Drivers for Digital Marketing

Written By Daniel on April 12, 2007 at 8:00 am | In uncategorized

Increasingly tech-savvy Chinese consumers offer new advertising and revenue options

Trend Description

Some of us might not realize it, but the virtual worlds that we might dismiss as frivolous games actually have a lot to teach us about ourselves and other people. Online games, for instance, are becoming a regular meeting place for people from different cultures, boasting thriving virtual economies that are having a growing impact on the real world, and offering excellent opportunities for marketing and brand promotion. The rapidly expanding Chinese online market is proving an increasingly attractive proposition for companies willing to exploit the digital revolution.

China experienced a 47% surge in total online spending in 2006, surging to 276.8 billion RMB (US$35.5 billion), according to a survey recently released by the Beijing-based Internet Society of China. Hu Ying-ping, lead researcher at the Society, comments, “The most important trend in 2006 has been the role played by Internet users. They are the driving force behind Internet service applications.”

China’s internet market really took off in 2005 after it reached an 8.5% penetration rate, fuelling acceleration in advertising spending and the diversification of online services. Chinese internet users are now spending an average of 169.57 RMB (US$22) a month online, including payments to online service providers, retailers and game providers. At 4.98 billion RMB (US$638 million), online advertising accounted for a slim 1.8% of total internet market spending in 2006, even less than the 5.96 billion RMB (US$764 million) in online gaming revenues. However, revenues in both sectors dramatically increased, up 51% and 62% respectively over 2005.
Cases

HiPiHi

 

Even though SecondLife’s first “millionaire”, Anshe Chung, is from China, and the western virtual world is attracting the attention of a growing number of Chinese, SL has yet to officially arrive in the Middle Kingdom. However, China now has its very own home-grown rival to SL in the form of HiPiHi.

HiPiHi, founded in Beijing in October 2005, is a privately held company funded by Guangcai Investment Group (GCIG). It is unique in China, and the second company worldwide after SecondLife offering a truly interactive and open-ended experience to online users. The SecondLife-like 3D virtual world has just started a period of beta testing, during which time 100,000 invitees will become the first residents of the HiPiHi world.

Hui Xu, founder and CEO of HiPiHi, was the General Manager of MyWeb China and was nominated as one of the “Top Ten China Internet Heroes” in 1999. He says, “It is absolutely a misunderstanding of the virtual world if people think HiPiHi is a copycat of SecondLife. The virtual world is not just a 3D environment, but a complicated social system including the property policy, financial policy etc. HiPiHi is born in China, we really hope it can embrace our own culture.”
Zhouma 101

 

Zhouma 101 is a mobile gaming experience designed to focus attention on Taipei 101, ¬currently the world’s highest skyscraper, and capable of multi-tiered rotating advertisements. Every Friday evening, citizens of Taipei who own a camera phone can download the application by dialing a number displayed at the top of the Taipei 101 building. Players then receive an SMS giving them details of a subject to photograph. Participants are allowed 5 minutes to shoot and send their pictures, the results are displayed on the building’s giant screens, and the prizewinners chosen through interactive voting.

Zhouma 101 a fun mobile game Taiwan’s digital youth, and also a great way to turn Taipei 101 an interactive billboard for companies to launch weekly advertising campaigns. As Taipei is well covered by 3G and Wi-Fi networks, Zhouma 101 is signifies a simple beginning for what is expected to become an increasingly sophisticated gamevertising market. Further mobile gaming experiences are expected to be ready in time for next year’s Beijing Olympics.

The origins of Zhouma 101 can be traced back to the Chaos Computer Club in Berlin. From September 2001 to February 2002, the Club transformed an office building in Berlin’s Alexanderplatz using interactive computer displays, in a project titled “Blinkenlights”. Using mobile phones and special downloaded applications project participants could play ping-pong and create custom animations on the side of the building.

 

Trend Impact

In-game advertising is on the rise, and Microsoft has upped the ante by buying Massive Inc. for its in-game advertising network, for a rumored US$200 million to US$400 million. This will now allow it to leverage ads for its games on Xbox Live, as well as games on the PC, mobile and other platforms. In fact, Microsoft can now offer the Massive in-game advertising forum to Sony and Nintendo for ads on their consoles if its rivals choose to bite.

According to the Yankee Group, in-game advertising revenue will reach US$732 million by 2010. In a news release, the Yankee Group recently said, “In a highly fragmented media environment, Yankee Group finds that video games present a promising window of opportunity as a growing advertising medium. As television advertising loses its effectiveness, advertisers must reach a largely segmented audience with discerning tastes.”

Developments in technology are re-defining the way companies advertise their products and collect revenue. The new markets that interactive games and cyberworlds are spawning are fast translating into real-world money. Hooked gamers are captive audiences, perfect targets for brand promotion and willing to spend increasing sums on “virtual” items. Companies that ignore the increasingly digital lifestyle of their consumers do so at their peril, especially in the increasingly tech-savvy Chinese market.

Links
www.redherring.com
www.blogs.ldjjj.com/category/education/
www.blinkenlights.de