Predictions for the Mobile Internet and China’s Impact

June 19, 2012

Between my passion for social media and the looming presence of China in today’s world, there was no way I was going to miss a Cannes session entitled “Social + Mobile + China: Navigating the Biggest Land-Grab in Advertising History.”

With more than half a billion Internet users and nearly 400 million going online with their phones, the “social-over-mobile” movement in China is the fastest-growing media migration in history. The talk, which featured GroupM China CEO Bessie Lee interviewing with Joe Chen, the CEO of Renren, China’s leading real-name social network, delved into the implications of these impressive numbers.

Renren vs. Facebook

If you are not familiar with Renren – which literally means “People People” in Mandarin – it started as a social network for college students in 2005, just a year after Facebook. But academic origins aren’t the only thing the two social giants have in common. They both have very similar business models, dependent on advertising and gaming (though Renren has embraced ecommerce more fully than Facebook). And they both see mobile as a growth area, but seem to find monetizing it a challenge.

Renren differs from many Western social networks in that it requires users to provide real names. The reason is that Renren sees itself as recording human history – and, according to Chen, “History without real names is not history; it’s fiction.” Another interesting difference is that there’s no equivalent to Facebook’s “poking” feature, because that kind of behavior is considered rude. However, if you play Renren’s successful social game “Happy Farm,” you’ll need to steal vegetables from your friends when they’re not online… so there are obviously different definitions of “rudeness!”

Social Spending Still Low

Based on research conducted by GroupM with TNS, media spending around social media is still less than 10 percent; despite the vast amount of time netizens spend in the space. Joe Chen sees three reasons for this:

  1. Social media measurement still isn’t fully developed in China.
  2. Advertisers are still unable to give a proper social media brief within their marketing objectives.
  3. Social media strategy is not integrated into the overall brand communication strategy at the beginning of the campaign.

Complementing this, venture capitalist Mary Meeker’s latest digital report shows that global consumers spend 10 percent of their time on mobile, but advertisers only spend one percent of their ad budget there. In China, the percentage is even lower. Chen believes clients aren’t developing comprehensive mobile strategies for their brands – they develop apps and mobile brand pages, but they don’t know how to maintain them successfully with a long-term content strategy. Additionally, since the market still lacks a standard, there are too many mobile ad networks with no proper tracking in place, which limits the investment.

Five Years From Now

Chen says the rise of the mobile Internet is today’s version of the development of skyscrapers, railroads and ocean liners – the accumulation of all previous revolutionary progress. He thinks the battle will be mostly over in five years, with at most two dominant companies controlling a vertically integrated online ecosystem that includes an operating system, an open-platform app store and a payment business, all integrated in a new generation of mobile phone. The battle is not about pure innovation but about competition – the company that does the best job vertically integrating its value chain will win.

How accurate will these predictions turn out to be? Only time will tell, but one thing is for sure: It never pays to underestimate China!