Brands Are Chewing Through Digital Agencies in China

Choosing a digital agency in China is difficult. The right agency could lead to massive success, but the wrong one could waste money, time, and energy. Many brands are struggling to find the right agency. According to a survey by market research agency R3, the average agency relationship in China is only two years and 10 months, 1.5 years shorter than the global average. What exactly is going wrong, and how should brands go about finding the right agency for the job? Do You Even Need a Digital Agency in China? While brands can attempt to fly solo, the nature of the Chinese market makes this very difficult. Some brands underestimate the value that agencies can add. “A lot of digital services appear to be highly commoditized in the eyes of brands,” explained Pablo Mauron, Managing Director China & Partner at Digital Luxury Group (DLG). “Some organizations are under the impression that content creation capabilities are the only requirement for social media.” “But the added value of an agency is that it goes beyond just helping brands during the execution phase. Strategy, planning, integration and execution all require different skill sets – and these skills cannot be found in just a few key individuals. An agency can offer brands many individuals that possess a broad range of skills. These agency individuals would also have the added knowledge of the entire market landscape, thanks to their work across various projects, for various clients.” Jiaqi Luo, marketing strategist at East Media (and a contributor for Jing Daily) emphasized that the rapid pace of change in the China market makes it nearly impossible for brands to keep up on their own. “It's almost a cliché now to say how dynamic and fast-changing the Chinese market is. But the reality is, it is still often underestimated in Europe. Brands need a very competent team entirely dedicated to China marketing, learning its trends, tools, and new practices, because these are changing every day. Often, the agency also plays a role as the brand's educator ensuring they are up-to-date with what's going on in China.” Moreover, anyone familiar with doing business in China knows that relationships are key. A strong agency will have an established network of vendors, media, and platform connections that will help get the job done. Choosing the Right Type of Agency The sheer number of agencies in China can be paralyzing for brands, especially those who aren’t exactly sure what they are looking for. When choosing a China agency there are a number of factors to consider, including size, location, international vs. domestic, the types of services they provide, their track record, and much more. When it comes to agency size, Mauron feels that this doesn’t matter as much as the team working on your account. “Just take for instance, DLG China. With 50 people in our Shanghai office, we are smaller than several big agencies. But our team is 100 percent focused on digital and I don’t know a lot of “big” agencies with a digital team of that size. We are under retainer with all our clients and have clear requirements in terms of the minimum scope of work so as to avoid having teams juggle between too many projects at the same time.” Emanuele Vitale, founder of East Media, added, “Size isn't the real issue here. It’s competency. But in terms of efficiency, a smaller agency is usually better since the communication model is more transparent.” Another common conundrum for brands is whether to choose one agency that can do everything, or work with several agencies that specialize. “This is really a question of perspective,” explained Mauron. “We focus solely on digital and often decline requests for traditional PR services, event production or advertising, for example. Our size and experience allows us to cover the full scope of services in terms of digital communication and social media, e-commerce strategy and social CRM. This could sound very limited in comparison to agencies that “do a bit of everything” but in fact, it already encompasses a lot. Besides, we believe that having such a scope already allows us to cover the digital needs of most luxury brands.” Of course, large international agencies might disagree. Working with an agency that can provide a wide variety of services, from digital, to PR, to experiential, all under one roof, might be better if easier communication and collaboration creates for a more cohesive overall strategy. Location, Location, Location An agency’s location is also another deciding factor for many brands. While the majority of China agencies are located in China, there are a number of agencies with additional offices abroad. Some, such as East Media, are focused on China but work entirely from abroad. For a brand that has a strong China team, choosing an agency based outside of China could be sufficient. Mauron, however, argues that “having offices in both Shanghai and Geneva allows us to be closer to our clients in China and abroad. It also contributes to good synergies and discussions between local offices and headquarters, with many of our clients seeing an added value in DLG being able to bridge and support the communications within their organizations as well.” Another important factor that brands need to consider is the demographics of the agency and the team that they will be working with. In China, there are typically three types of agencies: Local agencies run by local Chinese, local agencies with a foreign founder or CEO, and international agencies. All three of these have extremely different work processes and communication styles. When deciding which type to work with, brands need to consider what role they expect the agency to play. If the brand’s local team has limited understanding of digital marketing in China and the agency will be expected to play an educator role—frequently interacting with the head office outside of China—then an international agency or a local agency with a foreign CEO is likely the best choice, as they will have stronger cross-cultural understanding and communication skills. Conversely, if a brand has a strong in-house China digital team that is primarily looking for support, then a local Chinese agency might work best. A Starting Point Recognizing that choosing an agency is a huge pain point for many of the brands they work with, KAWO , a WeChat and Weibo management platform headquartered in Shanghai, spent six months compiling a directory of over 200 agencies that provide China digital marketing services for global brands. “It’s a big pain point for us too,” shared KAWO co-founder Alex Duncan. “As a pure software company we depend on agencies to support our clients. The number one question we were getting from customers was ‘what agency should I work with?’ ” While the newly released directory doesn’t completely solve the problem, it serves as a useful starting point, enabling brands to filter through agencies based on their industry, services, and location, something that they were unable to do in the past. Besides using the directory, what other advice does Alex give his clients? “Aside from finding an agency with relevant industry expertise we think chemistry is really important. You need to find a team you can trust and work closely with as partners.”

Brands Are Chewing Through Digital Agencies in China

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Published April 10, 2018

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Brands Are Chewing Through Digital Agencies in China