Adotas asked Yoni Eyal, General Manager of ironSource in China, to unravel the mysteries of that country’s mobile market.
Q: How can mobile app companies and brands reach Chinese audiences?
A: For foreign advertisers looking to penetrate the Chinese market, there are several key issues to be aware of: obviously localization is key, but this goes far beyond just translating your app or creative. Cultural differences penetrate every level, including the minutiae of design (just try taking a look at a Chinese website to see the vast difference in how they are used to consuming information).
If you want to succeed in connecting to Chinese users, you have to take these differences into account and work with a company that maintains a strong local presence. Either way, the ideal situation is to be working with a partner who not only has a deep understanding of the local market, but also the breadth of available services for you to get a one-stop-shop solution.
Localization applies to business operations and infrastructure, too. Forcing your way into the Chinese market without in-country support and/or without playing by the country’s rules, no matter how limiting they may seem, just won’t work. And throwing a lot of money at the problem won’t work either. Consider working with an existing local player, or hire local staff.
Above all, ensure you do your research before going in. For example, the Android market has multiple local app stores. Savvy global developers target Chinese Android stores by having a local Chinese presence, either fully employed, or a third party company that assists with getting their apps approved into the top 20 Android stores. The approval process can differ from store to store, and a prior basic understating of the approval process can save precious time and connect you with a Chinese audience faster. For iTunes, the approval process is somewhat streamlined. However the government now requires online games to secure an approval number from the State Administration of press, publication, radio, film, and television, so bear that in mind too.
Q: Where do you see the biggest opportunity in China right now?
A: We see two main areas of opportunity – which we identify as ‘China In’ and ‘China Out.’
Traditionally, ironSource has worked to help Chinese companies market and distribute their apps to global audiences – what we call ‘China Out.’ This is a huge activity for us, working with the giant BAT companies (that’s Baidu, Alibaba, and Tencent) to help them reach global users. There is plenty of room to grow and expand this side of our business in China, especially as more Chinese companies achieve local market saturation, and start looking to globalize.
The other side of that is what we call ‘China In,’ or, helping Chinese developers and mobile publishers monetize and market their apps locally. As Chinese developers shift from having a singular revenue stream based around in-app purchases (IAP), to incorporating an ad-based monetization strategy as well – like using rewarded videos – we see an increase in usage of video and interstitial mediation platforms (SSP). Since focusing our activities on ‘China In’ at the start of last year, we’ve seen rewarded video adoption rise by over 100%. There is great potential for technology companies to work with the large community of Chinese developers, helping them scale their app businesses.
Q: What are common mistakes app developers make when looking to penetrate the Chinese market?
A: One critical mistake companies make is thinking massive capital guarantees success. Even if you have billions of dollars at your disposal, and plan on leveraging it to enter the Chinese market, you can’t overlook the local competitors already successful in the space. It’s wise to look at companies you have similar goals or interests with, and potentially form partnerships to advance business in that specific area.
One of the biggest differentiators that puts Chinese markets in contrast with the global app economy is its mobile app ecosystem. Unlike much of the rest of the world, which is dominated by Google and Apple’s respective app stores, China is divided among hundreds of Android Stores, with Google Play accounting for only 4% of the marketplace. Western developers creating apps for the Chinese market need to understand how to work with 200 app stores as opposed to only two. If they don’t take this into account when entering the market, they will spread their resources too thin and ultimately flop.
And the differences don’t only apply to the app store ecosystem. Let’s take the Chinese mobile app game ecosystem for example. It’s comprised of mainly RPG titles, which have a different game flow than in the west. A common mistake is when companies try to localize only UI / language, and neglect to analyze the current trending games. A good read for this subject can be found here.
Q: What do Chinese companies looking to globalize seek in a partner?
A: Chinese companies that look for global distribution usually do so because they have reached local market saturation. Therefore, they are looking to partner with companies that can assist in scaling on a global canvas. They aren’t interested in working with small players because it simply isn’t efficient for them.
Moreover, they are looking for companies who can provide scale across different regions and geos. It’s not about being strong in one country (like the US for example), but about having equally massive reach across a range of international markets. One great example is SEA, which is a region many Chinese companies are now looking to enter. Though some Chinese giants want to penetrate the US market, many of them actually hope to achieve market domination in emerging or fellow BRIC markets, and they need partners who can provide access to large volumes of users in these countries.
Q: What global trends do you believe will emerge in the next year regarding the BAT companies (Baidu, Alibaba, and Tencent)?
A: As domestic markets become increasingly saturated, the battle among Chinese internet companies will expand to Southeast Asian Markets. The current landscape in that region is very similar to China’s five to ten years ago, and the high penetration and growth of mobile phone users provides a lucrative opportunity.
Historically BAT companies have a vast scope of non-gaming apps. The overseas mobile gaming audience will be the next step for the BAT companies, expanding their reach to users around the world. The first indication of this was in 2016, when the BAT companies began focusing on international expansion — from Tencent purchasing Supercell and Alibaba’s ecommerce app expansion. We can expect to see this trend to increase in 2017.