WeChat is (kind of) the Facebook of China. People, me included, spend way more time than they should on WeChat – which translates into marketing opportunities for Entrepreneurs like you.
For most of us, WeChat is a new frontier in marketing, and you probably have more questions than answers.
That’s why we I decided to reach out to one of China’s leading WeChat marketing experts – Raymond Lam, at Dragon Social in Hong Kong.
In this interview, Ray gives you actionable advice on how to setup and account, even without having a Chinese company. He also shares cost examples, various account options and much more.
Raymond, please tell us a bit about yourself and what you do at Dragon Social
I am the Head of Growth at Dragon Social, providing consultation to foreign brands that want to enter the Chinese market through digital marketing. I help brands reach out to their targeted Chinese audiences through content marketing and advertising.
We aim to provide solutions for businesses through each stage of their entry into the China market by building brand awareness, fostering engagement, and driving conversions. My expertise lies in marketing in the B2B, e-commerce, tourism and hospitality, and real estate sectors.
First, how can Wechat be used for online marketing?
WeChat is an essential app in China, just as Google is to the rest of the world. WeChat Official Accounts are powerful means to gather followers and redirect them to a website or e-commerce platform. It helps brands to build thought leadership and engage with both potential and current customers.
So, how is WeChat used for online marketing? When users want to find information, they resort to WeChat’s search tool, which can direct them to WeChat’s Official Accounts as search results.
Users can subscribe and view these accounts both directly on the accounts and in a feature similar to Facebook’s “Newsfeed” called “WeChat Moments.”
There are two types of Official Accounts:
1. Subscription Accounts (订阅号)
2. Service Accounts (服务号)
Subscription accounts are suitable for brands who are content-focused. They can post as frequently as once a day, and appear in a dedicated folder in a users’ chat section. However, they have lower functionality as they cannot access APIs, and therefore are more often used by celebrities and bloggers.
Service Accounts have access to 9 comprehensive APIs such as geo-localisation, instant customer service, mini-site interactive games, can register for WeChat Pay, and setup a WeChat Store. It also appears as a push notification alongside the contacts of a user, which is highly visible.
Due to this increased visibility Tencent limits the amount these accounts can post to 4 occasions per month. We still recommend these types of accounts for businesses with a large base of customers, despite only being able to publish content 4 times per month due to the advanced integrations and constantly expanding feature list.
WeChat Stores provides a seamless path for users to purchase backed by advanced APIs. Compared to TaoBao where users purchase only after searching and comparing prices, WeChat Stores are more like ‘destination-shopping’.
It is an e-commerce interface linked to WeChat Official Accounts. But this also implies that WeChat Stores do not have organic traffic as TaoBao does. Running promotional campaigns and online word of mouth are thus key to the success of WeChat Stores.
What kind of businesses, for example in Europe and the US, market their products and services on Wechat today?
Fashion and luxury brands have had fantastic results from marketing on WeChat. Givenchy once collaborated with a famous blogger named Tao Liang, known as Mr. Bags with 1.2 million followers on WeChat, to promote its limited-edition handbag. Within 12 minutes, the entire collection of 80 handbags priced 15,000 RMB each has been sold out.
Burberry, one of the most appreciated brands in China was able to foster a massive amount of engagement when celebrities commented on their London fashion show via WeChat. This helped the brand to further build relationships with Chinese consumers.
There are so many opportunities yet to be explored for businesses in industries ranging from entertainment to e-commerce. Many of WeChat’s features remain underutilized and I expect we’ll see even more creative uses of WeChat in the future.
Is it mandatory to incorporate in China to set up a company account on Wechat, or can it be done using agents or even overseas companies?
There are two ways to set up a WeChat company official account without having to register a company in China.
You can use a foreign business license to register an international account which will cost at least USD 1000 and takes about 2-3 months to set up, the high cost in terms of both time and money stems from the back and forth communication with Tencent, as each account receives approval on a case by case basis.
The advantage of this type of account being able to own the account entirely and access all of the features available without the need to rely on an agent.
Another way which is more often recommended is to use a third-party business partner with a business license in China. Each company can register as many as 50 WeChat company accounts, so agents have sprung up across China to offer this service.
It costs around USD 500 maintenance fee per year to pay for the third party. You reserve the right to choose your name, logo and description for the account. The only difference is the ‘Account Type’ would be sponsored by the third-party company, which might not seem a big deal to many companies.
The only issue is you’ll need to find an agent you can trust, which can be difficult. Be sure to do your research on any potential partners, just like you should with any business partnership.
Account type sponsored by a third-party business partner
Recently, WeChat has provided an option for companies to switch their third-party partners for a small fee without any loss of followers or content. This allows foreign companies to later switch it back to their own company once it has registered a business license in China.
It takes less than 2 weeks to set up through the domestic process, making it cost-efficient, flexible and lower-risk. The key is to choose a trustworthy partner to set up with, and if you’re in the market for one, Dragon Social would be a good choice.
How much does it cost to setup a company account on Wechat?
As mentioned, setting up through an international account will cost at least USD 1000, taking 2-3 months. While partnering with a third-party business partner in China would cost around USD500 maintenance per year, however some companies can have the fee waived.
Are Wechat ads paid per sponsored post, click, impression or any other metric?
There are three major types of WeChat advertising including WeChat Banner Ads, ‘WeChat Moment Ads’, and Key Opinion Leader (KOL) Ads.
WeChat Banner Ads can be purchased on both an impression and click basis. CPM (Cost per impression) costs are fixed depending on location while CPC (cost per click) costs are determined by a bidding system similar to other systems.
One common question is whether foreign companies can use WeChat Banner Ads – the answer is yes, but advertising for certain products might require permission granted from the Chinese government.
Receiving permission and getting this all set-up can be a bit time-consuming, but this type of advertisement can be quite effective for targeting specific groups of Chinese customers.
‘WeChat Moment Ads’ offer both display and video formats and are purchased on a purely CPM basis. These are much pricier when compared to banner ads. The pricing differs slightly depending on the format.
It is currently the top choice for luxury brands in China who create advertisements in a variety of different media formats.
KOL ads allow companies to post advertisements on the official accounts of KOLs. The price range is huge as there is no set pricing and each KOL is free to decide the cost for advertising on their account. KOLs usually determine their pricing based on the quality, price and type of products companies would like them to endorse.
A portion of the advertising fee paid to celebrities is shared with WeChat, thus KOLs tend to charge higher prices to maintain their profits. The key to success with these advertisements is finding the right KOL for your product and your budget.
If you want to know more about this topic, you can check out our WeChat advertising blog.
Do you have any cost examples?
WeChat Banner Ads range from 15-25 RMB for the CPM model, depending on location, and start at 0.5 RMB for the CPC model. We usually see CPC costs of between 5-20 RMB. Moment ads are the priciest, with CPM ranging from 60-180 RMB depending on location.
The biggest issue many companies face with WeChat advertisements, however, is the initial deposit for activation which is RMB 50,000.
Note: CPM = Cost per thousand impressions, CPC = Cost per click, RMB = Chinese Yuan (1 USD = 6.6 RMB)
Do ecommerce companies normally sell products within the Wechat platform, or direct traffic to their own website?
As I mentioned before, WeChat Stores are more like ‘destination-shopping.” It is a closed network and it can be hard to drive traffic to a WeChat store with organic content alone.
Independent ecommerce websites also face this same issue and in many cases face even more hurdles than WeChat shops. Although users spend a lot of time within WeChat it is still new to the ecommerce game, meaning that users don’t expect to make purchases when using the app.
While both of these methods can lead to sales the most effective method is still to rely on the aid of the 3rd-Party E-commerce platforms in China.
For most brands, setting up an account on China’s e-commerce giants, such as Tmall or JingDong (JD), should be the first step to establishing an ecommerce presence in China. These platforms offer many built-in tools for recruiting followers, building brand awareness, and driving sales.
A WeChat shop can be built after this has been established to allow for multiple points of purchase across different platforms.
Of course, WeChat will certainly add new features that will possibly make WeChat a stronger platform for e-commerce companies.
Based on your experience, what is the minimum budget to get started with Wechat advertising?
The minimum budget I would say is at least RMB 50,000. At this price, you’ll be able to achieve some brand awareness for your company. However, it is unlikely you’ll be able to achieve a positive ROI on your first attempt. To optimize and ensure you’re reaching you’re the right audience it will likely require a higher budget.
Thank you Raymond. How can our readers learn more about your services?
Dragon Social is a leading digital marketing agency that specializes in marketing for foreign companies who want to enter China. We provide both standardized social media marketing packages as well as custom-made social media and digital marketing services.
Check out our blog posts for further information on WeChat marketing or other forms of marketing in China for your company, and feel free to contact us anytime!