Kaiser Kuo: Digital China's social hotspots

Kaiser KuoWhere do China’s digital gatherings take place?

I recently discussed this with Kaiser Kuo, Group Director of Ogilvy China’s Digital Strategy and author of China Digital Watch blog.

Summarized here (video below).

Same, Same, but Different
To Kaiser, every country clearly has its own Internet and digital culture. While there are superficial similarities between China and US or China and South Korea or Japan, the differences can be quite striking.

Instant Messaging
As a portion of the Internet population, 48 % of South Koreans use IM, with 58% in the US, while a whopping 80% of Internet users in China use IM. For those who use IM in China, 80% use QQ. QQ has inspired a new form of language.

Bulletin boards
A throwback to early days of Internet in many countries, Bulletin Boards remain an mainstay of China’s Internet. They began as an outgrowth of newsgroups and people continue using them in part because they are anonymous. Although they are home to much vitriol and many vituperative attacks, Bulletin Boards have in some ways become the public sphere in China. They are a place where you can get some sense of the vox populi.

Online Video
Internet videos have become central to online life in China despite the country’s relatively low penetration of broadband. Kaiser cites a survey showing that 77% of Chinese people say watching online videos one of their top activities. A Microsoft study, Circuits of Cool,  found that 33% of Chinese say that every or most times they get on the Internet they watch a video. Online video has also created a new class of Internet user, called Haike, who walk around doing guerilla footage .

Online Gaming
Online games are a dominant economic force on China’s Internet, with Kaiser estimating revenues at around US$1.4bn, roughly 70% higher than online advertising revenue

Internet Cafes
While 40% of Chinese Internet users go online through Internet cafes, these are not the kind of place where you stopped to check email while backpacking through Thailand. These are high-tech venues with 200 to 300 computers, some quite high end. Some online video hosting companies have even started using the cafes as supernodes to store and distribute online videos more efficiently.

Gaming in Internet cafes is popular to the point where the government requires fatigue systems: After three hours your Orc Berzerker starts to lose power and after 5 hours your account gets deleted entirely.

Big future for Mobile…
While bullish in the long term for mobile, Kaiser warned it is easy to overstate the case for mobile. Yes, there are 3 times as many mobile as Internet users, but the truth is that most Internet users themselves will get the mobile handsets. Mobile becomes a supplement to the Internet, not a substitute.

…but numerous exaggerations about China…
Some exagerrated numbers about mobile Internet usage have come based on counting a passive response to a mobile WAP application as active usage of mobile Internet. There are very few people who use China’s walled garden or Free WAP

…and a tough regulatory environment
Mobile advertising suffered setback on March 15 when SMS spammers were shut down. One big casualty was Focus Media, which had just acquired an SMS spam company. This should, however, be very good for industry in the long run. Much of the current advertising on WAP-based networks, however, is for other mobile services, such as ringtones. This can get very incesctuous.

Slowdown won’t kill digital

Your average user is not going to stop shelling out RMB 5 cents for his avatar’s new clothes or allow his virutal pet to die. I am still pretty confident that advertisers will increasingly realize they can get their best bang for their buck on performace-based advertising.

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