December 11, 2008

Interview: SinoTech Group CEO, Dr Mathew McDougall: The Future of Digital Marketing in China

By David Temple

Digital Marketing is undergoing a period of intense change in China, and 2008 has marked a coming of age for the digital advertising industry in China as Advertisers and Marketers across the country and the region embraced the Internet and the power to connect with consumers through interactive, engaging new online ad formats. 

This month, I speak with Dr Mathew McDougall, Group CEO of the SinoTech Group in Beijing, Greater China, to find out what the major online advertising trends will be in 2009 and how marketers throughout the China and the region can tap the vast potential of the online medium.  

David Temple: Tell me something about yourself and your position in the company. What were you doing before starting SinoTech? What are some of the other milestones in your life?

Dr Mathew McDougall:  Well, I am the CEO of the SinoTech Group; I take on a very hand on approach in the company and try to have a good understanding of all aspects in the organization.  I get very energized by being able to work directly with the clients and get a view of what they see as important for them in digital advertising. Before founding SinoTech, I had spent 4 years in China establishing another online media company that was focused on developing tools for optimizing the revenues for the website Publisher.

The most important milestone in my life, aside from my business, is my family. It’s amazing how this effects ones direction in life and ones goals and determination. I am married to a Chinese woman and now consider China my home.

David Temple: Please provide us a brief history of your company?

Dr Mathew McDougall:  The SinoTech Group consists of three core business areas: Media Tech & Consulting, Search & Social, Creative & Production. Although these groups have different focus, SinoTech Group aims to provide a complete set of digital services. We were fortunate early on to build a strong relationship with China Media Exchange and be able to provide technologies and services of value to their customers.

David Temple: What is the core focus of the SinoTech Group?

Dr Mathew McDougall:
  Simple: Be innovative, transform the online advertising market and focus on developing world class products. In China, people tell me that we don’t need sophisticated advertising tools in China, that we are simply behind the West in our thinking and our advertisers are not interested in measuring performance. I just don’t agree with this anymore.  Therefore, I founded SinoTech Group to provide media technologies such as ad serving and analytics technologies. You could consider this technology to be a Chinese “Double-click” like technology that was designed and developed here in China specifically with our unique ad serving requirements in mind. Moreover, our partners and advertisers requested we develop a web site analytics platform that could help them measure the online effectiveness and we are excited to say that we launch our 2.0 version later this month.

Another point often made to me was that Search Marketing in China was never going to be successful, that Chinese advertisers did not ‘get-it’ and Chinese Search Engines were not going to support SEO and SEM. This turned out not to be the case and our search organization, called SinoTech Informatics, now has a large team doing Search Engine Optimization (SEO), Internet marketing (SEM), and web design services. The shift in advertiser thinking and a broad adoption for SEM appears to have been greatest in the past 6 months; more interest from advertisers to help them understand search marketing and more requests to assist with ways to drive traffic to their websites.

Our SEM platform, SinoMaximizer was developed here in China and supports double byte, Chinese language semantics and is integrated at the API level with all the major Chinese search engines such as Baidu, Yahoo! China and Google. In fact, we were the first Chinese company to be granted access to Baidu’s API for search marketing and I believe that this can be attributed to Baidu now understanding the value and increased revenue potential that can be had with growing the revenues from mid- large advertisers. These kinds of advertisers that want to manage 1000-10,000’s of keywords and get the best return from this marketing spend.

David Temple: What is the future of search engine optimization (SEO)? Where will be the challenges in developing of the online SE presence in near future?

Dr Mathew McDougall: There are challenges all the time. The Search Engines’ are changing the way they see websites and that changes the way marketers approach their campaigns. I believe that the future will be very ads based by offering multiple ways to find the site, and niche portals and micro-sites will become more important for visitors to find results.

David Temple: What makes SinoTech different from other companies in the online advertising and search engine marketing industry?

Dr Mathew McDougall:  The SinoTech Group has formed a strong relationship in China with the core search engines in China and our consultants provide tools, technologies and services to complement the digital offerings put forward and we are working hard to ensure we understand the scope of each campaign. As we sometimes need to learn the clients business, we keep everyone well informed and make all the constituents a part of the entire process. At SinoTech, we believe that our value is to our partners and increasing the value to their clients.


David Temple: What can we expect in 2009 for Chinese online media?

Dr Mathew McDougall:  2009 is going to be another fascinating year of social and technological developments driven by ever changing digital communications. The Internet and mobile platforms are fundamentally changing the way individuals interact and how “Chinese society” at large leverage communities to wield significant power and influence.  Next year, I expect social networking, user-generated content, word of mouth, and video, wireless, advergaming to all have a major impact on our advertising industry.


David Temple: What will happen with social networking and user generated content in 2009?

Dr Mathew McDougall:  Over the next year, social networking elements will broaden in reach and role as more Web 2.0 features become available for mainstream content. Homepages will serve as mini sites for the various threads of people’s digital lives and niche community sites will also grow further.  According to IDC, China’s Web 2.0 market has shown great development potential and in 2006 the market size was US$62.8 million. By 2011, China’s Web 2.0 market is predicated to reach US$645.8 million.

To that end, brands should become smarter in how they participate and tap into the power of social networking. It must be noted that social networks are also great places for listening to the minds of your audience.

User-generated content (UGC) will become even more prominent and diverse.  Expect to see UGC content/spin-offs migrate to mainstream TV, books and newspapers, and more high profile organizations get involved.

The main points to consider:

  • Use the UGC sites as an insight into what engages your audience and what encourages collaboration.
  • UGC is all about creativity; don’t go there if you don’t have a creative purpose.


In the word-of-mouth area, “amplification” will take over from “the long-tail” as the buzz word for 2008. Amplification is about tapping into the power of word of mouth—73 percent of young people say friends are their most trusted source of information. Digital conversations can go on indefinitely and do not follow a fixed time frame. In some cases, it can be self-sustaining, thus:

  • All brands should monitor online buzz about their products-any brand serious about building relationships with its consumers should listen to what they say.
  • Don't underestimate the audience by spoon-feeding the entire story.
  •  Interesting stunts and events get blogged, and can achieve far greater audience through this amplification than ever before.


Dr Mathew McDougall:  We have definitely seen a surge in social networking and UGC in China over the last 12 months.  We expect this growth in users to translate into advertising opportunities as advertisers begin to better understand how leveraging social media can empower them to create virtual connections with consumers, opening up a new mode of communication and creating deeper connections with a brand audience.

The development of quantifiable metrics and best practices over the past year will only encourage more advertisers to participate in the UGC phenomenon next year.

At SinoTech Group we believe that the new online advertising solutions need to provide advertisers metrics and measures that they need to understand what the UGC phenomenon, what is important to the consumers in this space, and how to leverage digital marketing to get the most effective marketing impact.


David Temple: What do you see happening with video in 2009?


Dr Mathew McDougall:
  Next year, the true potential of video will be unlocked as this medium matures with the emergence of new tools to help edit and upload video. Collaborative filtering, RSS, and tagging will “amplify” the best examples faster and more broadly.  Although we have seen consolidation in web sharing sites in China the page views will continue to grow and there will be attempts to develop new advertising formats to try and tap into potential advertising dollars.

The Internet will increasingly become a true “entertainment” platform and there'll be more opportunities for advertising in and around online video, with larger audiences, more legitimate content, and more defined analytics.

Dr Mathew McDougall:  The impact of video on the online medium is something we read about in the news almost daily.  Video will continue to develop in both popularity and in potential for the online advertising industry next year. I personally believe that we will see a good degree of advertising innovation in this area.


David Temple: What do you see happening with mobile/wireless advertising in 2009?

Dr Mathew McDougall: Time will tell if the growth curve will kick into high gear for mobile advertising in China and I believe that mobile advertising will certainly go through some road bumps as the crucial transition to third-generation mobile telephony, or as 3G, takes shape next year when the new 3G licenses are issued in China.  It is rumored that we will see 3G licenses before Chinese New Year and if this eventuates then I expect a scramble next year to utilize this additional speed.

Mobile advertising will simply become another element used in the online digital plan for advertisers.

David Temple: What do you see happening with gaming advertising in 2009?

Dr Mathew McDougall: All very good questions and online gaming advertising (advergaming) is something I am watching. Real video game-makers are the ones that have interaction nailed down. (Advertising with online games) is a very exciting opportunity and we're quite interested in it. Online gaming communities, where PC users (usually teenagers and the 18-to-30 crowd) connect to play multi-player video games together on the Web, are extremely popular and largely untouched by marketers. SinoTech Group was commissioned early this year by Turner to produce games on the Cartoon Network and we are now selling in advertising. I see this new format becoming adopted more widely with specific Brnads.  

I think once we can get ad serving technologies to ubiquitously place ads in multiple mediums that are targeted and measured we will see a significant adoption of digital technologies and rapid increases in online ad spend.

David Temple: Any closing comments?

Dr Mathew McDougall:  By now you can guess that I am full of opinions and views on the Chinese advertising market. But just to summarize, I believe Media consumption will become less collective and more individual sophisticated, multiple pathways to individual consumers will develop. All media relationships will become interactive to a greater or lesser extent Consumers will increasingly determine their own use of media in a much more complete fashion, including deciding when they will accept marketing messages and when they won’t Metrics which measure ‘viewing’ rather than ‘engagement’ will disappear.

To date, most innovation has been in the form of ‘media firsts’ – finding new places to stick advertising. Until very recently there has been little progress in targeting here. I think we will see this change in 2009 and advertising targeting in Chinese advertising, such as Geo-Targeted ads, behavioral and contextual targeting will become standard.

I see the broad themes for 2009 will being:

  • Relevance
  • Interaction
  • Relationships


Thanks for your time.

August 25, 2008

SES: Global Search For B2B Search Engine Marketing

By David Temple

Global Search For B2B Search Engine Marketing

Localization was again the main theme of this session. You need to not only localize your content but also consider the search engines, local market needs ( keyword research) and metrics. All those factors need to be considered when conducting a global search engine marketing plan.

The session panel was comprised of the following;

Moderator:
• Jeffrey Rohrs, Vice President, Marketing, ExactTarget

Speakers:
• Patricia Hursh, President, SmartSearch Marketing
• Kevin Lee, Executive Chairman & Co-founder, Didit
• Jeffrey Pruitt, President, SEMPO and Vice president, corporate sponsorships, iCrossing

Patricia Hursh started the session on how to get started in global B2B search.

• Which search engines to focus on
   o In China Baidu dominates
   o In Japan Yahoo is the leader (based on an earlier session,n Google is gaining ground)
   o Don’t rely on charts as each search engine has different users

• How important is translation?
   o Search engine requirements
    Target audience (demographics)
   o Local dialect, cultural tendencies, current events, etc.
   o Work with native speaker (use a local voice)

• Regional search trends
   o Google Mexico SERPS show 80% ads in Spanish, and only 20% in English
   o Yahoo Mexico SERPS, 100% of the ads are in Spanish

• Ease of PPC campaign set-up
   o Yahoo

  • Need to setup by each country campaign
  • Can only use local currency
  • Minimum bids are different

   o Google

  • A single interface
  • Can charge in local or US currency

   o Deposits and bids may vary

Kevin Lee is next up and he talks about some of the challenges in dealing with the global B2B market.

Challenges

  • Hedge for currency fluctuation
  • No single decision maker
  • Budget by country or region
  • Long lead time
  • B2B keywords are different
  • ROI calculations different by market
  • Lead time is longer
  • Metrics are different

Metrics

  • Lead forms or whitepaper request
  • Contact page
  • Phone calls
  • Orders
  • Site stickiness

Segmentation

  • Day of week
  • Demographics
  • Click source
  • IP address and ISP

Jeffrey Pruitt is next to speak and talk about B2B trends. He just returned from China and realizes the importance of communications and finding the right partners.

  • B2B spending is at $3.5 billion and is predicted to reach $8 billion in 4 years
  • 84% of mobile search want a mobile site
  • Social marketing is becoming more important to the B2B sector
  • Offline (TV, radio, print) drives search
  • Understanding global business goals and localize where applicable
  • Focus on success of engagement (downloads, signups, etc.)
  • Understand the market  (Google in US)

   o Baidu in China
   o Naver in Korea
   o Yandex in Russia

SES: Search Around the World Part 1: Asia/Pacific & Latin America

By David Temple

Search Around the World Part 1: Asia/Pacific & Latin America

This session is on the first day at SES San Jose 2008. The main theme gathered from this session is localize, localize, localize. It’s not just a matter of translating your current content, you need to have someone in market or at least someone that knows the market well in order to be effective. And no, do not use translation software!

The session panel was;

Moderator
• Anne Kennedy, Managing Partner & Founder, Beyond Ink

Speakers:
• T.R. Harrington, Director of Strategic Direction & Product Development, Darwin Marketing
• Motoko Hunt, Founder, Japanese Search Marketing Strategist, AJPR LLC
• Alicia Morga, CEO, Consorte Media

China

T.R. Harrington is the first to speak. (He’s been in China for more than four years and understands the market well.) When he first went there he thought they had fortune cookies but soon discovered that was an American invention.

• China has 254 million bypassing the US early this year.
• BBS is still huge in China with 12M daily searches on Baidu
• Tencent (QQ) has the largest number of casual games and is the #1 blog site and #1 portal.
• Drivers for search growth are the rising internet population, growth in the number of web pages and a large number of SME’s.
• Taiwan and Honk Kong should be approached differently. Even different regions in China should be considered as different markets.
• Baidu has 71% market share compared to Google’s 23%
• Paid ads used to dominate the search but Baidu is doing a better job of balancing paid and organic
• CPC costs are rising dramatically
• Traffic estimation tools aren’t reliable.
• Baidu is adding 14.5 new products a year

Japan

Motoko Hunt has been doing search marketing in Japan for a long time. She also emphasized localization.

• There are 89 million users in Japan which represents a 70% penetration rate and 85% of them are on broadband.
• Online ad spending is at $4.6 billion and is expected to reach $7.6 billion by 2011.
• Yahoo used to be the search marketing leader but Google has caught up and they each have about 50% of the market share.
• Mobile marketing and QR codes  are huge.
• Blogs are very popular and some blogs have gone to books and even a TV show.
• Youtube and Nico Nico Duga are very popular in Japan.
• There are 4 different sets of characters so you have to do extensive keyword research.
• Main take aways

o Localize
o Keyword research
o Adapt for what works in Japan
o Consider different ways to approach the market

Latin America

Alicia Morga, addressed not only Latin American but the US Hispanic market as well.

• 44 million US Hispanics and 23 million are online.
• US Hispanics use both English and Spanish with English used by 52%, Bilingual is 27 % and Spanish at 21%.
• In Latin America there are 53 million users but only a 13% penetration rate.
• When US  Best Buy translated their content into Spanish it got indexed immediately but most of the traffic came from Spain & Latin America.
• When the shopping cart was in English it actually converted better as it was perceived as more legitimate.
• Banner ads works well since the users aren’t jaded as in the US.
• Mobile advertising and text messaging work well.

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