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Advertising On The Three Screens and New Business Models for China

In technology marketing parlance, the three screens refer to the television screen, the PC screen and the mobile phone screen. Most marketers and advertisers now recognize that more eyeballs and viewing time are going to the PC screen, and even more will soon go to the mobile phone screen, and the question they are asking is “When will advertising on the PC and mobile phone catch up with advertising on the television?”

This is a question which Kaiser Kuo, publisher of Ogilvy China Digital Watch, asked in his article “Closing the Marketing Gap”. To quote from his article:

The “Marketing Confidence Gap.” That’s Ogilvy parlance for that vexing and persistent chasm between, on the one hand, the high percentage of media time spent by the average consumer online and, on the other, the relatively low percentage of overall ad budgets being directed online.

Kaiser then goes on to point out that when TV was the disruptive new technology, advertisers most likely ran into the same kinds of complaints from what were then mainstream media buyers (print and radio). And that it took some time for the new advertising models for TV to take off and then reach a new equilibrium of general acceptance. The new medium created its own new business ecosystem with the most well-known being the television market research firm AC Nielsen.

The three screens model throws the old model of TV advertising into question. For many video watchers on the PC, the main appeal of watching videos on Youtube or Tudou is because they can watch them anytime, without advertising. Contrast this with the old broadcast model of the 1960s in the US, dominated by ABC, NBC, and CBS and a few affiliate networks. In the 1970s, cable TV began to take off; it did not have any advertising and relied exclusively on subscriptions. Then in the 80s, satellite news (CNN) took off. So the good old days were not really as quiet and stable as some would have us believe.

This is why the relationship between time spent online and advertising does not hold water for me. There is no rule which says that the correlations which applied to the first screen of television should also apply to the second and third screens of the PC and the mobile phone. I would go so far as to argue that disk and broadband prices have dropped so low that the traditional ad agency role of playing matchmaker to ad inventory (advertisers) and media (publishers) have disappeared. My opinion is that the only place where there is any meaningful and measurable matchup of ad inventory and media are done online is with search ad results, with Google the leader in most of the world and Baidu in China.

This is why I think Sam Flemming’s talk about Internet Word of Mouth (IWOM) has hit an important vein which the ad agency’s have failed to grasp. It is an uncontested fact that while e-commerce in China has been slow to take off in China, many Chinese look for information about purchases beforehand by visiting BBSes and seeing what others say about a product. So why is there no way to track the main influencers of buying decisions and rewarding them with money if their recommendation results in a completed sale? To me, this has always seemed like a difficult, but not insurmountable, technical challenge. In the west, there would be complaints about people making recommendations because they want to make money instead of actually having tried and used the product, but in China, I don’t believe that those disputes would be likely to arise.

China has a unique retail phenomenon called tuangou 团购. This is groups of individuals and families who meet each other in the BBSes and who are planning on purchasing the same big-ticket items. Then, they go and negotiate volume discounts with individual retailers, eventually selecting the retailer who gives the biggest discounts. I have never heard of this phenomenon anywhere outside China.

There are plenty of opportunities in China; it’s just a question of how you see the challenge.




5 Responses to “Advertising On The Three Screens and New Business Models for China”

  1. Peter Quinn says:

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Peter Quinn

  2. [...] Administrator wrote an interesting post today onHere’s a quick excerptIn technology marketing parlance, the three screens refer to the television screen, the PC screen and the mobile phone screen. Most marketers and advertisers now recognize that more eyeballs and viewing time are going to the PC screen, … [...]

  3. [...] for the iPhone, the “three screens” model for video messaging has become a fairly well-accepted industry truism. That, coupled with Apple’s [...]

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