Why is my office so cold?
While I remain an avowed skeptic about the advertising as it is currently practiced, I am increasingly convinced that it has a future only if it can evolve beyond a mass-media based craft. I suspect that will mean that advertising (or whatever it becomes) will be as intertwined with the Internet over the coming decades as it has been with television over the past half century.
I have talked about how the largest barrier to that taking place is our own attitudes. But it is by no means the only major issue that confronts the digital vanguard of the ad industry.
In China, for example, investments in digital advertising are still hampered by the limited penetration of the Internet in China. Yes, it is hard to keep a straight face while saying that, when we have over 350 million people online here in Fair Cathay. But as with most such numbers, it is what they hide that is important.
The Underside of the Iceberg
Even if you accept the 350 million user statistic, that means that some 1.05 billion people, or around 3/4 of China's population, has no regular access to online services. Now, while it is tempting to dismiss this mass of people as "the bottom of the pyramid," statistics belie that approach. CNNIC's own demographics note that most of the people who spend their time online and those who get buying information online remain under 30, and the majority of those under 22.
So the Internet in China is not "skimming the top demographic," but instead - for the time being at least - is taking a big bite out of the middle, missing out not only on the unconnected masses, but most of China's affluent older adults as well. With digital marketing, we are only touching a fraction of the higher-income market.
How Many Users, Really?
As near as I can tell, there are probably only 150 million installed computers in China with Internet access. That means that at least between 50% and 60% of China's online users gain access through a shared computer, i.e., they're not full-time-access users like most are in the U.S.
As marketers (or honest statisticians) we should really be measuring Internet users not in number of accounts, but by using a multiplier that takes into account actual time spent online per week versus a global average. Even the TV guys agree - you don't measure number of people who watch TV: you measure people watching times time spent watching which programs.
What's Your Line
We can all think of companies who would be happy to have an in with China's online population. But for an awful lot of firms, that market is simply not enough.
Many companies - not only those making soap, fizzy drinks, and popularly priced foods, but also companies like Dell, HP, and Samsung - are focused on expanding their business beyond their current markets, often in the more developed coastal regions. Emblematic of this effort is the widespread push into third-, fourth-, fifth-, and sixth-tier cities, and even into China's villages.
Other companies are seeking to broaden the population that can buy their products, or "total addressable market (TAM)" in the trade vernacular, diving deeper into the geographic markets where they already have presence and some acceptance.
For those challenges, digital media have yet to craft an acceptable solution in China. Until they do so - and until the issues of penetration and greater access to terminals are addressed, traditional media will continue to dominate the thinking of most of China's marketers, and rightly so.
If You're Past the Billion Customer Thing...
Where the Internet remains attractive, though, is for those companies who want to start cultivating relationships with these young people in advance of their prosperity, or who want to start experimenting with online tools in the hopes of building proficiency. And naturally, if you are specifically targeting the kinds of people who are already online, pushing even a disproportionate spend over to digital makes sense.
All of this comes down to some core principles when dealing with media in China:
• We need to use care before tossing Chinese newspapers into the same cauldron as US or European broadsheets. They may be down, but they're still critically important.
• We need to recognize that the importance of Digital is going to vary heavily from company to company, sector to sector, and that this will be the case for a few years yet.
• We need to recognize that the Digital Divide is a marketing problem, and that digital inclusion redounds to the benefit of marketers, not just computer manufacturers.
• We need to recognize that the desktop and the laptop will not be the primary nexus of digital marketing in China: it will be the mobile Internet that really helps China bridge the digital divide and will turn digital into a powerful medium for marketing.