By Ren Fang | October 20, 2009

Four hours after the premier of the 4^th season of Heroes on NBC, the show was available for download on all the Chinese P2P websites, subtitled by anonymous 'translation volunteers'. Forty-eight hours after, the total number of downloads number eclipsed 2 million.

I consider myself one of the 336 million 'Chinese netitizens' hunting for free content on every P2P corner (proud member since 1997). The volume of free online content in China is absolutely astounding – a conservative estimate of 100 times more than that in the United States. I really shouldn’t say ‘free’ really – after all, there’s no such thing as a free lunch. In this particular case, with all this ‘free’ content, there are the layers upon layers of advertising (mainly banner ads) that these digital ecosystems rely on for bandwidth and overhead costs.

If there is one thing to be said about the Chinese Internet user (age 18-30), they are resourceful. Like every efficient market and every evolution of technology, these users have found a way to circumvent the unwanted, the fluff. They have become far more skilled – nay, I will actually use the word ‘experts’ – at detecting, filtering, and blocking every known way of online ad messages.

Like their counterpart in the US, Chinese brand managers are scratching their heads wondering just how to reach this elusive market. Finally in 2008, they designed “Sufei’s Diary” – the first online branded content. “Sufei’s Diary” is based on a Portugese  series, “Sofia’s Diary” about an 18-year old girl moving to the big city (Shanghai) for college. The first run of the campaign was as follows:

Webisodes: 40 x Daily 5-minutes

Run of Webisodes: 8 weeks

Channel/Platform Partners: 3 video portals, 1 mobile platform

Anchor Sponsor: Estee Lauder/Clinique

Additional Sponsors: Sony (Cybershot, VAIO), 51job.com, P&G

Target Audience: female 18-30 years old

Total Views: 20 Million (4 months accumulated)

Avg. Views / Episode: 453,000

As an original program, “Sufei's Diary” is armed to the teeth with fully integrated brands/products and audience interactivity functionality. Go on to Sufei's blog online and discuss the Clinique products Sufei used in the show or participate in weekly polls that determine the plot for the next few episodes. With 20 million views in a four-month period, advertisers are scrambling to emulate this same runaway success. Here are a few lessons to be learned -

BE A FRIEND

In China, even worse than being hated, is being ignored. For online advertising, banner ads have been classified has evolved from the former to the latter. Today, brands need to realize that they have to be ‘friends’ of this ad-blocker generation in order to even be noticed – thus, by using a more effective tool, i.e. branded content.

Metrics of success is typically measured by impressions / eyeballs for the program. While fine and useful as a matter of quantitative measure, I personally think these impressions only make sense when they are gauged against an engaged-viewer which is a far more qualitative quality. In the case of “Sufei’s Diary”, the after-campaign survey of 1500 respondents showed over 50% of viewers were more motivated to purchase Clinique products after watching the show.  In my mind, this was a way of them to say "thank you Clinique for not bombarding me”.

CONTENT SCARCITY

Compared with many other western countries with well-developed media/entertainment industries, the underdeveloped media market in China has been facing content scarcity for years and the only sustainable business model is advertising. That is to say, compared with branded content in other western countries, it is logical that with the right program and brand, you can make more of a splash in China compared to here in the US (of course, all theory). Following the success of “Sufei's Diary”, other web-based sitcoms seemed to come out of the dark corners of the Internet. Shows like “Office Quartet” (think US-based “The Office”) sponsored by soft drink brand Kang Master or “Color Ladies” (think a female “The Office”) sponsored by Samsung. Despite the not-so-good production quality, these distant cousins of “Sufei’s Diary” reached similar levels of success as their predecessor indicating that the Chinese netizens have a huge appetite for a new model of programming.

LOOSE REGULATIONS

In China, SARFT and Ministry of Culture (MOC) basically rule what can and what cannot be aired on traditional media – i.e. television and radio. However, the Internet is another story and is very much considered the 'Wild West' where content innovation can flourish. I should say that it's not that SARFT and MOC does not care about online world, but the fact that they lack the execution power over the Internet. Will this change in the future ahead? No one really knows at this point – but, for the time being, these loose regulations means a lot of open opportunities for content and brands.

RETURN ON INVESTMENT (ROI)

Finally – my favorite part… Returns On Investments (ROI). No matter how we dice it or splice it, it all comes down to the money. And in our (METAN) world, we spend a considerable time making sure this works too. Let’s take “Sufei’s Diary” and breakdown a simple scenario:

With 18 million paid views (453K views / episode x 40 episodes) and estimated CPM (cost per thousand) of $10, the total campaign would have cost $180,000. Expensive? Yes. Value? Hold that thought. The after-campaign survey showed that purchase intention was nearly 50% of the respondents, so a CPM of those who intend to buy comes out to $20 ($10 divided by the 50%).

Let’s compare that number against other traditional ads available for online, namely: video pre-rolls and banner ads. With video pre-rolls, Tudou, a top Chinese video portal, has a listed 2009 rate card of $17 for a 15 second pre-roll. With an average CTR (click-through rate) of 10% (based off of US metrics which is higher than that of China), the equivalent CPM of those who intend to buy comes out to a whopping $170 ($17 divided by 10%).

Banner ads fair even worse unfortunately. From my estimates, CPM comes out to be $2 ($14,300 / day x 7 million daily average viewers) for a homepage banner ad on Tudou. With an average CTR of 0.25% (again, based off of US metrics), the equivalent CPM of those who intend to buy comes out to $800 ($2 divided by 0.25%).

Let’s compare – branded content at $20, pre-rolls at $170, and banner ads at a modest $800. Doesn’t take rocket science to figure what’s the best bang for your buck in this situation. Obviously, these are very rough numbers and gross estimations, but it is a good litmus to determine the efficacy and value of where branded content is.

Most importantly, a successful run of a branded content program is the association of the program and the brand itself. For the case of “Sufei’s Diary”, whether you are Sony, Clinique, or 51job.com, the idea of the program and your brand is synonymous – they are one in the same. For brand managers, you couldn’t ask for much more.

CONCLUSION

The other night, my friends in China called asking about a clutch (apparently that is a small strapless purse according to my wife – I thought it was associated with a car) they had seen on an episode of “Gossip Girl” online. Lucky for me, my guy friends over in China have not asked me for a General Motors SUV after watching an episode of “Prison Break”. In any case, the message is clear – branded content works and works well in China. And for myself and the millions of content-hungry netizens, we are always asking for more.