By Gordon Chu | Tuesday, May 26, 2009
With nearly 300 million Internet users according to the China Internet Network Information Center (CNNIC), China now eclipses even the United States with the most Internet users in the world. To put things into perspective, China alone, comprises nearly 20% of the world’s population of Internet users. Their growth rate grew over 1200% from 2000 – 2008 making China one of the fastest adopters of technology in the world. And the scary part of these figures? We’ve only seen the beginning – China still has only penetrated under 25% of its population with Internet access (versus nearly 80% of Americans are Internet users).
So, I ask – how do we reach this massive sea of Internet users. What Internet marketing arsenal can we pull out of our toolbox? Key word search? Nah – that would be too obvious. Social networking communities? Sure – that could work, but prepare to take a number in line when looking to partner with one of the big Chinese social-networks. Here’s a hint – think outside of the Internet “cloud”. Instead of investing your efforts in China’s digital realm, go around the corner and experience first-hand the droves of people crammed into a single room with 100 purring PCs. Welcome to the world of Internet Cafés.
Unassuming from the outside and certainly nothing out of the ordinary when you walk in, the phenomenon of Internet Cafés is like no other when compared to the rest of the world. Everyone is sitting in front of a PC either playing an online game or chatting. Nothing different, right? The hours pass and some of the kids decide to take a break from the World of Warcraft and go watch ABC’s Lost instead. Others decide its time for food and grab a bowl of beef noodles. And still others decide they’d like to go a round of karaoke with their best rendition of Christina Aguilera. Still no big ‘a-ha’ moment? Let me say that ALL of these activities are happening still in that one crammed room with 100 purring PCs. All the convenience for you and your friends under one roof. In fact, a lot of the Internet Cafés have nice plush couches for sleeping and showers to freshen up if the person wants – making the Internet Café the home-away-from-home for many.
The whole Internet Café phenomenon first came to the scene as a result of limited options. Home Internet broadband was expensive (or unavailable) and there were no other real viable way to access information. Even with cost of home broadband coming down, Internet Cafés still comprise nearly 40% of all Internet usage. As for access to information - the obvious solution? Open a place up and wire up PCs with access to the Internet. Information was aplenty, information was fast, but information was only the beginning. While information may have been the catalyst for the spur of Internet Cafés, the sub-culture is what keeps it alive today and will keep it thriving in the future.
Internet Cafés were not just a place to check new music, read news, or watch your occasional viral video. It was an escape from the rest of the world – actually, it was the ONLY escape available for the Chinese youth market. A space and time where friends intermingle and have fun (albeit all via the Internet) without over-bearing supervision. Nevermind this is one of the few ways to interact, this is the preferred way to interact – nearly 82% of Internet users in China use instant messaging regularly. If you compare that to the United States, we’re at a whopping 39%.
While the manner of how people consume media through the Internet may not be a big surprise when compared with the trends of technology, the sub-culture of the Internet Cafés was certainly an unanticipated result. Who knew that Internet Cafés were going to be THE place to be – the birthplace of friendships, relationships, and a digital / real community. Even within this community, further diversification and niches have evolved from the growing trend of this sub-culture. Crazy about World of Warcraft? There’s an Internet Café equipped with the best PC hardware you can find with a space that’s decorated and themed for your game play. Lonely while surfing the Web? Go to the “Surf Mate” Internet Café and surf the web with a lovely lady next to your side. No matter what your fancy might be, there’s an Internet Café and a waiting seat for you.
Just how big is the Internet Café market today? In 2008, there were 147,000 registered Internet Cafés that made up 126 million Internet users. Roughly 90% of Internet Café users are between 18-30 and over 85% of them are male. Over 45% of the users frequent the Internet Café at least 4 times a week and the average user spends nearly 4 hours per day. And that’s only registered licensed Internet Cafés. Estimates for the number of unlicensed Internet Cafés topple 130,000 and consist of an additional 100 million Internet users.
Marketing to Internet Cafés is not a question of when – but a question of how. Companies have already taken notice of this market and we can see the advertising dollars flow to this particular Internet segment. For example, in 2005, Coke partnered with 9-City, the Chinese operator of War of Warcraft Online, to host co-promotion campaigns. In all affiliate Internet Cafés with 9-City, Coke became the exclusive carbonated drink that would be sold. Today, Coke still continues to heavily invest in targeting this market. Still not convinced? Other companies have made their business with Internet Cafés. For example, in 2005, Giant Game launched their first MMORPG (Massively Multi-player Online Roll-Playing Game) game ‘ZhengTu’. With a full grass-root marketing blitz to encourage users to join the virtual game (nearly $9M in advertising was spent in 2007 Q3 alone), Giant Game managed to reach critical mass and IPOed in the New York Stock Exchange with their one game alone.
Yes, Internet Cafés seem quirky. Yes, there will be parts of Internet Cafés that we can never grasp or understand. But, it’s a market that is only beginning to grow. It’s a market that has its own rules, its own culture, its own life. The reality is there will be no way to fully capture the entire market. The market is fragmented and scattered throughout both rural and metropolitans cities. But with numbers upward of 200+ million users frequenting and congregating together in this network of Internet Cafés, there is opportunity to be had and, from the ways looks, lots of it.
