Demystifying The Hot Social Commerce Platform Little Red Book

There are a lot of digital channels in China today for brands to choose from, so deciding which to focus on can become a primary task for marketing departments. One that popped up on the radar fairly recently is the social commerce platform Little Red Book. Founded in 2013, the shopping app combines the obsessive visual layout of Instagram with the in-depth and authentic user reviews of Amazon. It has quickly amassed a sizable amount of followers — 80 million monthly active users now. And even though this number is relatively small compared to other social platforms, Little Red Book’s users have much more power to influence purchasing decisions, which is why it has convinced major luxury brands like Louis Vuitton to launch official accounts. On July 10, luxury brand and digital agency executives gathered in New York City for an early morning discussion about the platform. Leading the panel was moderator Yiling Pan, senior editor of Jing Daily; Kim Leitzes, CEO of China’s premier influencer marketing platform Parklu; and Kristina Li a.k.a. Liwaner, a KOL with over 1 million followers on Red who shared her content strategy and how to spot fake fans. Below we’ve summarized all the burning questions about Little Red Book that brands want to know: What’s the cost of working with a Red KOL? “A year ago, to work with a micro KOL of less than 10K followers, was about 1000 RMB [150],” Parklu’s Leitzes recalled, “but that’s rapidly gone over 10,000 [1500].” Red KOL Kristina divulged that she charges 40-55K RMB (5,825 - 8,000) for a post, however, it’s not uncommon for a KOL to send different prices to different brands, as they often charge less to work with a brand they love. The drastic increase in pricing partially has to do with the soaring popularity of the platform. Kristina started blogging on Red in 2017 and got a sponsored opportunity from Estée Lauder within a year. But as the platform grew, more KOLs joined and the competition for ads got more intense. Wanting to keep content trustworthy and organic, Red became strict about controlling the platform’s overall environment and rolled out a set of rules. For example, KOLs now have to hit a certain amount of followers and monthly traffic to be able to accept ads. And for every post that’s sponsored, a KOL has to create 4 organic posts. This pushes them into choosing the highest-priced sponsored deals they can get. Content preferences on the app have changed as well. Quality short videos and posts that mention more than one brand get greater visibility. Those changes are making sponsored posts much more expensive but also make them higher in quality. What's the ROI (return on investment) for working with KOLs on Red? In terms of actual sales, brands can link their Red page to Tmall (Tmall’s parent company, Alibaba, invested in Little Red Book in 2018). But since sales happen at a number of places — whether on Tmall or via overseas Daigous — it’s hard to track the exact sales journey back to Red. A lot of marketing budget is split between “branding” and “performance,” so a good way to measure overall awareness is to look at the brand’s share of voice on Red against their main competitors as well as the number of followers from sponsored content vs. organic content that’s earned. How to spot fake fans? Spotting faking fans can be easy, according to Kristina. There are three metrics on Red: likes, collects, and comments. If a post has few comments but a lot of likes, it’s problematic and is likely a fake account. The same goes for accounts where likes only come from other KOLs. And just like any other social platform, there are also group chats on Red that do “likes for likes” among fans and KOLs, helping to create fake engagement numbers. User-generated video is king, but what takes? On almost all social media platforms in China, short-video is perhaps the most popular format for grabbing oversaturated user attention — and Red is no exception. Kristina revealed that 70 percent of her content is now video-based, and she’s seen a visible traffic boost because of it. But for luxury brands used to posting high-production-value videos, properly controlling user-generated video content can be hard. “At the end of the day, if it’s user-generated content that’s in the brand’s favor, it’s not something you are going to police,” said Leitzes. “But as a brand, you always have to ask what’s the content opportunity you can create for the KOL?” On Red, there are a lot of opportunities for luxury brands to create content. According to data from Parklu, the top 20 luxury brands in 2018 focused a lot of their content on offline events such as fashion week, pop-up events, and special product launches. In the end, it's up for a brand to decide what kind of content they want to engage their fans with on Red and if it fits as part of their larger digital strategy.

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Demystifying The Hot Social Commerce Platform Little Red Book