Digital branding price catalogue for Chinese market

Executive summary

For Canadian companies, especially those in B2C sectors, China’s ecommerce market represents both opportunities and challenges. To gain market share in China’s extremely competitive ecommerce ecosystem, an effective digital branding strategy with sufficient marketing budget is indispensable. Marketing in China is much more expensive than in Canada and the return on investment is lower.

In order to provide Canadian companies with a basic overview of costs associated with China’s various major social and ecommerce channels, as well as the cost of working with social media influencers, the following report “Digital Branding Price Catalogue” was prepared by an international marketing agency located in China.

There are a few important things to keep in mind:

• Digital channels in China increasingly cover all areas; ecommerce (both cross-border and domestic), livestreaming, user-led discussion forums, brand-led areas and accounts, text/image/short & long video content and more. Your total costs will depend on how you plan to use certain channels together.
• Your product category has a significant impact on costs which include ecommerce store deposits, annual fees and proportion of sales to invest in marketing. Categories like Medical Products, Fresh Food and Mother & Baby are typically more expensive.
• Influencers cover many platforms, and so your budgeting should factor this in, given that a campaign or initiative could have benefit across many touchpoints.
• It is cheap to get started, but expensive to make a difference. Throughout the report there are cost guidelines for a ‘basic presence’ compared to a ‘mid-market performance’. A common theme is the relatively inexpensive way to get set up; many social platforms require a few hours for applications, a $130 fee and some of your key content translated. Costs rise dramatically to reach ‘mid-market performance’.
• All prices quoted in this document are in $CAD at a ratio of 1 CAD = 5 CNY for the purpose of this report.

How Much Should Brands Spend on Marketing?

Your category will dictate a lot about how much and where you invest in marketing. However, these general guidelines from brands using Tmall as their core

sales channel provide a guide.

Brands of varying maturity, scale and category on average spend 33% of net Tmall GMV (Gross Merchandising Value) on marketing. 16% on social media and 17% on Tmall.

You should expect to spend more on social media marketing if your brand:

• has lower monthly sales
• has lower awareness
• plans to grow faster
• has a higher price point or premium

It is recommended that brands spend 100% of Tmall sales on marketing during the first 3 to 6 months of Tmall launch.

Brands tend to spend more on marketing within Tmall, not only due to the efficacy and widespread usage of the platform, but also because the return on ad spending is easier to measure.

A China market entry strategy should be a 2 to 3 year plan.  Unless you have high product margins, most brands will struggle to break even if not selling $1m in their first year

Ecommerce Platform Guideline Annual Costs ($CAD)

Annual Social Media Platform Cost Guidelines ($CAD)

Search, Information, Website, & Influencer Costs ($CAD)

Participating in Ecommerce Festivals

There are no set costs for participating in certain ecommerce festivals, although activities around 618, Singles Day and ‘Goddess Day’ (March 8) will be the most expensive.

Foreign brands in particular schedule their major marketing investment around these times and this makes for high competition.

Here are cost considerations to keep in mind when planning for a major ecommerce festival:

• Ensure stock and logistics are prepared 4 - 6 months in advance; expect an increase in warehousing costs for the period.
• Discounting and Gift-With-Purchase is needed; significant product discounts and free gift with purchase is expected, which could significantly affect your profit margin and may be more strategic as a promotion activity.
• Sales Livestreaming will be your biggest expense. This is now what most hyped-up consumers are looking for: your brand booked in with big livestreamers offering the best discounts in the market. This is where you could be paying $70,000 + 25% commission for a 2 minute slot.
• Traditional advertising is very expensive at this time; domestic brands do not often see big jumps in sales at festivals. They understand it is more sustainable and cost-effective in the long term to build brands without major discounting and expensive campaigns at these times.

To obtain a full PDF copy of the Digital Branding Price Catalogue or for any questions, please contact infocentrechina@international.gc.ca

Disclaimer:

Please note that China has a fast changing digital branding ecosystem and the information provided in this Price Catalogue is for Canadian companies’ reference only. For concrete digital branding action plan and budget estimation, we recommend Canadian companies to consult local professional marketing teams.

The Canadian Trade Commissioner Service in China recommends that readers seek professional advice regarding their particular circumstances. This publication should not be relied on as a substitute for such professional advice. The Government of Canada does not guarantee the accuracy of any of the information contained on this page. Readers should independently verify the accuracy and reliability of the information.