Why Are Brands Developing Their Private Domains in China?


Iris Chan | May 07, 2022

Credit: Unsplash

What are some of the challenges brands are facing in the evolving China digital market and how can building a private domain help brands address them?

For the past two years, brands have been looking to and entering the China market with excitement, especially as markets elsewhere slowed as a result of the global pandemic. Having been relatively untouched by COVID-19 since 2020, it was business as usual in China – which presented brands with a great deal of opportunities, both online and offline.

A few weeks ago, however, Shanghai went into lockdown, followed by other cities, as the country dealt with the spread of the COVID-19 Omicron variant. As a result, brands had to quickly pivot and adapt – not unlike what happened at the start of the pandemic over two years prior, when brands were left to figure out how to bring their brand experiences online and acquire new customers in the absence of offline retail traffic. Brands had to lean in and level up their own digital capabilities, and build up their own digital infrastructures and ecosystems that went beyond official social media accounts and flagship stores on Tmall. This, however, did not come without its own set of challenges.

The China Digital Landscape

To say that the China digital landscape has undergone a great deal of change over the years would be an understatement. As the landscape evolved, so did platform capabilities and corresponding user behaviours. In the past, with platforms serving specific roles, consumers would jump from one app to another along different stages of the consumer journey. Over time, however, platforms started developing a wider range of capabilities – purely social platforms started developing e-commerce capabilities, while e-commerce platforms began growing their top-of-the-funnel social and content capabilities.

This creates both opportunities and challenges for brands. While such a change means that brands are now able to develop end-to-end consumer journeys within a single platform, it also results in a high degree of audience fragmentation.

Consumer Acquisition Costs

Naturally, brands have to be where their consumers are. With a wider range of platforms to be present on, content requirements are now multiplied. At the same time, audiences captured on these platforms need to either be directed to a point of purchase, whether on that same platform or on a secondary one. All of this means additional investments on various fronts, from content production and amplification to advertising, which significantly raises the overall costs related to consumer acquisition.

While this is important and serves its purpose in establishing a brand’s presence in the market and facilitating consumer discovery, this alone is not sustainable as costs will keep increasing and output will diminish over time with competition and fragmentation.

Consumer Data Consolidation

Beyond rising costs, brands inevitably experience the challenges and unmarked variables that come with third party data. These data-related challenges manifest in two forms – when there is too little of it, and too much of it. The first is created when brands face limitations in terms of when and how they wish to use the consumer data collected on third-party (and not brand-owned) channels.

The second occurs when brands have access to too much data. As brands invest further in developing their presence across the relevant channels and down the consumer journey on each platform, it also means better leveraging digital assets and activities to understand the differences and nuances of their range of consumers’ specific behaviours, preferences and experiences. Most brands have integrated tools for data tracking and collection, but do not always necessarily have the infrastructure to consolidate all that data collected across the wide range of platforms, and then the strategic capabilities of interpreting it to create value for the brand.

Concurrently, rollouts of data protection regulations around the world with China’s Personal Information Protection Law (PIPL) came into effect last November, adding to the requirements around data management for all companies. All that said, the matter of data collection is an arduous but critical endeavour, and one that brands are constantly navigating; evaluating what data is worth collecting, and ultimately has value in serving their customers better.

The Private Domain

As these challenges persist, brands have started to look towards private traffic and building up their own private domains to address some of them. By building up and activating owned channels, brands not only have more control over the consumer data collected, but also have direct engagement and a guaranteed channel of outreach to consumers. This will eventually afford them improved returns on investment in terms of marketing and communications.

Whether it is COVID-19 or a digital disruptor in the market, this will not be the last time that brands experience flux and require pivoting with agility. Will your brand be ready? 

Learn more about what it looks like to build up a private domain in China, and how brands are creating more meaningful experiences for consumers in exchange for data consent – which, in turn, help brands better understand their behaviours and preferences, in the DLG Webinar Series #9: Developing the Private Domain.

COVID-19 | CRM | China | E-commerce | Social Media