AI Advertising Optimization: Australian Baby Product in China Reduce Cost by 94%
China’s baby product is set to be worth more USD 27 billion by 2023 and consumers still prefer foreign brands as a result of safety concerns. Rewards are obvious for these overseas brands, but the Chinese market is extremely difficult and both entry and marketing costs outrageously steep. Brands who want to reach Chinese consumers, need to be savvier with their marketing and use better optimization tools to improve the efficacy of advertising campaigns and lower costs.
Chinese Parents Love Foreign Baby Products
Chinese parents love to spend money on babies and the demand for baby products is witnessing wild growth. Baby personal care products alone grew between the years 2013-18 at CAGR (compound annual growth rate) of 19% between 2013-18, reaching a total value of RMB9.6 billion (USD1.4 billion) in 2018. Mintel expects that this market will continue to see sustained growth and grow by 14.5% to reach RMB18.8 billion (USD 27.7 billion) by 2023.
Foreign brands are lucky in that they have for the long-time, had an edge. Chinese parents are extremely choosy regarding purchasing decisions related to infants and for a long while, foreign products were considered more reliable and safer.
Getting Noticed in the World’s Most Competitive Baby E-Commerce Market
While the demand for foreign baby products is clear, this only represents half of the equation. The Chinese baby product market is extremely E-Commerce focused with online channels representing 50% of baby care revenues.
With babycare products being one of the most competitive categories on Chinese E-Commerce, marketing costs are particularly high and brands need to invest heavily in order to get noticed on these platforms. Even the biggest brands are struggling, Japanese baby products market leader, Pigeon, who own 35% China baby product market share, recently announced a plan to lessen their reliance on major platforms and sell directly to consumers. Pigeon’s expenses were equal to 33.7% of their revenue for the China market in 2019 and 30.3% in 2018.
For brands looking to move outside the over-priced walled-gardens of TMall and JD.com, the increasingly obvious choice for brands is Tencent’s WeChat platform. WeChat is the mega-app that boasts over 1 billion registered users and is integral to every aspect of China life.
But advertising on WeChat can still be expensive. Many of the advertising tools on the market for WeChat are not up to standard and it can be difficult to drive traffic.
AI Advertising Optimization: Cut Through the Noise and Lower Costs
The answer for foreign brands is to refine their advertising spends by using the latest optimization tools. There are myriad programmatic advertising tools on the market in China, but many do not match expectations.
Taeltech advertising optimization is different from the other alternatives on the market. It uses consumer data and AI to generate superior targeting for clients’ advertising, which allows its clients to increase the efficiency of their advertising and lower advertising spends.
Taeltech’s advertising optimization is powered by AI algorithms that leverage a vast pool of millions of monthly customer interactions (shopping, scanning barcodes, answering surveys, sharing with friends etc.). The company is also able to take advantage of deep holistic consumer profiles that cross channels, ecosystems and categories.
Mainstream approaches to advertising targeting are lacking because they are based on transactional histories of consumers and insufficiently basic demographic data. Taeltech is able to leverage much wider consumption baskets and behavioural traits through amalgamated tracking of cross-category shopping behaviours, users scanning barcodes of products they have at home, and regular surveys. This allows for a much deeper snapshot of users and targets audiences that are actually the people who need a brand’s products.
The Taeltech design and marketing teams work with partnered brands to create several versions of their advertising copy. The AI team then develops a number or targeting audience "seeds" based on behavioural patterns of Taeltech users.
Baby Product Brand Leverages AI Optimization to improve ads effectiveness by 1600%
Understanding the challenges and costs of the China baby market, Taeltech worked with an Australian baby toothbrush brand and helped them to both improve the efficacy of their online advertising and lower expenses in comparison to standard WeChat tools. For example, the cost of adding a new product to the shopping cart dropped from RMB 1215 to RMB 76, representing a 94% decrease. Percentage of users viewing a single page rose from 4% to 18% (4.5 times increase). Moreover, average session lengths increased by 4.3 seconds (from 6.1 to 8.4).
Taeltech AI ads targeting optimisation is available not only on WeChat but also on other platforms such as Douyin (Tiktok), Weibo etc.
Many brands abandon efforts to advertise on WeChat or other similar platforms due to low efficiency of the ad spend. Yet it seems the advanced targeting tools, such as those offered by Taeltech, may bring the brands back in business with regards to advertising on social channels in China.