Online influencers turning clicks into cash

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Li Jiaqi, a Chinese blogger, who endorses beauty products through livestreaming, applies lipstick during a live broadcast on the Taobao platform in Shanghai. [Photo/VCG]

Despite being the founder of Alibaba Group, the world's largest e-commerce company by transaction volume, Jack Ma doesn't seem to know much about selling lipstick.

In a video that went viral ahead of last year's Nov 11 promotion-a global shopping festival established by the online retailer-Ma pitted himself against Li Jiaqi, a broadcaster known for endorsing and selling lipsticks through live broadcasts and short-form videos. In the allotted time, Li sold 100 times as many lipsticks as the business guru.

But the competition is a seemingly win-win-win game. Brands gain access to Li's huge audience, products are snapped up, brands see revenue expand, and platforms like Alibaba take a bigger cut.

Influencer endorsement is big business in China. Consultancy Frost & Sullivan's data showed that sales generated by online influencers reached 32.9 billion yuan ($4.9 billion) in 2017, and that number is expected to enjoy a brisk 40.4 percent compounded annual growth rate over the next five years.

The most profitable types of internet celebrities are fashionistas and beauty experts who broadcast through an array of social media platforms from Weibo to Douyin.

Turning clicks into cash, these brand ambassadors and content providers are shaping up to be such an influential force that they are known as KOLs (key opinion leaders).

In order to capture a slice of China's booming consumer market, influencer marketing is no longer an option but a necessity for brands. Now it has even proven to be a compelling business tale, as is exemplified by the Nasdaq-listing of Ruhnn Holding Ltd, a Chinese startup bridging influencers with brands to help engage potential clients and drive online sales.

While shares tumbled since its debut trading day in early April, the initial public offering has stirred much discussion on the potential of this emerging industry.

KOL, as an existing marketing concept, is "supercharged" in China, according to Lee Folland, head of research at Reuter: Intelligence, a marketing agency specializing in luxury brands.

He said it is "at least five years more advanced than the rest of the world". And this is largely thanks to the country's pioneering power of its digital ecosystem, namely social media and social commerce.

"The integrated nature of WeChat and other platforms lends itself ideally to social commerce, in terms of the ongoing popularity of social media, and the seamless nature of m-commerce syncing up with the social platforms," Folland said.

The richness of a media portfolio also plays a role. Tadashi Yoshida, vice-president of iStyle Inc, Japan's leading cosmetics portal, has discovered Chinese consumers' propensity to KOL endorsement to be notably higher than their global counterparts. Such findings are propelling the company to promote heavily online through a partnership with Tmall, an Alibaba shopping site.

"With digital media forms being much more diverse in China than elsewhere, people here have become wearier of standard media advertising and are increasingly drawn to influencer endorsement," he said.

Coolio Yang, chief executive officer of consultancy Kantar's media division in China, pointed to the cultural significance behind the move. He said the so-called "half-acquaintance society" of China has given rise to the likes of Pinduoduo and WeChat-based commerce, both of which rely heavily on word-of-mouth and interpersonal recommendations.

A mixture of such factors has contributed to a generation of youngsters who stand to make a fortune out of online stardom. And depending on the varying level of popularity, KOLs stand to rake in tens, or even hundreds of yuan for each endorsement placement on a single platform, Yang noted.

"Top-notch stars can charge up to 800,000 yuan to even 1 million in extreme cases. And it's always oneoff prepayments that we are talking about," he said.

This is the case with Zhang Dayi, a model-turned-influencer with Ruhnn, who managed to sell 2,300 bottles of sunscreen co-branded by Zhang and US skin care brand Neutrogena in just one minute during a campaign last year.

Reaping the earlier gains of brand endorsement, trendsetters like Zhang have even ventured into establishing their own brands rather than simply promoting for others.

In an interview with China Daily during a Tmall Beauty event in March, Zhang identified the prerequisites of her success as China's unprecedented digitalization, the decentralization of cosmetics consumption and the rise of Generation Z who aspire to novel experiences.

Meanwhile, she also stressed the importance of constant output of original and compelling content to keep followers hooked.

This holds true for Zhang's peer Yvonne Ching, who had worked for multiple luxury brands in Shanghai before fully devoting herself to her full-time KOL business that includes a longtime partnership with UK fragrance maker Jo Malone.

"I position myself as a brand ambassador. The critical thing about this is authentic storytelling and genuine sharing. Original content is therefore highly important," she said.

Ching said she has been highly selective of her clients and does thorough research to make sure she delivers precise, relevant and value-added information.

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