According to a recent Netpop survey, 58 percent of purchases are influenced by consumer reviews and ratings sites, discussion boards, blogs, and other social media sites. In contrast, only about 19 percent of purchase decisions in the U.S. are influenced by user-generated content.

With traditional media outlets like television and print proven to be less effective channels, marketers are targeting user-generated content on the Web to reach youngsters, cultivate brand evangelists and trigger word-of-mouth. It’s no longer just about having a big advertising budget to get the most impressions; you have to understand online consumer behavior to use your budget most effectively.

This rapidly-changing market for user-generated and repurposed content on social networking sites has advertisers reworking their typical models to reach the Chinese marketplace – especially with the upcoming Beijing Olympics taking place in August ’08. TV has traditionally monopolized Olympic advertising; however, instead of relying on television ads, costing upwards of $800,000 for 30-second spot, advertisers should broaden their reach and hone their targets by investing in multimedia campaigns that reach their desired targets like the 176 million Chinese consumers between the ages of 18-28.

The Value of Video Sharing Sites in China                                        

In China, video sharing sites are becoming more popular than watching television, especially for younger members of the Chinese population. And because users are generating such a vast array of content, traditional broadcast networks are even supplementing their own broadcast material with user-generated content, to a much higher degree than U.S.-based television broadcasters.

User-generated video has only recently gone mainstream and the games in Beijing will be the first Olympics since this phenomenon has taken hold.  Keeping in mind the potential audience this could draw, U.S. brands looking to break into China should know what online ad models are available in order to capitalize on the trend.

Online Ad formats – What Works Best?                                                                                  

With the traditional lines between viewer and broadcaster blurred, online video-sharing sites and their advertisers are forced to rethink not only the directional flow of content, but identify new ways to capture the attention of viewers while generating meaningful revenue.

There are many drawbacks to traditional online ad options like banners and pop-ups. Banner ads place major limitations on your creative options — there’s only so much you can do with a rectangular box. Also, since online users’ viewing behavior is skimming and scanning, this box is easily skipped and ignored by users, in turn lowering the click-through rate and wasting marketing dollars.

Pop-up ads, and then floating ads, were created because of the intrinsic limitation of banner ads. They are more effective in grabbing the attention of viewers and can display information without disrupting the page. Sites like Sina.com, the largest portal site in China, use pop-up ads almost exclusively. The problem with these ads is that they interfere with the user’s experience and there have been many applications designed to specifically block them.

Through research with focus groups and prolonged testing, Tudou has found two formats that work especially well for Chinese audiences viewing video online: wallpaper ads and 3 second screen insertions. Both of these methods are large enough to grab the viewer’s attention without annoying or distracting the viewer and have been well received with conversion rates 10 to 15 times higher than average online conversion rates in China.

Conclusion

With the explosion of broadband Internet and the popularity of social networking in China, advertising methods have drastically changed forever and will be put to the test as the world’s eyes turn to Beijing for the Olympic Games this summer. So as marketers tap into social networking as a way to advertise their brands in China, it’s important to learn user behavior and choose a platform with sufficient reach, strong targeting functionalities and higher variety of ad product assortment.