Weibo’s Decline Demands Digital Rethink for Luxury Brands in China


Avery Booker | April 18, 2014

Avery Booker, Partner at China Luxury Advisors, explains why Weibo’s lessening influence may not necessarily a bad thing for luxury brands

Li BingBing for Gucci

Establishing itself in recent years as the de facto digital platform for international brands hoping to tap the Chinese luxury consumer, Sina Weibo – like the mainland China luxury market itself – hit the skids in 2013, losing an estimated 28 million users.

Although many observers have placed the blame primarily on heavier-handed censorship, in reality Weibo’s decline can be attributed to censorship along with combination of factors, from a tidal wave of spam, to paid-off “key opinion leaders,” to the fact that there are, finally, useful alternatives in China.

Although it still boasts hundreds of millions of registered users, making its decline relative rather than absolute, recent reports suggest that only around 10 percent of registered Sina Weibo users are active. This just goes to reinforce the fact that Weibo is simply becoming the worst possible thing it could be in China: boring.

“ Recent reports suggest that only around 10% of registered Sina Weibo users are active ”

However, Weibo’s lessening influence may not necessarily a bad thing for luxury brands, and instead presents an important opportunity. Facing (in many cases) significantly diminished return on investment from Weibo, the time is right for brands to re-evaluate their digital priorities in China.

For luxury brands that have already diversified away from Weibo as a primary marketing vehicle, the next logical step has largely been WeChat — the industry darling of 2013 and, in all likelihood, 2014.

Mobile-native, designed for one-to-one communication, and claiming some 270 million users, WeChat capitalizes on three things key Chinese consumer demographics depend upon: their smartphones, the presence of their friends, and a feeling of inclusion.

As Steven Millward of Tech in Asia puts it, the growing perception among many former Weibo devotees is that WeChat “is a more apt place to share fun items, your newest photos, your diary, or news articles with friends.”

Louis Vuitton’s Sina Weibo presence

This “fun” factor is a key driver of many in China using WeChat as their primary social platform. A recent report from the China Internet Network Information Center found that around 37 percent of those who stopped using Sina Weibo in 2013 started using WeChat.

WeChat’s importance is underlined by the fact that an ever-increasing number of luxury brands – among them Louis Vuitton, Dior, and Jaeger-LeCoultre – are now actively committing resources to the platform.

A recent Bain & Co. survey found that 24 percent of respondents already use WeChat to get information about luxury goods, compared to 37 percent who do so through Weibo.

However, WeChat isn’t only a platform for better one-on-one communication between brands and potential buyers in China. Brands are launching unique campaigns on WeChat despite its inherent limitations. It was this that made 2013 such a critical year for luxury on WeChat.

“ Brands are launching unique campaigns on WeChat despite its inherent limitations ”

More gutsy marques spent a portion of the year making WeChat a lynchpin of their CRM strategy, while others launched in-app e-commerce or loyalty programs. As more Chinese shoppers make their luxury purchases overseas – over 60 percent doing so in 2013 – WeChat is proving a strong tool to reach and influence purchasing decisions worldwide.

Accessible luxury titan Coach has been one of WeChat’s most enthusiastic adopters, incorporating a store locator and promotions like the multi-channel fall 2013 “Modern New Yorker” campaign into its account. More recently, Vivienne Tam made WeChat a cornerstone of her New York Fashion Week activities.

In addition to handing out iPhone cases featuring her WeChat QR code, letting fans take part in a special group chat, and blasting behind-the-scenes content, Tam also gave fans access to a model-casting contest for her AW 2014 runway show.

Vivienne Tam’s WeChat campaign for NYFW

According to Tam, “WeChat is the most innovative mobile social app in the world, and is an important platform for me to reach and engage a global audience both real time and in a sustained manner. In fashion, we derive inspiration from everywhere and staying connected with our audience in a deeper way drives that.”

Having launched its official WeChat last summer, Burberry has given the platform another global boost, via a “digital innovation partnership” announced in mid-February. As Christopher Bailey described the collaboration, “WeChat opens up a huge new world of opportunity in the digital space – the exciting thing for us is the deeper and more meaningful way that we are able to tell our stories using this platform.”

Like Vivienne Tam, Burberry gives WeChat fans access to exclusive audio and video content, but the brand took it a step further during its recent London Fashion Week runway show, letting fans follow the activities of VIP guests, and personalize and share looks from the AW14 Womenswear collection.

“ Burberry gives WeChat fans access to exclusive audio and video content ”

But WeChat’s rising prospects don’t mean Weibo has completely flatlined, at least not yet. As Kenneth Tan of Shanghaiist notes, “All said and done, there is still no rival platform that can boast as many public figures, companies, government bodies, non-profit organizations, etc. all in one place, and none that can get information out as fast to the Chinese public as Weibo can.”

WeChat obviously shows long-term promise, and has already proven its utility, but it still struggles as a marketing vehicle. “Official” brand accounts remain relegated to a separate folder within fan feeds, and can only blast one message per day.

Meanwhile, the more full-featured Service Accounts, used by the likes of Louis Vuitton, can incorporate loyalty programs, e-commerce, and menus, but currently can only blast one message per month. (Though these messages display in fans’ main message feeds.) Essentially, what makes WeChat great for users – a dearth of spam, for starters – makes it challenging for marketers.

Gucci exited Douban in January 2014

Another obstacle for brands is gauging the competitive landscape and ROI on WeChat. Engagement rates of competitors’ campaigns are not publicly viewable, and limited APIs mean calculating ROI remains clumsy even for a brand’s own account. Working with on-the-ground influencers in China on WeChat campaigns remains a challenge as well, as brands can’t see the influencer’s follower count, making ROI even harder to rationalize.

For all the talk of Weibo and WeChat, however, it’s important for luxury brands to keep in mind that digital marketing in China is not a two-horse race. Consumer niches are waiting to be found and occupied, and Weibo and WeChat are just two (admittedly huge) facets of a successful China digital strategy.

Here’s an example: Douban. Although the platform has proven a dud for the likes of Gucci (which jumped ship in January 2014), Douban still has over 60 million users, and remains popular among creatives in second- and third-tier cities. Obviously not a crucial demographic for top-tier luxury brands, but one that entry-level, accessible brands might be wise to give a shot.

“ Douban still has over 60 million users & remains popular among creatives in second- and third-tier cities ”

Meanwhile, Western import Instagram – which has more than its fair share of clones in China – is catching on among the fashion elite in Beijing and Shanghai, attracted by a legion of international and Chinese celebrity users. And while location-based platforms such as Jiepang – itself briefly a luxury darling circa 2011 – have yet to reclaim their former glory, newer social fashion and shopping apps, like low-end Meilishuo or high-end Bomoda, fill a need for style inspiration.

So what does this mean for luxury brands fighting to be heard in China? It means that a token presence on Weibo — which was fine when consumers were still in discovery mode — won’t cut it anymore. Weibo still plays a role in any brand’s overall digital strategy in China, but it should no longer be a primary one.

That doesn’t mean luxury brands should put all of their eggs in WeChat’s basket, just because it has the cool factor right now. After all, the road of digital luxury marketing in China is littered with once “cool” players like Kaixin to Jiepang.

Instead, brands should see Weibo’s declining fortunes as a chance to re-evaluate their digital stance, prioritizing a few platforms their target audience actually cares about and putting real thought into content. A multi-platform strategy for China isn’t rocket science; it’s just smart business.

To further investigate the Chinese luxury market on Luxury Society, we invite your to explore the related materials as follows:

- 5 Must-Know Facts About China’s Luxury eCommerce Shoppers
- What Chinese Consumers Were (And Weren’t) Buying Over Chinese New Year
- 4 Challenges Facing Foreign Luxury Brands in China

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