So, it’s something I didn’t understand, analytics for three brands. You give the opportunity to a user to analyze three different brands that are not my brands? Like I could check what loreal is doing and what another is doing or whatever – is that the idea?
Elijah Whaley: So, you have to create an account to really understand – it’s kind of like Google analytics, you have to create an account to see how the analytics tool works, what it means is you can only add three brands at one time to compare their results. So I can add Nike, Adidas, and Converse and I can compare those brand results, and I can look at their share of voice, I can look at all of the KOL mentions, I can look at the KOL’s that are mentioning them and look at media value in those things, but I can’t compare more than three at one time, and so in our enterprise package you can compare 12 at the same time, and this is what really brands are trying to do is understand the ecosystem of their competitors and themselves and see where they lie in that, and we don’t give that type of visibility except to our enterprise clients.
So that’s what comparing brands means. So, you can look at 12 – you can look at 1000 brands if you want, but you can only look at three at the same time.
Matthieu David: I understand. I’m on your platform, and I just checked on the top right actually, something I didn’t see, set up the checklist, go to analytics, and I didn’t click on the go to analytics, I see, I understand now, and I can compare three brands, I see. Okay. I’ll like to play with it later on.
Elijah Whaley: Yeah, it’s a really nice tool. The funny thing is that the outpouring of that has been we have – it was actually a content marketing idea from a year ago where we started creating industry reports and we looked at brands across an entire industry and compared their KOL marketing performance and looked at their visibility and those reports, after two or three months – 2 or 3 of those reports became so popular, and the demand for them from the brands became so dramatic that we’ve actually not integrated into things like our enterprise package.
So, a lot of our enterprise subscribers, either monthly, quarterly or annually receive custom reports created by us, and we’ve actually hired an entire insights team. So if you’re looking for insights too, we have an insights research team that all they do is create reports and some of our best customers now also are data and insights company providers to other organizations, because it’s a unique set of data and analytics that no other brands really look at or have the datasets to talk about.
Matthieu David: Interesting. So, in terms of package, what’s the minimum pricing, if I want to begin to use your software?
Elijah Whaley: Sure, so the standard pricing starts at 5000 renminbi a month and that’s just for the software, access to the platform and then our enterprise starts at 10,000 RMB per month, and then you’ll see our full service – that’s essentially the agency part of our company where we handle the campaigns – whether that mean holding the hands of the KOL as they travel to Paris or New York or Tokyo or actually just running your product seeding, so distributing hundreds of products to hundreds of KOL’s in China as part of the initiative to just create some baseline awareness and feedback loop with KOL’s.
Matthieu David: So, talking about how you interact with key opinion leaders in China, you mentioned about getting products, you mentioned commission as well on sales, before that actually – you were suggesting that brands should not only look at the sales performance but also the brand reach, and about the model then – how to interact with a KOL? When I looked at YouTube, your channel, when I see about setting up a campaign, I see two items. Product and cash. So, basically, I feel that you have a mix of giving a bit of cash to the KOL and giving products at the same time. What’s your feedback on how to interact with key opinion leaders in China?
Elijah Whaley: Sure, so there are literally dozens and dozens of different collaboration strategies with KOLs in CHina, and they literally range from painting KOLs as creative agencies where they literally are just creating content for the brand itself and potentially not even distributing it on their own social media, because KOLs themselves have become master social media content creators. I come from a content creation background, and I look at content creators as being less creative and less knowledgeable than KOLs themselves because I believe they have more experience and they’re also constantly looking at the feedback loop from audiences where classic creators never look at the comment section of the content they create.
So, it goes all the way from content creation to yes, one of the main verticals or one of the main strategies is product seeding, so literally just mass distribution of products with – sometimes without payment, sometimes with a small payment to talk about the products. If you do not pay KOLs – say you distribute a hundred products to KOLs in China without a paid commission on that, without a fee – you’re probably going to have about 10 – 20% organic mentions across those hundred KOLs that you distributed to if you’re paying them.
In that case though, it can still be very valuable to brands because one the product price, compared to the fees that they would have paid, it was probably a lot less and two – there is a lot of value in that type of product and brand feedback, because key opinion leaders in China are much, much more likely to talk freely about brands that they really love or products they really love. So, if you have a miss, it means that you probably don’t have a product that KOL’s are very interested in.
90% of collaborations though are a purely flat fee-based, meaning that you are paying KOL’s in China an agreed upon fee to create a piece of content that is shared across their social media channels — promoting the brand. And that is the vast majority of collaborations.
Matthieu David: I see – 10 – 20% organic – sorry if I work with one of the KOL’s I would expect 10 – 20% to become organic, so meaning that along the 100 Chinese influencers I would have 20 – I wouldn’t have even to send a product and they would talk about the product. Is that what you said?
Elijah Whaley: Correct. And so yeah, 90 – 80% if you do not pay them, are unlikely to post about their product on their social media.
Matthieu David: I see. I understand. Could you give a sense of how much cost a KOL – I understand that as much as – it’s the same as asking how much the cost of a car can be, it can be cheap, it can be very expensive, but if you could give a range, I feel a lot of clients when they talk about KOL’s in China at Daxue consulting, they have no idea how much it can cost, because – that’s my feeling as well, there is a big gap – discrepancy between what it costs in the West and what it costs in China.
In the West, you can offer a product for free, and people will talk about it, maybe not a big KOL, but as you said, 90% is a flat fee based and I feel that’s more like 10 – 20% in the West when you work with KOL’s. I’m not sure about the metrics, but there is a difference.
Elijah Whaley: So, two answers to that, one is – we have a really great tool on our website, it’s a free tool – KOL budget calculator, if you go to the resources tab on our website there’s a dropdown there, and you’ll see a KOL budget calculator. That will give you a really good rough estimate. It needs to be updated; it was created about 8 months ago – actually, I think it was a year ago, so it really needs to be updated however this is the best way to look at rough estimates of pricing across those platforms. Actually, the dev team might have updated it recently so this might be fairly accurate. So that’s going to give you price ranges of key opinion leaders in China and the impressions that you can get for the price across all of our 13 social media platforms and those are aggregated pricing, so that will give you a really – even internally we use this tool to create budgets, so it’s a really, really useful really nice tool to use and that will give you a much greater transparency.
Now depending on the KOL, my own KOL – the one that I founded and created content for and managed and my girlfriend, we’re in a much different range. We charge typically 2 to 3 times what any regular KOL charges and the premium nature of us are because of the content quality that we create. So, we have a lot of brands that come to us just for content creation. So, that’s one aspect.
The real difference though between East and West pricing is that KOL’s or influencers in the West are essentially competing with the native advertising costs of the social media platforms where in China, many of the social media platforms don’t have mechanisms for native advertising that compare to KOL content.
So, on WeChat, you cannot pay to create an ad that pops up in your feed of accounts that you follow and create an article, wherein a Facebook feed, you can create a post that looks just like all your other posts from your friends and Chinese influencers that you follow. In Xiaohongshu they have no – they only just recently launched native advertising options and they’re only in collaborations with KOL’s and the barrier to entry is 1 million renminbi. You can’t do a campaign for less than a million renminbi. Some of the same on Weibo and Douyin and these other platforms, and so the reality is, there is no way to advertise on these social platforms without working with Chinese influencers, and so KOL’s can demand a premium that you don’t see in the West.
Matthieu David: I see, so what you are saying that the platform like Facebook, Twitter and so on, are making it possible for you as a brand to advertise through your own channel, targeting your own community or the people you want to target which is because you have touch points or you have anything you know about them that was a look-alike campaign on Facebook and so on and that is much more difficult to do in China. I truly – indeed, I feel the same. I feel first it’s much more difficult to target audiences in China, it’s much broader – let say I target male-female, first-year CT’s, roughly an income on WeChat, but you cannot be as detailed as Facebook.
That’s something which has always surprised me – WeChat has so much data, maybe more than Facebook because so many things go through WeChat, but they don’t monetize, they don’t monetize as much. They could be much more precise, so that gives space to KOL’s I understand. Going back on the cost of one KOL in China I see your budget allocation, but it’s written by the number of costs, is it – so does it mean that if I want to work with one KOL from the top tier, I need to consider at least 30,000 RMB?
Elijah Whaley: Yes, if you want one post from one top tier KOL on Weibo you need a minimum budget – or you need an average budget of 30,000 RMB.
Matthieu David: Okay, because of the example I have on my screen, and I prefer to describe it because some people may not see it if they listen to us. So, with 101 thousand RMB – I don’t know why its 101 by the way and not 10000 but with the budget of 101 thousand RMB I can have one post on a top tier city paying this person 30,000 RMB reaching 1 million views – so not engagement, just views, then which cities – like Wuhan, Hangzhou is top tier – I believe it’s on the top 5 – top 6. Five posts – it doesn’t tell me if its five posts from five different KOL or five posts from the same KOL, but it would cost 50,000 – basically three times less, 10,000 RMB per post and then Micro is not really linked to the – it’s not linked to the cities sorry, I misread actually – top tier, meteor, micro is more the size of the influencer right?
Elijah Whaley: Correct.
Matthieu David: Micro is about 6,000 RMB per post, and the long tail is about 3000 Renminbi per post, and the total reach would be 4.4 million views with a budget of 1,00,000 RMB. I understand. So, basically what you are saying is that you can begin to play with a KOL with 3000 RMB, but you have to consider for someone with influential to pay 30,000 RMB for one single post.
Elijah Whaley: Correct.
Matthieu David: Okay, I see. Our new platform talking about OI – you track OI – you try to seize it as leverage, but at the same time you just said before that it would be not constructive or not wise only to see the sales return. Until then you talk about the sales return on your platform.
That’s one question I had initially is how can you asses the sales result, even if it’s on one year, three months, six months – with aggregate marketing its easier, with (inaudible 31:09) marketing you put a plugin your website, you track the sales coming where it comes from. This is very common in the West, but in China where sales go on WeChat, Taobao, TMall, JD, I don’t believe you can track, or most Chinese people don’t buy on the brand’s website. So how do you get an idea of the sales performance of a KOL?
Elijah Whaley: Correct, so what it means is to get sales performance of KOL’s you have to specially design campaigns and that can mean – if you’re on Weibo putting – integrating into – many of these platforms have direct integration of e-commerce so that you can do direct measuring. So, on Weibo you can link to Taobao, on WeChat you can link to WeChat stores on Xiaohongshu you can link to Xiaohongshu. Unfortunately, in each of these ecosystems, you can’t link outside of the own platforms native integration or within the greater bubble of Alibaba, Tencent, Xiaohongshu kind of – kind of things. So, what it really comes down to is if you want to track direct conversion ROI, you need to design the campaigns explicitly to be able to do that. And so that can be done through – in some cases trackable links, in other cases redemption type codes or discount codes in certain cases only working with KOL’s on a certain platform for a certain period and then attributing the increase of sales or the sales on that platform to those KOL’s.
Unfortunately, that’s where there’s some disbalance in the West and the East. It is more complicated and more difficult to track direct conversion in China than it is in the West and that’s just – unfortunately, and I consider it to be unfortunate- it is the nature of the beast, however when I mentioned that brands should think of KOL marketing as brand marketing and not direct marketing, what I’m really talking about here is we have a tool, or we have a measurement that’s become a little bit of an industry standard, what we call our media value and media value is an equation we have developed over the last could of years that takes into the account KOL’s pricing, the native advertising costs of the platforms themselves and the increases in attributable sales that we’ve seen and what that X on ROI kind of looks like.
So it’s something that we continue to develop and especially when we add new platforms – we just recently added Bilibili to the platform, and so we have to go and really excursive and give out the media value of the platform, but what we’re trying to get brands to understand is that media value is an equation for brand marketing. It’s a way of saying that when a KOL talks about you and generates awareness and engagement, this is the value of that conversation to the brand and essentially if you had to buy that amount of awareness, this is what it would cost.
So it’s not directly saying this is how many sales that its creating, its saying that this is the value of this conversation around your brand, and so you can actually go into our tool and you can look at KOL’s and every single one of their posts will have a price on it and the price is actually the media value of that post, and we’re saying, this is the value of this conversation being generated for the product services or general awareness of that post. And so that’s the conversations that we start to have with brands, and I think we’re very fortunate to be able to say, this has become such a significant equation that we have like I said- major financial institutes – one of our main financial institutions is Jeffery’s. That’s one of the largest financial advisory companies in the world, uses our equation in their reports to their paying customers.
Matthieu David: Interesting. Mega value – what parameters do you take into account to be more precise? The reach? A number of uses, impressions I believe?
Elijah Whaley: Correct.
Matthieu David: But it may also be the recurrence that every post has of the average, not only the last one I believe, and the quality of the audience –
Elijah Whaley: When we measure the individual post then we’re only looking at that post, it depends on if we’re looking at an aggregate number over time with multiple posts or if we’re looking at an individual post. So, it’s kind of depends on are you looking at a KOL’s profile, or are you looking at our analytics tool.
Matthieu David: I see, the number of impressions is one metric, and as you know we’ve all seen these videos on LinkedIn or elsewhere we saw (inaudible 36:48) all those phones which are playing themselves and clicking. How do you react and how do you asses the quality of medium value by correcting with the maybe fake followers or fake engagement? How do you react to this?
Elijah Whaley: Sure, so we have a – it’s one of the reasons why we have a tier rated KOL database and what that means is we are using data to initially analyze KOL’s accounts, their followers, their engagement, to detect fake followers and to detect fake engagements and then those KOL’s do not make it through our next stage of purity, we’re actually working with a community team who looks at the content quality, who speaks to the KOL’s, and that’s why we have a curated database, its much different than those companies that just anybody is a KOL. Not anybody is a KOL, and we know that, and that’s why we take a curated approach.
And the other aspect of that that I kind of jokingly like to talk about, because it’s a really famous quote, and I think that’s it’s really – I think it’s something that we should think about as marketers is – there’s a really nice quote from the late 1800s from an ad man who said “I know that half of my ad spend is wasted, I just don’t know which half” the problem hasn’t changed in a 150 years. We still are dealing with the truth of the matter is, half of your advertising spend is probably not being optimized and trying to decreased or trying to optimize that is the eternal battle of the marketer and so we are trying to approach that battle with technology and with a curated approach.
Matthieu David: Understood, so basically what you’re saying is that the KOL in China which is leveraging fake engagement would not be part of your platform of would be taken out at some point because its curated.
Elijah Whaley: And we do our best to deal with those situations, and they do arise even in our own campaigns where we track for our customers, all of the campaigns. Many of our customers don’t use our influencer marketing platform in China to actually launch their campaigns, they’re only using the analytics or search engine, and then they’re running the campaigns outside of our technology.
If you’re running the campaigns through our technology solutions, then we’re doing fake data tracking and detection for fake clicks and irregular movement in trying to track that stuff. So, we try and expose those KOL’s, show that to the brands, expose that to the KOL itself, showing that we know what they’re doing., and then dealing with those issues.
Matthieu David: Talking about the different platforms and the fact that it’s very fragmented, what you were telling before is that if you run a campaign on WeChat, you need a WeChat shop. If you run a campaign on Weibo, it’s linked to Taobao with TMall. So, it’s fragmented; you don’t send all your traffic to your own website and come back on your website, which would be the approach in the West.
There is an Alibaba ecosystem, there’s a JD Tencent Ecosystem, and there is recently an (inaudible 40:21) ecosystem. How do you leverage the Douyin, how do you leverage Bilibili, I don’t know actually Bilibili how independent he is, but Douyin, how do you leverage it with e-commerce?
Elijah Whaley: So, Bilibili just got investment from Alibaba about six months ago, so now they’re linked, now you can do direct linking to Taobao or TMall. So, here is what we say to all of our clients and we reject a lot of clients too, based on this simple premise. Influencer marketing is the last initiative you should take as a brand. You should have everything else set up, all of your stores, your translated website, brand pages across all social media, content created by the brand, wonderful ratings and wonderful comments from customers on e-commerce. Offline events.
Everything that you can do to make that brand journey make sense, no matter where it happens. Because the reality is, one of the interesting insights that were exposed by McKinsey a few years ago was that the Chinese customer takes eight brand touch points in their buying journey before making a purchase decision. In the Wes, it’s only four. And the reason why is in the Chinese culture – this is a high context culture. The relationships that are built through reciprocity and gifts and exchanges of information is much higher in China, in more Asian countries than it is in the West. And so that being said, KOL’s are only one of the touchpoints in the brand journey and the buyer’s journey to make it a decision. And so, if you are going to be totally dependent on a silver bullet of a KOL to make transactions, you are sorely mistaken, and you will be disappointed.
You have to have a strong brand, a strong presence across all mediums, all buyer mediums because of the high content nature and culture of Chinese themselves. And so, we really – the most important thing to us when we look at a brand, is saying, hey those are the main questions we ask – are you established here? Where are your e-commerce platforms? Do you have social accounts? Are you creating content? Do you have good reviews? Are you optimized on SEO in China? Are you optimized on social SEO? Because all of these things are going to have a dramatic impact on the final conversion of an influencer marketing campaign because direct conversion is much much less likely in China than it is in the West.
Matthieu David: I see when you work with KOLs in China, and they are present on WeChat, Weibo, many of them on their own blog, their blog with a lot of text, not only short messages. When you pay them for a post, is it a post on all platforms, or is it a post on only one platform?
Elijah Whaley: It depends on what you agree upon; it really depends on what you agree upon. So typically, all of those things can be done in the negotiation period. There is a lot of things that brands need to consider, it’s one of the reasons why they work with us for a period of time commonly because if you don’t know – you know one of the things that’s very typical is a Chinese influencer after a month or a couple of months will delete sponsor posts on Weibo, on Xiaohongshu – on these different platforms because they don’t want their feed and they don’t want their account to look too commercial.
So, if you do not explicitly say in your brief and make an agreement that you will not delete the post for six months or a year or whatever, then you are exposed to that potential. If you want to use the KOL’s creative on your own platform, you have to agree to that. If you want them to post across their different social, you need to agree to that. All of this is all in the fine print details of a brief, which is essentially the creation of a contract between the brand and the KOL in China.
Matthieu David: Okay, very interesting. The other aspect that I see as a difference with the West, in the West, the KOL may talk about the brand on its own blog more often, like WordPress or whatever medium. Then its ranked-on Google, its ranked-on Search engines, but in China when the KOL talk about a brand on WeChat, it’s not ranked. It stays on WeChat only and not ranked on Baidu if I’m correct. And if they talk about a brand on Xiaohongshu, it stays on Xiaohongshu – it’s very closed environments, so –
Elijah Whaley: So yeah, we can talk about this, so one of the things that I’m most passionate about is actually social media search engine optimization. So, I call it SSO. I believe Baidu is dying in the mobile search world and I believe that the rise of platforms like Douyin, Xiaohongsh, and WeChat are increasing and so WeChat is one of the most dynamic search platforms in China, cause not only can it use Sohu to search the regular internet, but it can search your moments, it can search content, it can search your conversations. It’s a very, very dynamic, powerful search platform.
If you have not optimized WeChat content for search by putting your keywords in the title and distributed throughout the content – you missed that opportunity. And a lot of brands don’t think about this. They aren’t even aware of how important it is. In addition to that, Xiaohongshu is a very, very interesting platform. It’s really the web 2.0 and what I mean by that is, we 100% know now, that content on Xiaohongshu is actually designed – is much more evergreen. Xiaohongshu is a search engine, and the posts within it are more like web pages, and we know that the title – keywords have to be in the title.
Keyword has to be in the first paragraph, and it has to have a 0.01 or a 0.05% density throughout the article, and this is actually – and it’s funny because it’s actually morally after traditional SEO in China and so, we actually offer SEO services for KOL marketing in China. So, there are two things that we’ll do. We can optimize the content for the social platforms themselves, and secondly, when you do have content that you’re creating say on Weibo or WeChat, we can actually take that content and then rewrite it or whatever is necessary and seed it into forums or different blogs to create SEO opportunities for KOL content.
So that’s actually a service we provide. One of the cool things about Xiaohongshu actually is that it is actually very – it does rank very well on Baidu. Baidu does index Xiaohongshu posts, and so there is reallymassive search potential working with Xiaohongshu KOL’s. And Xiaohongshu is the platform that I most bullet from. However, the search is also changing. Location-based search is huge – people don’t even realize how big location-based search is and location-based search is also on Xiaohongshu and Douyin, and I think that that’s an opportunity that a lot of brands are thinking about, especially travel, restaurant, location-based brands in foreign destinations, because if you tag with a location, your content in a foreign location – when someone is looking for stuff around me, while they’re traveling in Paris or New York or something, there’s not going to be a lot of competition.
So if you’re the only restaurant that’s had a KOL create something and tag it for your restaurant, you have a massive advantage over every other brand or every other restaurant in your area, and so – I believe things – you know, the increase of voice search, the increase of location-based search, those are dynamics that are rising and that are on the peripheries right now for users, but can be game changers for brands.
Matthieu David: I see, when I was reading top-tiered, and so on I was confused it was cities or KOL’s, I was stupid to think it was cities but it makes sense now because when you say location-based, you can look at actually KOL which is close to your – in your district, maybe on your street to make sure that actually he is talking about you at home and so the location is close to your shop.
Elijah Whaley: Hopefully, hopefully, you actually require them to tag your location, cause you’ve got – you could put in a destination, or you have them visit your store and literally create the content in your store, but you can tag – when you’re creating the content, you can tag the location of the place you’re creating it for. So those are the types of deeper tactics that’s one of the reasons why ParkLU has become so popular is because we’re the ones who know that stuff and we’re the ones who know how to leverage that type of thinking.
Matthieu David: Talking about SEO in China, we know SEO – Google bases its SEO on backlinks, content, bank links, optimizations or speed and so on, when you compare the SEO with social media like the SEO of LinkedIn, it’s much more basic, it’s the density of words and the first thing you mentioned is density of words like the keywords in the title, first paragraph, 0.05% or – if I’m correct or maybe 5% I’m not sure of my notes, but basically it’s about density of words. Do you feel it’s more sophisticated them or basically it’s still about density?
Elijah Whaley: Well no I mean that’s the technical SEO in China, that’s just to play the game, get in the ballpark. If you don’t have keywords in the title – in the first paragraph and 0.05% density throughout the article, you can’t even play the game, but what’s going to make you rank, what is going to give you authority is going to be 1) is the accounts number of followers, so that’s why KOL’s have a strategic advantage. And then the likes, comments, reposts or favorites, depending on your platform, that is what is going to make the authority ranking in there.
So, in traditional SEO in China, we look at what’s the traffic? What are the social signals? What are the backlinks? What are those things that generate – well in a social media environment, you don’t have backlinks? You don’t have some of those types of indicators, so what they use as indicators instead is what is the performance from the reader? How many – compared to how many readers, what percentage of them are liking? Commenting? Reposting or favoriting and that’s what gives them the algorithmic advantage, and so you can actually at times – see posts with very few – like on Xiaohongshu like I said is this internet 2.0 – search 2.0 really good example, if you search for a keyword, you might see a post – you’ll likely see posts with thousands and thousands of likes and comments and things, but you’ll also see in the mix posts with a couple of likes and a couple of comments and the reason why is because the percentage of views to likes and comments is an extremely high percentage.
So that’s what triggers the algorithm, so one of the cool things is, in this competitive environment of social SEO in China or SSO is that any content has the opportunity to rank. Because it’s going to be based upon what rate of likes and comments and so the real byproduct of that is, is it comes down to quality, and quality is not determined by the platform, quality is determined by the consumer of that content.
Matthieu David: Okay, so what you’re saying, to summarize that is the percentage of engagement divided by the impressions. That’s going to count, more than the impression.
Elijah Whaley: Yeah.
Matthieu David: Okay. So, to be very careful actually at the beginning when you start, pause to make sure that the first impression is going to engage so you can rank –
Elijah Whaley: That just comes down to quality and the talent of the content creator, and that’s why I didn’t put so much trust in traditional content creators, I think KOL’s are the masters of this, and they’ve proven that a lot.
Matthieu David: Talking back about Douyin because we switched to other topics after – how do you convert from Douyin?
Elijah Whaley: So yeah, so there’s a couple of ways, Douyin is really cool right now because they allow linking to JD to Taobao, to TMall and then they also have their own native stores in there and so they also allow linking to websites, they allow – it’s a very dynamic open platform right now, and it seems like potentially it’s going to remain that way, which seems to be – I hope it remains that way because it gives a – it makes the platform easier to use for users, and that keeps people around.
So, for right now you could put a trackable link into Douyin, you can put in trackable links to stores. The only way you’re actually going to get real visibility is if you have a Douyin native store, as far as what is directly converting, another side you lose the trackability as soon as someone clicks on that, so you don’t have – unfortunately you don’t have cookies and things like that to be able to track direct users, you can only use rough guessing attributions or trackable links. So, that’s kind of how Douyin works right now and probably how it will work for their foreseeable future.
Matthieu David: What do you think about their e-commerce platform? Would you suggest also as you suggested before to open a shop?
Elijah Whaley: Everywhere, everywhere, and if you’re going to be launching campaigns on Douyin, why would you not? Why would you not? This is – it’s the unfortunate thing and this is the thing that I think maybe you deal with or a lot of people realize is that – excuse me ( I’ve got to turn off this alarm here) one of the things that brands need to realize is that influencer marketing in China, or coming to China in general – I think a lot of brands have the perception of “look there are 1.4 billion people in this country, so all I have to do is go over there, and I’m going to make a ton of money,” and the reality is, China is one of the most expensive countries in the world to enter in as a brand and to make it.
And if you are not very strategic and you do not pick the right partners, and you do not establish yourself properly, and you do not understand deeper tactics and have the budget to make things happen – you’re not going to be successful in China. And that’s why – that’s one of the difficult – that’s one of the warnings that we give to a lot of brands when they come to us, and they’re like – oh we’re just entering China, and we want to do KOL marketing, and typically we say to them, you’re not ready, and that’s just because we assess your brand and we don’t want you to fail.
We don’t want you to fail, and we know you’re not going to fail if you’re not everywhere. And if you don’t have good ratings online and if you don’t have SEO and you don’t have brands that’s already creating content, and we don’t want bad feedback in the market about our product and services and the best way for us to do that is actually not looking so much at ourselves, but looking at our clients.
Matthieu David: I see. How much does it the cost to begin to do advertising on Douyin and to open a shop on Douyin and so on, for instance on TMall you need to put a deposit to open a shop, you add some constraint, do you have some requirements on that?
Elijah Whaley: Yeah, I don’t have the numbers on that. That’s where we have partners that we refer to in such – we are strictly, strictly in the KOL marketing world and don’t deal with those things.
Matthieu David: I see, I see. Okay. Soon going to be one hour, so we’re not going to go further, I still have a few questions I guess we need to organize a second session, especially on what you have done yourself with Melilim right?
Elijah Whaley: Yeah, yeah
Matthieu David: Well, a few words maybe on it.
Elijah Whaley: Well I mean, so I was a creative back in America. I was in video production since 16 years old. I saw what was happening; I saw that the democratization of the creation distribution and consumption of media was going to drive down the wages and opportunities for individuals like myself at the time. And so, I decided actually at the time that even though I had built up a career in video production, to go back to school for international business.
And, that brought me over to China, interestingly enough the first project I did was go back to America to produce a travel show for Tencent but really what I saw – so I started as a content marketing director for an ad agency and every time we created a piece of content it would go to – our distribution team would work with these people called KOL’s and I was like oh, what’s this KOL thing and once I started to learn about it, and I was really passionate, really interested in content marketing, content inc, that book really influenced my career in a lot of ways, from Joe Pulizzi. I realized that what KOL’s in China were doing was they were building marketing channels, owned marketing channels and I didn’t see this as influence, I didn’t see this as – I saw these Chinese influencers and I still see them as brands, and I see that the channels that they’re building are actually marketing channels that are just waiting for native branded products and services to be layered in.
There are two aspects of it – brands need to realize when they’re sponsoring a KOL I believe that they’re potentially sponsoring their future competitor and because I believe that the next wave of major brands and we’re already seeing a sign of it are going to be KOL brands, influencer brands.
Matthieu David: It’s already happening, right?
Elijah Whaley: Its already happening – Ruhan’s IPO in this year, Kylie cosmetics is a major contender in the cosmetics world in the West, and she’s more of a celebrity, but we see this, and the reality is – they own the marketing channel, they realize things like value first marketing, they understand that it’s not about direct marketing, it’s about brand marketing and they’re better.
They’re better at creating content. They’re better at communicating and they listen to customers, they create – they involve customers in the product development cycle instead of developing something in a black box and then trying to market it, they’re actually developing products directly with the customers and then they already essentially know how many are going to buy it before they even produce it. And it’s one of the reasons why, on my own personal consulting side, the biggest number of brands or companies that have been coming to me, have all been incubators. And so, Meilim Fu, we specifically started Meilim Fu – so Maggi my girlfriend, I met her, and she was and is a top – probably the top make-up artist of her generation.
So, she does make up for movies and TV and magazines and really well respected and known for that. When I met her, one of the first questions I asked was, what’s your career goals? Where are you going? And she says, I want to create – my ultimate goal would be to create a cosmetics brand, and I said, you know what – let’s build a marketing channel first for your cosmetics brand that doesn’t exist yet. And so over the last three and half years, that’s what we’ve been doing, is developing a marketing channel, aided by and paid for by cosmetics brands, for cosmetics brands that will eventually be their competitor and the really interesting thing is that we’re in talks with the world’s largest cosmetics company to launch her brand, and this is because it was very, very intentional on why we’re doing this. This was to provide value first to create a cosmetics brand that would be driven by the customer.
And, we’re on the route to do that, and it’s going to be a really interesting story, and I hope that if we were to talk again in three months, we would be on the way to do that.
Matthieu David: That makes a lot of sense because you see that in the fashion industry like CALA, who has his own brand, but also has been director of other brands like – I’m not very good in fashion but he has been involved with other brands, and he had his own brand at the same time, so you can see the same with KOL’s in China having their own brand and being director of Louis Vuitton, Loreal or whoever. Makes a lot of sense. You were talking about the books, and I’m very interested in knowing more about the book you mentioned that influenced you. You were talking about one –
Elijah Whaley: Oh, yeah so the book that influenced my career, I think the greatest book that influenced my career is a book called Content Inc by Joe Pulizzi, and it was – content Inc. they’re actually kind of I think the company that kind of coined the term content marketing and content marketing obviously has been around for hundreds of years but the idea of content marketing is that you would offer content as a form of relationship building, as a form of value creation, as a form of affinity building with your target customer that isn’t directly paid for or attributable and the best examples in the world or the best example in the world is like Red Bull Media.
They’re the masters of content marketing and I think red bull media might make more money than red bull today and the number of events and the value – and they’re so valuable that other brands are paying them to be a part of their events and their content and all the things that they do. They have a musical – they do everything. And so, the idea – this is where the shift where a lot of brands don’t understand is, they’re stuck – they’re really, really stuck and it’s kind of sad in some ways. In disruptive marketing.
They’re stuck in the idea that people are going to consume mass media style content and my goal is to disrupt them from being able to see that for 30 seconds, and that will create an impression and then they can do the content. But the switch has been being – the brands now – the ones that understand are creating the content that people want to consume.
Matthieu David: Yeah, I believe SK – II is one very good example of a brand creating documentaries and content that actually in the West, without being done by – I don’t know, governments or media or NGO’s and SK-II which is doing it in China. So, I see the same thing in the market. Very interesting.
Thank you very much, Elijah. I took a lot of your time this morning; it was very insightful, very, very interesting. I think the audience is going to love what you said, love what you shared. How did you like it?
Elijah Whaley: Yeah, it was awesome. I love every opportunity that I have to geek out on this stuff because the reality is, for the last four years, I have slept, read, ate, cried, bled influencer marketing. It’s all I do. I’m the CMO of an influencer marketing tech company, and I am the co-founder, Angel investor and main content producer for one of the most significant KOL’s in China and so really, this is all I do.
Seven days a week and you can see light spots, I’m in my office/studio and when I’m done with ParkLU I turn around and produce content for key opinion leaders in China and I’m very strategic about this and so I’m very passionate about it and so, given – I feel like I’m being – this is a therapy session for me. Given the opportunity to really let all that’s in me out, so I love doing podcasts, it’s really actually a pleasure for me. So, I appreciate it. Thank you.
Matthieu David: Thank you very much, we’ll be editing and publishing this new episode of our China vlog soon, I think in 10 days. Thank you very much.
Elijah Whaley: Yeah, thanks so much Matthieu, have a great day and look forward to talking to you again.
Matthieu David: It was a pleasure. Talk to you soon. Bye. Thanks, everybody for listening to China Paradigm, the China marketing podcast where we interview entrepreneurs in China.
China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.