Find here the China paradigm episode 26. Learn more about Olivier Verot 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, we have Olivier Verot. You have been a very long-time friend of mine. I think I know you since you have started. And you are the co-founder of Gentleman Marketing Agency, a digital marketing agency in China, and also of the blog, both in French and in English, now I guess many in English. So, you are doing digital proportion I would say, everything which is linked to digital in China. SEO in China – I feel you are very strong in SEO and also SEM – social media and word of mouth marketing what you say word of mouth marketing, which is certainly about KOL and influencers. Thank you very much for being with us today because I think there is nobody better than you, I know who is as good on SEO in China, SEM, leveraging the digital tools in China. Thank you very much. Was the introduction correct?
Olivier Vérot: Thank you, Matthieu. The introduction is correct, yes.
Matthieu David: Good, thank you. Can you give us an idea of the size of the business, the different paths you have – the different steps you have gone through?
Olivier Vérot: So, to start from the beginning. We are a digital marketing agency in China, and today we have about 70 people, so last year our turnover was a bit more than 3 million USD, just to give you an idea about, like the size of what we are now.
Matthieu David: In 5 years, right?
Olivier Vérot: Yes in 5 years, it’s the 6th year actually yes. So, we are very specialized in digital marketing. We usually provide a total solution for clients and basically all kind of clients. We divide it like three – I’d like to say four kinds of different clients. First one it is all the clients that want lead generation in China so it can be like Service Company, Tourism Company, or Industry Company so basically, they want leads so for this kind of customers as you mentioned we are quite strong. No much digital marketing agency in China was doing that, or so it’s about SEO in China, SEMs, order search problems, every problem basically, it’s about your reputation.
After we have the second kind of customers that are basically growing, it is everything linked about branding, so we provide a total solution for brands. It can be social media; it can be everything about PR online PR. It can everything about influencers and everyday links about the problem of how to engage the consumers. We have a certain type of kind of clients they want to basically like Sell in China. So, it’s a problem of e-commerce in China, so we have them to basically to drive traffic drive quality clients to their stores. Can be general stores, can be JD, can be WeChat, can be everything, and we also manage for clients to sell at platforms to help them basically to sell and the last one it’s about distribution, so, as a digital marketing agency in China, we help our clients to develop their distribution in China. It is leveraging the branding to basically let them activate the different source of distribution – physical distribution in general stores. That’s a little bit….
Matthieu David: Physical as well?
Olivier Vérot: Yes, so we know that for distributions actually, we develop the distributors, a lot of distributors and what the distributor is branding. They want strong brands, so basically if you work on the branding if you have a good brand if your brand is very active on social media, it is something that the distributor in China really want to get basically. So, we have a pool of different distributors in fields. When the brand is quite strong, we introduce it to this kind of like – more distributor medium or some big one, or some agent and he’s kind of like clients, they can basically resell their products to distributors.
Matthieu David: I see. And that shows that I had more in mind initially because when we got in touch initially, you were a lot on lead generation in China. The first segment which is SEO in China, SEM driving – display may be driving traffic to your online presence, could be your website because it’s China, it can be your TMall shop or your JD.com because people don’t buy on the website, direct website of brand.com most of the time. I understand. Could you spend a bit more time on lead generation in China? What kinds of clients need SEO in China and SEM and what kind of clients don’t need? Do you feel that some clients would – some companies which need that and some companies which actually would never sell through SEO, they would never sell through SEM?
Olivier Vérot: Exactly. So as a marketer what you need to think about it’s like if the client’s – clients will use the search engines information to search in China to know why they won’t. So, for example, I am putting two reasons – Baidu it’s very relevant, basically like when somebody wants to travel somewhere, they will use a search engine in China to search a lot of information. So, every time you search and use a search engine in China, we know that if there is a search in China, if there are figures, is it useful to go to this kind of platforms? For example, it’s for everything about the industry or like you are selling machines or something like this, so the number of searches can be small, but usually people they are searching for a bike, new kind of fit for their factory basically. It’s also a good way for basically for the company to get leads to get quality traffic so this quality traffic will basically like search every search in China, they use five different websites, and they will compare different kinds of suppliers so it can be useful.
Everything links more so about the service industry. So, for example, like somebody wants to learn English, somebody wants to have a lawyer in Canada for example, somebody wants a particular kind of product, and they don’t find what they want so that they will search information, then they can search potential supplies and liers online. All these kind of clients it’s useful because they can get quite the traffic leads and we advise for that. For B to C it’s a bit complicated because actually, few our consumers use Baidu for getting – for buying but they will use Baidu for checking the information, so it’s a little bit different. Let me give you an example if you don’t mind. A lot of consumers will basically like – the day they will think about buying a new brand that they’ve never heard about they will check information about this brand on Baidu. So that’s what includes SEO and the brand to control –
Matthieu David: Say it again. SEO in China?
Olivier Vérot: SEO is a brand name. So you are a new cosmetics brand, and your name is called Pros cosmetics for example and people before buying they would search information to see if the brand is real, if the brand is good, what people speak about the brand they would use most of the time the search engine in China to get information about what it is, and also what people also search and use it is something about a new things, something that they never have – for example you have a lot of searching on Baidu about, for example, the top lipsticks brand in the West. So, they would search for keywords to get more information.
So, Baidu is coming more for one less at the beginning of the search in China, and this is something very useful. We also do some kind of like SEO on the platforms, so if you for example like search on TMall, for example, it’s also kind of like a search engine in China to rank higher than the other one. JD basically is the same, and all the platforms also work a little bit the same except WeChat – basically, on the other platform, the search optimization can also work directly via your platform and so indirectly we are a KOL. So, if we write all these KOL’s and all these platforms, so, for example, The Little Red Book is not the store you have there, but you will be able to link when we speak about the main product the circle exists.
Matthieu David: Okay, Little Red Book which is Xiaohongshu in Chinese, all right now, I think they’re rebranding in red. That’s very interesting what you say, so to summarize travel, B2B service like lawyers, Baidu can be game changer and trade leads but for B2C you have to do optimization on the platform for yourself which is TMall, Taobao, JD.com, and you have to be on Baidu for your reputation or may for be some information about yourself or the industry but you are not going to drive massive amount of sales through Baidu. Is it correct?
Olivier Vérot: It’s correct. Yes.
Matthieu David: What about the platforms which help consumers to understand better product like Sohu. Do you see momentum in new platforms? Baidu has been in the digital ecosystem for very long, but what about the new ones who are popping up like Sohu and other platforms?
Olivier Vérot: As we see, it’s about, the market has been divided by a lot of different platforms. So, for example like Sohu is taking a lot of users from Baidu who wants much more qualitative information’s, so there are more white collars, there are people who want more information’s, so we use them basically a lot. If you want to search for information about beauty, cosmetics, fashion a lot of people will directly search for information or read the right book to find information. If the people want to search information on travel, they will also search for example on Mahuo who is basically a kind of like TripAdvisor, so the search in China has been divided by different platforms and the same for Taobao.
Taobao is a search for E-commerce in China. So, people are using less and fewer Baidu because their result is less and less relevant. After a lot of scandals basically, the users are losing trust from these platforms, and a lot of different players come and become THE platform for one kind of like specific industry.
So, we don’t really focus on Baidu or would like to say or SEO in China; we focus on the users. So, we study users, and according to the behavior of the users, we will adapt the strategy for this kind of – for the company to reach their target.
Matthieu David: I see. But is it like learning all the time again the work of SEO in China because I feel that Baidu SEO was based on back lane, it was based on creating content, a bit similarly to Google, but it can be the same on Taobao, it cannot be same on Taobao, it cannot be the same of Mafwengo, Do you have – how do you learn all the times the work of – do you invent yourself on SEO in China or you don’t have to with the same principles?
Olivier Vérot: Basically, you need to understand the mechanics. So every platform they have a kind of system of calculations so after you understand the system of calculations you just adapt the works to basically the right – on the proper keywords, and then basically like the titles, these kind of things are always the same and after when you get this kind of process, it’s easy. It’s the same as like for example if you understand the process of social media, whatever the platform that you go it’s always the same, based on likes, interactions, comments basically it’s about sets, and it’s about the popularity of the page compared with the others.
Matthieu David: Okay. You talked about another platform like Mafwengo, like Sohu. Do you have competitors of Baidu, is Sohu or 360 real competitors of Baidu or you feel it’s very specific, it’s very niche? In terms of percentage, Baidu is taking 60-70% if my numbers are correct.
Olivier Vérot: Yes, exactly so Baidu is taking all the percentage and I don’t think they are really competitors because they didn’t really innovate, they just copy the same result of Baidu they don’t bring something new to the market. We put a lot of hope on the sadolin.com, but basically, their results didn’t bring more things, so they just copy basically the same results as Baidu, the same business model, their ads, and doesn’t bring anything new to the market. Sogou.com, it doesn’t – it’s really, really niche, it’s not really relevant so they add one special tool, such as WeChat that basically can, in the paper can be very interesting because you cannot find on Baidu the WeChat result, but it doesn’t work. Very, very few users are using that. I don’t think WeChat or Tencent is a very such company. They are very social, so they don’t develop a lot of ‘I am going to be able to find information and maybe for political reasons they don’t have any strategy tools.’
Matthieu David: Do you think we can build a strategy to enter the Chinese market on Bing or even further on…? No? Okay, why do you – don’t think so, because for a brand which is a foreign brand or for a service which is a foreign service like a lawyer in Canada for instance, Chinese will not go on Bing to look for them?
Olivier Vérot: No, I don’t think so. Usually Chinese will not go on Bing they will use Google most of the time, and if they don’t have Google it means that they are very Chinese and they will search on Baidu basically.
Matthieu David: Okay, so is there a strategy to rank Chinese keywords on Google?
Olivier Vérot: Chinese keywords on Google! No, it will be in English keywords so that they would search in English. Chinese keywords on Google are mainly for Hong Kong, Taiwan, or all the Chinese people living overseas.
Matthieu David: I see, to finish on the topic of SEO in China and Baidu, are the principle of SEO similar to Google on Baidu are they similar to Google, or they are different?
Olivier Vérot: It used to be a little bit similar, but today there is a very big gap. I think. Baidu I would like to say, say like 10 years ago – so it was like Google in 2010 or something like this, so they didn’t put a lot of categories against the scam, against the black SEO. They are really focused on their own platform, so they are not very open with platforms, so they rank their own platform like Baidu Baike, Baidu Zhidao, and Baidu Tieba today they’ve developed new things like Wenku, so it’s basically like a ppt little bit so it’s kind of like Baidu media. So, they try to take their users and put the Baidu platform instead of that but it’s not really relevant for users, they are also using a lot of really good information for their platforms and lose the trust of users.
Matthieu David: I see.
Olivier Vérot: Where Google tries to bring the best results for the users really focus on the users and always updates their results to basically opens to the new platforms, open to the platforms that really try to develop the best answers to the questions.
Matthieu David: I am just thinking now that some people who listen to us may not know, but Sohu is the competitor – I mean not the competitor the equivalent of Qihoo in China and Mafwengo would be like TripAdvisor.
For Baidu basically, a company which is entering China cannot use Baidu in the same way as they use Google. Would not be the same patterns of conception and the same strategy would be very, very different. So, you talked about branding, and you talked about e-commerce in China and finally distribution as three of the segments you’re providing in your company. Could you tell us more about e-commerce in itself – so how did you drive traffic on e-commerce, how do you convert and if you had any number or case study to share with us would be, I think very, very useful for the audience.
Olivier Vérot: So, e-commerce in China today it’s driven basically by Chinese platforms like TMall, JD, and the other one. As we see as a trend today in 2019, it’s really the trend of social commerce. So, people are spending a lot of time on social media and after all, like when they’re interested in some things that will buy the stuff that they want. So, it’s a very big trend that we see, especially for young consumers. So Little Red Book was – is 100% platform so basically people don’t go and search for the product as they follow influences, and this influencer will basically advise buying this product, this basically will drive 80% of the sales.
Taobao and TMall also tried to do the same because they are integrated to a lot of KOL’s on their own platforms where they have recognized streaming – they are not only a Weibo, they are also on Taobao platforms, and they are doing a lot of live streaming, so they are Taobao influencers and Weibo also basically links to Taobao and TMall ecosystem. So, it’s also basically a big source of quality traffic in sales for this kind of brands who just – just who have a store to explain what they have is basically good if you have strong need about something. But most of the sales they are bringing from the social community, so people are following brands, searching for reviews if this product is cool and nice, they will try and buy it.
So, it’s a very good way of getting new clients through this platform. Influencers are also a big, big part of the KOL in China, especially in the beauty industry, fashion, everything is about lifestyle – influencers are playing a big, big, big part of the e-commerce strategies, so basically by offering product, give them money, they will speak about one brand or one brand, and they will basically relate this brand as very, very popular. So, as a digital marketing agency in China, we have clients to define their good positioning, and we explain to them that their brand is not just a product, the brand is basically a universe, it’s a lifestyle, and that’s how we can attract the right consumers. So we are doing that, we are bringing traffic from different platforms, the quality of the traffic and the AOI and I just take a lot of the complains, so you speaking about frequency, for example, we have work for ISANA, it’s a new brand of Roseman, it’s a kind of like online pharmacy, and they have launched a new brand called ISANA so –
Matthieu David: Would you mind spelling it?
Olivier Vérot: Isana. So, we have created a – they are doing a lot of things that you put into ice, this kind of products. So, we have imagined a campaign based on the Hague. Shague is a very big famous influencer, just like Justin Bieber for you girls. So, he was the ambassador of the brand, plus a lot of KOL’s who were really in this product…
Matthieu David: You managed to get him!
Olivier Vérot: Yes. We managed to get him. And he was the brand ambassador of the brand, and we have a lot of different influencers, we bring some traffic, and if you want some figures for the double 11’s, we drive 8 million sales in one day for this –
Matthieu David: 8 million renminbi, which is basically one million dollars.
Olivier Vérot: Yes
Matthieu David: Was its cross border?
Olivier Vérot: Yes. It was cross border exactly.
Matthieu David: Okay, so to give a perspective to people who are listening to us who are not familiar with China to drive a sizeable amount of traffic in the cross border is not that easy in fact. You correct me if I am wrong, but I feel that TMall global, has been advertised as a very easy way to sell to Chinese market, but I feel a lot of brands and companies have been disappointed, but you have found a way actually I feel through KOL, to be able to sell cross border product.
Olivier Vérot: Exactly so I would like to say, TMall Global is a very big platform, and it’s not suitable for 80% of the brands. It’s only suitable for the brand that is ambitious and invests a lot of money on those platforms. So if a brand is enough ambitious build strong reputations, and create a social burst I would like to say it’s good, but for most of the brand who would expect to have the same thing as Amazon, so basically, I just open a store, put my product and just wait – it would never work. So, it’s basically a totally different ecosystem, a totally different system, and to enter TMall Global you need to have a lot of preparations.
You need to work on the reputation of the brand you need to work on a lot of different things to have the right targets, the right angle the right things to go to TMall global. We don’t need advice at the beginning for the brands to enter TMall global and even TMall don’t advise for small brands to not come to their platforms. Go in to The Little Red Book for first good gap, so if you’re successful in the Red book, which basically – it costs less, you can be ready to move to the next big gap but On TMall global you need to have an investment of like – I don’t know something between 200,000 dollars to 500,000 dollars a year to have something quite interesting. It’s basically complicated.
Matthieu David: Let’s say 300,000 US, it including everything – would include the advertising, would include SEO services that would include hiring on their site – or they don’t have to hire on their site, you would take care of everything. So basically, starting with 200,000 US you can really begin to sell, but below that, it’s very difficult.
Olivier Vérot: Yes, exactly.
Matthieu David: It’s very challenging if it’s below this level. I understand. One thing about these new platforms like Xiaohongshu, little red book, they don’t rank on Baidu right, they don’t rank on – TMall is not ranking on Baidu, is it?
Olivier Vérot: Xiaohongshu, they rank on Baidu. They rank on Baidu, they rank on the influencers, they have a platform rank, so Baidu takes them, and after Alibaba invested in them, Baidu delete their results. So there is a big fight between these three platforms about Baidu, Alibaba, and Tencent, so little red book was first invested by Tencent and after that by Alibaba, and after that they kind of decreased their trust on Baidu, so less and fewer requests have been ranked for Little Red Book, and which other platform you speak about?
Matthieu David: So TMall, JD.com are they ranking on Baidu?
Olivier Vérot: So TMall it’s kind of like the – official TMall of the brand rank, so for example like if you search for products, you will find a TMall on Baidu, but the page doesn’t rank usually, and TMall and JD also pay a lot of money on advertising on Baidu to attract Baidu traffic to their universal page, so for example if you are searching for – I don’t know baby formula, you will have a very high click drive by TMall and JD to bring the traffic directly to their platforms to refer it to all the choice of the brand that they have.
Matthieu David: I see. We are talking about search in China. You have talked about live streaming in China. Could you tell us more about all the possibilities of driving traffic or paying for traffic? In the west we have RTB – real-time bidding, we have re-targeting, we have influencers, live streaming, we have a search of course and SEM, we have social media management where we can buy like on Facebook, look alike, all the ways of targeting on Facebook which is very precise. Could you tell us what is possible in China and what is not possible?
Olivier Vérot: So, you have to stop traffic – like basically the SEM that is basically mixed with the Baidu platform. So usually when you advertise on the SEM, you will also get your ads on the Baidu product, so that’s basically a part. You have the FTB, or I would like to say in China it’s called more the display, the display ads that you basically buy – it can be like CPM, cost per mille, or it can be cost per click, on different kind of platforms.
Matthieu David: For RTB in China, sorry to stop you, a bit on RTB – but for RTB you said a different kind of platforms, does it mean Baidu is offering that, but it’s not the main player?
Olivier Vérot: Baidu is one of the big players, but there is a lot of different and small display platforms that are on the different kind of apps and media also, in China. So every – they have a very different way of calculations and it can be very old, very traditional some of them are very advanced, for example, Weibo, they have copied a little bit – the system of Facebook so they can target the people by their interests, so that’s very interesting for brands because if you target the people by interest you have higher chance to bring quality traffic, so that’s ads basically.
The Influencers, of course, an influencer is good because you buy – the guys but you also buy the trust of the influencers, so according to the traffic of the influencers it is better. About the retargeting is like a little bit different from what you have in the west because in the west your retargeting is based on your own platform right, but in China what you can do is you can put cookies on your Yuku channel for, and either people save the video on Yuku channel and you can retarget them based on that. So, you can also do retargeting on other platforms and stuff.
But the result that we have on the retargeting is not as high as what you can get as what you have in the west. So, I think the Chinese platforms are a little bit late and not as smart as what you have in the west. I would like to say they are 5 years late in terms of retargeting and display compared to today what you get. Take Google or Facebook, who is pretty smart. And after you have what you call as a media buying. So, media buying or display service is a big difference because media buying for us as we define as in Gentleman, it’s more you buy on the media. So on Sohu, you buy a certain amount of exposure in their platform, if the platform is famous, it costs a lot, and if the platform is not very famous it costs lower. It’s a kind of a very dirty world because the last – I think last year the e-marketer provided a report which explains that 60% of this traffic was fake.
Matthieu David: So fake means frauds.
Olivier Vérot: Yes, frauds basically its fake traffic. So as a marketer as a digital marketing agency in China, what we do we always try to put some tracking between the learning page where we are to this kind of robot to direct to the page, to evaluate the traffic, if it is real traffic and are they real traffic, and as we think it’s not so good and usually doesn’t bring good results. So, we don’t need advice to use a lot of traffic like this and to come back from your consumers.
Today Chinese consumer doesn’t really trust the ads, so if they come and they see pop up ads that appear everywhere, people will – basically don’t click anything they don’t really trust, so we need to work more on the organic. In the organic is like the natural search in China, social media there is also a shift on social media, the buzz that you create, the influencers – all of this for us we call it not organic. So, it is more what is real, what you have in the – all the press release – what you have and everything that is around about the banner, about the click, about the flashy, people usually never buy. So, as a digital marketing agency in China, we advise our customer to not spend too much money on this kind of platforms and every time we may confess, we try to measure it, and if it is not working, we just delete this kind of stuff.
Matthieu David: It’s very interesting because we see that because Baidu has not been very trustworthy so far on some issues people rely on the opinion of what we call KOL and other people in order to make choices. So that’s why your advertisement in China needs are actually –
Olivier Vérot: You are right. Chinese people don’t trust in media, not much. They don’t trust in government right. So, it doesn’t trust in ads, a lot of cheaters it doesn’t trust in Baidu, it doesn’t trust in basically anything. They relate to their friends or famous people that basically everyday speak about Wonderpick, so yes that’s a very good way to get the trust from these people to work on KOL’s or the people that they’ve really known for a while.
Matthieu David: I see what about – so targeting people through social media and so on – on Facebook it has been made very, very easy to target people very precisely with very little budget. And I remember we looked into it one or two years ago it was pretty expensive to do it on WeChat and any platform and the targeting was not as precise as it is on Facebook. Has it evolved, what is the situation now if you want to start doing social media advertising how much money you should prepare to pay?
Olivier Vérot: So, the budget is not as low as Facebook. But Weibo has a similar system of billing; we see Toutiao is the same or so – so their system of billing is pretty accurate and pretty good. The problem with Toutiao it’s like they already have a low-class people and young people. Weibo has a little bit of about everything. On WeChat – it’s not that accurate today. I don’t think that is the priority of WeChat today, one day it will be – but today it’s not their matters, they don’t put a lot of efforts to have a better advertising, better system and something more efficient for brands.
Matthieu David: So basically, it’s nothing similar, right?
Olivier Vérot: About WeChat – Weibo is similar to Facebook. On Toutiao, it’s similar to Facebook. They have really copied and developed the same kind of native ads as what you have on Facebook, based on interest and Weibo and Toutiao, they really eyeball to know what you like, what you don’t like, what you follow, what’s your interest for long-time. For WeChat it’s a little bit different, I think.
Matthieu David: Could you share with us some ideas of good conversion rates or average conversion rates from the different sources of traffic? What is expected when you do SEO in China when you do SEM when you do buy in the display when you do influencer marketing. What’s a good and an average one?
Olivier Vérot: It’s really, really different to speak about conversion rates because it really matters about the industry and the brands, the wellness so I will just give you an example, if you advertise for big brands like L’Oréal, even if you put the banners you will have conversions rates because people know the brands already. So, it’s kind of like easy, but if you work on the new brand, even the best channel for the conversion rates will be almost zero because the brand is new. So, we identify the conversion rates – the best channel for the conversion rates is its own followers of the brand that you get, of course, the influencers are very also good for the brand.
Matthieu David: How much can you expect in percentage. Let’s say an influencer has 10,000 views on one post, what’s a good conversion rate and what’s an average one?
Olivier Vérot: On the influencers, you have to part, because you have the – it’s you, by himself? So, let’s take somebody who has a million follower. Okay, so as you say maybe these guys will have like 50,000 people will view his post, okay. Of these 50,000 who view his post, you can expect 500 people would click on the link and of these 500 people who click on the link usually, the conversion rate can be high from 1-5%.
Matthieu David: Okay
Olivier Vérot: Why it’s high because it already displays the on these own stuff. So, you will have in one hand 50 people who buy, so you think like 50 people on 500 is already a very good ratio. But actually, it’s 50 people who buy from the 50,000 people that see the posts. So, you have two layouts. But if you take for example from the ad people can see on the ad, they arrive on the page and you can have the same ratio about 50,000 people who go to the page and only 50 people who buy, so the conversion rate would be super low but it’s because there is not one person in the middle who will just explain what it is, so there are two layouts.
Matthieu David: But does it mean that basically the number of viewers at KOL and the number of viewers on an ad lead to a similar conversion of rate? Would you say so?
Olivier Vérot: It depends so I just gave you an example you pay an influencer of Weibo about 10,000 RMB right and you pay 10,000 RMB on the good content, links to the store. We know that at that time Weibo with ads has a better result as the KOL, about some similar faith like this – and if you have a – for example a KOL, that is brand ambassador of the brand, and you advertise to the people who like – you advertise to this post, and this influencer is speaking about the brand under the brand name, so this has a higher conversion rate. Because people even if they don’t know this brand, they know this guy for example like Justin Bieber and basically because they know this guy, so they are ready to try.
And the conversion rate also links to the price so if you are selling the first trial of 50 RMB, for example, you will have a very good conversion rate because 50 RMB is nothing. But if tomorrow you advertise a cosmetic product that people need to spend 1000 RMB to buy it, the conversion rate will be very, very low. So, the conversion rate is not a matter of really about one thing; it’s mainly about three it’s a matter about the reputation of the branch, it’s a matter about how you attract the right people linked to the right universe and its better offer, what you offer from there.
So, it’s almost basically impossible to give figures about which industry gives this conversion rate or this conversion rate or the other one conversion rate, everything is basically really, really with a difference. The brand never had the same step, never have the awareness – even if you take the same KOL, the same day, similar day, of two different brands, the conversion rate is basically totally different.
Matthieu David: So, you have to be very sharp in understanding segmentation and which KOL is good for which segment and how that can influence positively and not being fake.
Olivier Vérot: Of course, on the KOL they have exposure, so you have a number of their followers, the real follower that they get – okay, and you also have their credibility. So, for example, you can have some girls, who just make some trials all the time, and she is very famous for that, but the number of followers that she will have will not be that much, maybe only one hundred thousand, but she has a very good creditability. And the other part you have a bimbo she is very beautiful, she has like maybe 10 times or 20 times more followers, but she has no credibility because it doesn’t mean that she shows the product that’s her, the follower will trust her. They will trust more than the people who have more creditability. So, which… When we chose a KOL, we – exposure or number of followers, is not enough.
The creditability the times they have been there being also one factor, and what we also see it’s like – the community of the followers, so how many people engage? What is the quality of the followers that engage? Are these people buyers, because you can have some kind of MR. Bags, for example, his number of followers is millions, something like this, but they are really quality followers why because these people are active buyers, they are the people in luxury. So, these people, these KOL go to every fashion show, meet people, exchanges WeChat, is on Weibo, people following and you speak about luxury for a long, long time.
So, you have some stars who have one hundred times more followers than him, doesn’t mean that they have a quality of luxury buyers. So we need to think about what the target follow, what the target trusts and based on that we try to get the different kind of KOL’s influencers, based basically on the target, and sometimes as we say, we can target a lot of me- core KOL, so me-core KOL is like somebody that is a real influencer, walking in luxury, walking in a hotel, walking in this walking in that, and these people may have 10,000 followers right. You may think it’s not allowed, but if you want to sell a luxury bag may be these people post on Weibo it will cost nothing or maybe a gift – but these people because he works in a luxury hotel for ten years he has met 20,000 or 50,000 porta, sure customer.
Matthieu David: And people added him directly on WeChat because it was easier to communicate with him.
Olivier Vérot: Exactly because this customer trusts this lady, because this lady is already in this structure and she already talked to these people for long, long time, So it can be really smart for some companies to not only focus on the big one but focus on a lot of small influencers to reach the good people. There is also a number of factors that we see with KOL in China, it is like first time the one consumer sees the brand they will maybe not buy, but the second time they see another friend of them try the brand, they will think about it, The third time they will feel, oh this brand is kind of popular and is kind of cool, and the four and the five one and sixth one who buys it, so basically is the more KOL and influencer you had in the bit of time, the more the target thinks that this product is popular and the more it’s going well. I will just give you an example we have worked for a Spanish brand, and we have done massive KOL operations for two months, and the result had been really, really good. I think we had three posts itself on TMall within one month because all the influencers in cosmetic for almost three months speak about this. So, you have wider than 50 influencers in cosmetics, so basically, everybody will speak about the brand and try the brand one by one. So, people will think that okay, I need to try this bit.
Matthieu David: Very interesting so there is a question about intensity of the influencers in a short period of time, and once it’s done, then it’s about retaining and making them loyal which is the work of the brand to keep contacting the client once they have already bought the product.
Olivier Vérot: Exactly so make them loyal, it’s a bit in China – It’s very hard to make a Chinese customer loyal, or I would like to say it depends on the type of customer. So Chinese customer is really open to trying new things; it’s very good for the new entry brands. And if you want to make them loyal, basically it’s about a certain age or certain kind of customer that doesn’t want to try a lot of things. Let me give you an example, there is a girl between 18 years old to maybe 30, she would like to try a lot of different brands, but after 30 years old to maybe 50 she doesn’t have time to think so that she will come back to the habit. So, to get a consumer who is more mature, it takes more effort, it takes more time, but they will be more loyal. And a younger customer in their consumer they would like to try a little different thing, and they will never be loyal because they will always want to try new things and they will at times, they have a circle of friends who is basically be the same. So they would be loyal to an offer, loyal to one thing but not really loyal to a brand until a certain time of maturity and after a certain age or certain maturity, of course, they will become more loyal because when you get more mature you just get used to one, two or three product that you have so I think it’s made up of type of consumer in China the loyalty.
Matthieu David: You talked about, in a way which was nearly a concept like a target trust, the trust factor that those KOL can have. In some way that refers in my mind to software’s like Moz, like Similar Web, like all those software’s which are helping us to do advertising and do marketing online on Google in the west. Do you have software’s which help you to do that or it’s manual?
Olivier Vérot: We don’t have – we have a lot of different software’s which is not really good, we have software to calculate the fake click, we have software to calculate if there is fraud we have software for the attack, but it’s very segmented and there is also a big advertising platform or display platform that develops that one software in us that basically by buying them, you’re also buying their software to get a better and more accurate company.
Matthieu David: So, you are not using software’s – KOL ranking software and those kinds of software?
Olivier Vérot: But the problems that we have with this kind of software’s is it can help, but nothing is better than human for that. We think, because if you want to identify – if the influencers provide good content. If there are real people, you really need to have very, very smart software. Today there is a lot of KOL who are fake. 90% of KOL in China are fake actually.
Matthieu David: What do you mean by fake do you mean that they fake the clicks?
Olivier Vérot: Fake followers, fake like fake share, fake everything. So, you have some kind of KOL in China in three months they get two-three million of followers, so if you have this software which analyze the followers, who analyze the interactions, it will be very good because everything is fake. You can tell me like ok maybe all these 2 million followers, they may be some real, but maybe not. May not even one.
So, you have a lot of companies that are developing KOL by KOL by KOL, and I think this kind of companies understand the software pretty well and provide how to fix stuff. But a human, usually a well-tried human, need to basically to check what the KOL is? When has it been created? If somebody else speaks about this influencer outside of the Weibo, out of the others, or what is original or what is the case study or what brands he has worked with before, or you know like going a little bit deeper, and even like check the quality of the content. It will be better – we have tried a lot of a different kind of software today, I think once or twice it will be good if the brand or the users basically, as the people who pay can rank them, but it will always be very complicated because if I am a brand or if are – we have a lot of good KOLs in China we don’t want to share them to the other, because we know they are good right? And they KOL who are not so good, but we can give them a high score because we want the others to use them and waste their money.
Olivier Vérot: There is some, but they are not as good as them. We are using software – I forget the name for calculating the position on Baidu, but it does not analyze everything, there is also another one called China AZ, that basically the number one software for SEO guys in China. So they are checking more the on-site page basically, in the past there is also another software developed by SEO-AZ I think…SEO-AZ I think it’s the name of this one, so it’s kind of like more community of SEO guys that are developing their own software but never have been really big and never have been really commercial.
Matthieu David: So still it’s not at a level – at the same level but still it exists in a very different way, that’s what you are saying?
Olivier Vérot: Exactly. What you need to understand about the software in China also it’s not as developed as it’s in the west, because in the west company used to pay software for the decrease in cost, decrease in a lot of things but China, it’s not that developed. They are thinking more about hack the software or get this software in another way or just like this, so the software industry is not really developed, and people don’t even pay for the software. So everybody in the west pay for Whirl or pay for the other one, it just kind of like a habit, but in China nobody pays for that, so they expect everything you get free, or it is for free, they can develop it, but it’s difficult to have – and even with premium, at the beginning you get it for free and you have different version for pay, so you can try SEMrush for free and if it’s good thereafter you can pay for the first version, the second version, but you need to pay a certain amount of money every month, but in China it’s kinda difficult.
Matthieu David: Talking about new technology in order to target consumers. Alibaba has talked about a kind of unique ID where they can target the same person on all their platform. Have you heard about this technology and what’s your experience with it?
Olivier Vérot: Yes, we have heard about this technology and actually like – they do it before with Alimama. So Alimama it’s kind of the ad’s platform for Alibaba so that you can target the people based on the different ecosystem of Alibaba, Youku or Weibo or all the website links to Alibaba and Taobao of course. So they are already using that for quite a long time, so I think they rebrand it, they change it a little a bit but it was already explained before, it was rarely used, and it brings quite a good result for Taobao. So, when you are on Taobao or when you are on TMall, you have a different kind of option for advertising, so you have the search in China when you advertise, you have the banners inside of the platforms.
And you have basically the targeting or retargeting which is outside of the platforms, and Alimama operates it, and it targets the users, it targets the people when they go to the – it targets basically the interest. So, a lot of Chinese people, if they like fashion, for example, they will appear a lot of ads – display ads a little bit everywhere where they would search, and links directly to the Taobao store, so it already exists for a couple of years. And I am not surprised; it makes sense actually – it makes sense to cross all the different platforms of Alibaba and to have a new product. I have heard about this from Alibaba, and it’s called uni-marketing something like this or they are trying to broadcast…
Matthieu David: It’s like UMI something – like UNI something – U MI something…
Olivier Vérot: Uni marketing something like this, so yes that’s what they tried to do, they tried to do a little bit – I think there is a big opportunity for this kind of platform to really do something good for us as a marketer, we kind of take turns – we always wait a little bit. We let them try, see what’s the result – yes or no, because a lot of platforms has decided that we know that the people who are the first to try they will fail and there will be a lot of waste. So, until it works, as a digital marketing agency in China, we will advise this to our clients until not we don’t take the risk.
Matthieu David: You have talked about the new platform Toutiao, but you have not talked about Douyin.?
Olivier Vérot: Yes, Toutiao is Douyin, it’s Byte Dance, the same group.
Matthieu David: It’s the same company, but Douyin is focusing on video, Toutiao is focusing on the content, as far as I understand.
Olivier Vérot: Yes, exactly.
Matthieu David: So you talked about – actually that’s the thing which is even more interesting you mentioned Toutiao, but you didn’t mention Douyin, which is within the same company and which is actually, the app that everyone is talking about, moreover because it’s big in the west – it’s TikTok as well. So, it seems that it’s difficult to leverage in terms of marketing. As a digital marketing agency in China, what’s your experience with it?
Olivier Vérot: As we know, for every platform there is a kind of launch, after they increase and after there is a maturity, and during the maturity the platform start to monetize and give opportunity for the brands to advertise in it and today Douyin, it’s increasing very fast, we’re all making money we have all opportunity for the brands to pay all, the ticket is very high and not very effective, so it was a platform for influencers – so basically a little bit like YouTube – you pay the guys for the influencers, this kind of things, but the system, the metric to click – the system to link to another one was really not developed and I believe personally in these platforms because I think there is a lot of users and it’s really interesting and they put some links to their Taobao store, they put some links to our site, so it’s a little bit better but the system of bidding, everything is not mature now, but I believe it would be in the future because they belong to Toutiao, so it’s the same group they just need to lubricate the system and do it.
But today they are focused on attracting more influencers to the platform and make it not as commercial. In the platform, you need to understand that to expand, you don’t need to be very commercial. If you are every commercial, users are leaving. So, they need to attract the early adopters; they need to attract all those people that are creating amazing contents on the platforms. They basically need to keep them, they need to create to attract all the people who will follow them, it will keep increasing, and after one moment they are their peak so they will try to monetize their traffic, these people and when they monetize, when the brand need to pay, when you have more ads, a lot of users will be leaving the platform they will go to other platforms, and basically you become more mature, and when you become more mature it’s opportunity for the brand to advertise. And this system for advertising would be okay.
So, the early stage of a platform is not that good for brands to go there – you need to have a time when the platform decided to become commercial, like Little Red Book. Little Red Book for 2 -3 years it was so- so and until last year they opened the e-commerce part, so when they opened the e-commerce part, it was a good time to advertise.
Matthieu David: Yes, I feel that’s very common. WeChat has been very expensive for advertising on for a long time, and it’s still expensive, and I believe you have the same experience with Douyin. Thank you very much, Olivier. That’s very descriptive and when we began you asked me if how long it should last, and I told you between thirty minutes to one hour, and we are I think very close to one hour even exceeding one hour, the end of this episode of our China podcast, China Paradigms. I don’t want to take too much of your time on a Sunday. Thank you very much maybe there is something you would like to add?
Olivier Vérot: No, no thank you, Matthieu, for interviewing me in China Paradigms and wish a great Sunday.
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.
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