Video in China – Mobile and Beyond

Online video viewership in China is rapidly moving into the mobile space – and marketers need to start preparing.

Since the advent of the moving picture, video has been a key engagement channel for advertisers. Even in the digital world the importance of video has not lessened. In fact, the boom of online video in China is well documented. It is only the manner of how we watch video that has changed, transitioning from one screen to another.

The Next Generation of Video Consumption

As with all things digital, change is swift and constant. The rise of mobile – in June 2014, China’s mobile netizens finally surpassed their desktop and laptop counterparts – has contributed to a shift in online video viewing habits.

While PC viewership has remained relatively stable, in the past 18 months alone, mobile online video viewership has grown by 130 million.

video-beyond-pc-1Data Source: iUserTracker, June, 2014 

This growth is evidenced in the rise of mobile traffic to online video sites. In the past two years, mobile traffic to online video sites in China has grown by 10 times and now contributes to 33 percent of online video traffic. In comparison, PC traffic to online video sites has remained stable for the past three years at 28 trillion page views.

video-beyond-pc-2-2Data Source: iUserTracker, June, 2014 

Already, 31 percent of Chinese online video service provider YouKu’s monthly audience comes from mobile. IQiyi, its nearest competitor, is not far behind, with mobile app users contributing to 23 percent of its audience. However, mobile users are contributing a significant amount to these sites’ traffic. YouKu’s mobile online television (OTV) viewers alone are contributing to 54 percent of their page views. PPS’s mobile audience, which consist of 46 percent of their users, drives 88 percent of their traffic. In addition to surpassing or matching PC viewers in page views, for the first time this year mobile users matched the 46 minutes per day spent watching videos of their PC counterparts.

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video-beyond-pc-4-2
Data Source: iUserTracker, June, 2014 

Advertiser Behavior Lagging While Opportunity Abounds

This growth in mobile online TV viewing has mainly been spurred on by higher-income earners aged 36 and above. The mobile OTV audience aged 36+ has grown by 70 percent to 56 million since December 2013; those with incomes higher than RMB 5,000 grew by 74 percent to reach 80 million. To put that in perspective, only 15 percent of PC OTV viewers earn a personal income of RMB 5,000 compared to 30 percent of mobile OTV viewers.

Growth has arisen from this audience as they have both the means and the interest to watch online video on their mobiles.

Despite the drop in smartphone prices in China, the prohibitive pricing of data and limited 4G penetration across the country have hampered the mass adoption of mobile OTV viewership.

video-beyond-pc-5

Source: mUserTracker, Dec 2013 & June 2014 Data 

video-beyond-pc-6-2

Source: iUserTracker& & mUserTracker, June 2014 

It is clear that mobile OTV presents an opportunity for brands, especially those targeting higher-income audiences. However, spending in this space still lags — total spends in mobile online TV is only 9 percent of the online video market despite the fact mobile online video traffic has reached 33 percent. This is due to several reasons.

Firstly, most sites charge a premium for advertising on their mobile channels. Not only that, but accountability has previously been poor with little means to measure performance on the channel. This issue in particular limits investment into mobile online TV amongst FMCG clients that are reliant on data and reluctant to spend where they cannot measure.

It is not all bleak: mobile app spending has increased since last year and tracking agencies have just launched software development kit (SDK) cookies to measure performance on mobiles.

video-beyond-pc-7-2
Data Source: iAdTracker, June, 2014 

The Future and the Challenges

It goes without saying that the Chinese online mobile TV market will continue to grow in the next few years. Growth will be accelerated as more online video sites enter the mobile market or focus on their mobile offerings. Along with this increase of mobile online TV users and traffic, investment in the channel will also rise. This growth, however, will be reliant on tracking vendors rolling out measurement via cookies on mobile devices to ensure accountability.

More robust mobile tracking will not only enable a boom in programmatic buying on mobile OTV, but will also help deliver integrated consumer engagement. Imagine a world where a consumer views a skincare ad on their mobile near a street coffee shop, then walks past a pharmacy and gets a prompt with a special offer just for them in-store.

Online viewership will also not only be constrained to PC and mobile. With rising shipments of Smart TV, audiences will be more eager to watch more video content on TV screens. Smart TV viewership will grow — particularly in higher-income households, when Chinese government authorities have more flexibility in regulations for the Internet TV market.

As with mobile online TV, ad spending on the channel will remain small until threshold reach is achieved and measurement systems put in place. As online TV viewing fragments across PC, mobile, and Smart TV, the key challenge for advertisers will be how to plan and measure across these channels.

The need for a single source of data for online video is and will be paramount. The challenge for planners, brands, and media owners moving forward is not only how to measure, but how to integrate data across all digital TV devices and to plan holistic campaigns across all three devices ensuring we reach consumers where they are.

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