Virtual is Real

4 Major Challenges of Social Gaming Marketing
By Steven Hu on 22-Jun-11, 11:30 in Advertising, Brand, Digital, Marketing, Media |

There are more than 90 million young people playing social games in China.  The vast majority of them are city dwellers in tier-1 and tier-2 cities.  About 60% of them have either college or above degrees.  On average, one third of them play social games twice or more per day and 60% of them spend more than half an hour on social gaming on a daily basis.

As a result, It is not a question of whether advertisers, especially those youth brands, should involve social gaming in their marketing matrix or not.  Rather, it’s a question of how to do it right.

Below are the 4 major challenges that advertisers and their agencies face in today’s China social gaming market:

1. Too many social games to choose from. There are about 250 social games available in the China market and new ones are being added on a weekly basis.

2. Too many social networking service (SNS) websites to choose from. There are about 12-15 major SNS websites available in China, such as RenRen, KaiXin001, Qzone, PengYou, ManYou platform, China Mobile’s Feixin/139.com, Sohu’s Bai Society, Taobao’s JiangHu, Baidu’s Apps.hi, just to name a few, and still another 10 or so relatively smaller SNS websites.  The market share of the biggest one among them is less than 1/3.  So, it is a highly fragmented market in terms of the SNS arena in China.

3. Too many advertising formats to choose from when it comes to social gaming marketing. Should advertisers choose in-game product placements, or in-game banner, or around-game banner, or in-game/on-game videos, or customized gaming maps/characters/story lines, or dedicated advergaming apps?  All these formats have been adopted by various advertisers, but is there a standardized ad format/service to cover these all?  Also, what formats among them actually deliver the best ROI?  It’s a completely social-gaming-specific question.

4. What are the right yardsticks to best measure the results of social-gaming advertising? Some of the current yardsticks are not only inaccurate but totally irrelevant as well, such as PV, when it comes to social gaming-related marketing.  Unfortunately, many advertisers and agencies have not been equipped with the latest market and technical intelligence relevant to social gaming yet.

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RenRen proves what is the Holy Grail of China SNS sites
By Steven Hu on 17-May-11, 16:10 in Advertising, Digital, Media |

About one year ago, I blogged at CampaignAsia about “The Holy Grail of SNS in China: Advertising or Gaming/Virtual Items?” arguing that “Due to the fundamental differences between netizens in China and in the US in terms of their educational backgrounds, their main purposes of using internet, the overall environment for innovation, the sophistication of using internet, etc, Facebook is a different species from those SNS sites in China. SNS sites in China are gaming businesses with an SNS skin.”

Early this month, RenRen.com, the biggest SNS website in China, got listed on NYSE.  Now, the financials are in public and it reads as the following: “42% of revenues are from advertising 45% from online games. The remainder from e-commerce, and other sources. One online multi-player game alone (Tianshu Qitan) accounted for 14% of 2010 revenues.”  It not only proves everything that I have been predicting but, more importantly, it once again proves that there is always uniqueness in the Chinese market and the way Chinese do business.

This truth will also apply to how advertising is being and will be conducted in China targeting the huge number of Chinese social gamers (more than 90 million at the end of 2009 dwelling in tier 1 and tier 2 cities of China and growing fast) highly coveted by major advertisers.  It will surely be different from the ways that are practised on Facebook, yes, again!  I will discuss this in more details in upcoming blogs.

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Games VS Game-like Websites
By Steven Hu on 10-Aug-10, 19:44 in Advertising, Brand, Digital, Marketing |

As more and more marketers realize gaming is the mainstream media for them to reach young people in China, it is becoming commonplace to find a brand site or the interactive section of the marketer’s website presented as a gaming or virtual world site. However, more than 90% of such sites have nothing to do with real gaming. They are normal websites with just a game look on the surface.

Why does this ever matter any way? Because chances are good that you have paid much higher than you should have for such a site, a thing that looks like a game but actually is a normal website.

It is easy and cheap to build a website with only a game look because most website technologies have become commodities for many years already which way too many vendors can offer in the market. Such quasi game websites look very attractive and gaming-oriented at the first look, but when you go play it, there is no game play at all, no potential and mechanism for users to level up, no true interactions among users or for them with computer AI of some kind, etc. In essence, they are still just normal menu-and-webpages-based websites and the only difference is the menu has become very attractive animations or some excerpts of flash-based virtual world as opposed to words or small gif graphics as on traditional webpages. However, such a thing is only skin deep. It is very easy for users to see through this marketing gimmick: just clicking on the different parts of the attractive game-like interface. Do they simply link you to a corporate blog, or a normal brand-sponsored picture uploading and PK web function, or a pop up window in which the brand’s TVCs are being played, or a brand-sponsored BBS, etc? Any difference from those websites that are based on straightforward menus to linking different webpages?

As a result, such digital applications on the surface don’t solve the key issue a normal brand site has always failed to solve: making users keep coming back to it. It is one thing to attract users to your websites but it is quite another to keep them on the sites.

A true game website which engages its targeted users and therefore delivers user adhesiveness or even addiction to the digital asset requires much more expertise and in-depth appreciation on gaming and gaming-related interactive technologies.

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The Holy Grail of SNS in China: Advertising or Gaming/Virtual Items?
By Steven Hu on 23-Jun-10, 14:45 in Advertising, Digital, Media |

The galloping SNS industry in China has delayed its players, investors and observers in making the fundamental judgment on whether advertising or gaming/virtual items selling is the future. Those who make the right decision ahead of their competitors are likely to win the war of SNS in China.

My prediction is clear and simple: in China, the answer is the gaming/virtual items selling in the long run.

Due to the fundamental differences between netizens in China and in the US in terms of their educational backgrounds, their main purposes of using internet, the overall environment for innovation, the sophistication of using internet, etc, Facebook is a different species from those SNS sites in China. SNS sites in China are gaming businesses with an SNS skin.

Another major element highly relevant to this situation is the fact that the online gaming industry has been booming more than 8 years ahead of SNS in China and in a much more successful and bigger way. There have been about 9 overseas-listed online gaming companies or companies with online gaming as its core business over the past decade or so. There has been none such company in the SNS or web 2.0 arena. The online gaming was a USD 4 billion business in China in 2009 with close to 70 million heavy users more than half of which are paying ones.

SNS industry is at a huge advantage in learning from this booming online game industry in China than its counterparts in the US market because the console game market (which is by large all about unconnected games) has been greatly eclipsing the online game market (which is all about connected games) in the U.S. (about USD 1.8 billion in the US in 2009). There are much more business wisdom, successful models, professional talents, and industry success and failure stories in the online gaming business for Chinese SNS sites to tap into than those for its US counterparts, not to mention the huge amount of existing users that have already had the strong habit of paying for gaming online.

Even for Facebook, whether its ultimate revenue resource remains in end users via gaming/virtual item sales or in advertising or some kind of blend is still too early to tell. However, for SNS in China, it’s the gaming/virtual item sales that will be the Holy Grail.

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