Alibaba’s CMO on why marketers cannot ‘lag behind reality’

Alibaba CMO Chris Tung on the rise of live video, the importance of lifestyle content and why Western brands should underestimate Chinese consumers at their peril.

Alibaba

As the CMO of a $40bn business, Chris Tung is not prepared to let his team drop off the pace. Responsible for an ecosystem of brands spanning ecommerce, payments, social media, cloud computing and marketing tech, Tung is clear that his marketers must embrace the opportunities of data-driven marketing or risk being left behind.

“I find it actually takes time because there’s a legacy for companies who have been doing marketing the same conventional way for more than 50 years. You understand the market in a statistical way: you do surveys through a research company, look at the results after a month, make some judgements and create the campaign. Then you figure it’s working because sales are up,” says Tung.

“It’s all disparate, all estimated, all lagging behind the reality.”

The Alibaba CMO credits data with providing marketers with the “visibility, actionability and trackability” to respond to consumers’ needs in real time, expanding the number of opportunities from “one to a million”.

“That makes you super busy if you want to embrace it,” he explains. “But if you do, you will find you drive your growth much more efficiently than people who don’t. It’s like an automobile versus a bicycle.”

The key difference we have is that our ecommerce platform has evolved from a shelf space type of merchandising-driven site to a content-driven site.

Chris Tung, Alibaba

Alibaba is certainly maintaining its upwards trajectory, driven by consistent year-on-year growth. The group’s revenue surged 61% to $9.9bn in the three months to 31 March, with revenue for its core ecommerce business up 62% to $8.2bn. The cloud computing business grew by 103% to $700m, while the group raked in $840m in digital media and entertainment revenue, an increase of 34%.

Monthly active users on its mobile retail sites reached 617 million in March 2018, an increase of 110 million compared to the same period last year.

The Alibaba Group also grew the number of annual active consumers across its retail marketplaces to 552 million in the year to the end of December 2017, an increase of 37 million. In total, Alibaba’s revenue rose 58% to $39.9bn in the full year to 31 March 2018.

Alibaba
The Alibaba corporate campus in Hangzhou, China.

To maintain this level of momentum the vision is firmly global. Speaking in March about plans to open six new worldwide procurement centres serving Tmall Global, the international spin-off of its B2C ecommerce site Tmall, the Alibaba Group described its “ambitions to further globalise” and close the gap between China’s consumers and international brands.

This is a significant market for global brands to explore. More than 150 million consumers use the mobile app version of Alibaba’s flagship consumer-to-consumer shopping platform Taobao every day. Shoppers typically spend more than 20 minutes on the app each day, browsing an average of 19 products and leaving over 20 million reviews or comments.

READ MORE: Alibaba kicks off Olympics sponsorship with first global brand campaign

Millennials are the driving force behind Taobao, with more than 70% of buyers aged in their 20s and 30s. This demographic insight is encouraging Alibaba to focus on “next-generation features” such as virtual reality, live video and concept fashion stores featuring smart mirrors and gyro-sensors.

Tung explains that a commitment to content on sites like Taobao is what resonates so strongly with the millennial userbase, helping the company achieve its ambition of being a lifestyle-driven tech company.

Don’t underestimate the level of understanding the Chinese customer has right now.

Chris Tung, Alibaba

“If I compare Alibaba’s ecommerce apps to most of the ecommerce sites in the world, the key difference we have is that our ecommerce platform has evolved from a shelf space type of merchandising-driven site to a content-driven site,” says Tung.

“[Taobao] looks like a consumption magazine. If you want to buy furniture it’s like reading a home decor magazine, with great pictures and designers’ choices. We believe today the opportunity is not just to offer the consumer what to buy, it’s really to offer them guidance on how to live their lives better by making smart choices.”

Going live

Alibaba is currently working with more than 20,000 global brands, the majority of which are experimenting with content ranging from short video clips to text, graphics, photos or live broadcasts.

Live is a crucial and highly evolved element of Alibaba’s social ecosystem, with 10s of thousands of broadcasts by key opinion leaders taking place every day.

Followers can transact directly from a live video by selecting the products they want to go into their shopping bag during the broadcast. The influencer then typically receives a cut of the transaction. Such is the popularity of this form of content that an average live broadcast can attract upwards of 200,000 viewers.

The shoppable element of social media is becoming increasingly important to users says Tung, who explains that working with key opinion leaders is the best way to drive business on Alibaba’s platforms.

The live experience taps into what he describes as the “addictive” nature of the ecosystem. The average daily user spends 30 minutes on Alibaba’s platforms and enters its app seven times.

“Imagine if it was only a shopping site, why would you log onto a shopping site for more than seven times and accumulate 30 minutes a day on average?” Tung questions.

“This means it goes beyond just buying, it’s a lifestyle. It’s a way to understand the beauty of the world. It is purpose driven.”

Understanding the Chinese consumer

Alibaba boasts some 600 million active users across its ecommerce ecosystem, providing significant amounts of data about their lifestyles and buying behaviour.

While Chinese consumers typically use 10 to 15 apps a day, Tung explains that a “good percentage” of these major apps are run by Alibaba, meaning that it can help brand partners target specific audiences across its portfolio.

As the data is generated from ecommerce sales, Alibaba insists that it can be sure it is not dealing with avatars or replicated accounts.

“Real people pay, real people buy stuff, not the fake name,” states Tung. “That’s just part of the intelligence we can get. We can also pick up media behaviour and social activities that they engage with, which provides a lot of interesting information for us.”

Tmall
Tmall has ambitions to invest in its global arm, which currently sells more than 18,000 brands from 74 countries and regions.

In June 2017, Alibaba launched marketing services arm Uni Marketing, which tracks users across its sites with a “unified ID”. This technology enables Alibaba to tailor product recommendations to individual users and personalise its digital storefronts to correspond with their buying habits.

READ MORE: Alibaba’s CMO on its ambitions to be the first global Chinese brand

At Cannes Lions this June, Alibaba said it planned to enhance the robustness of its Uni Marketing offer through a partnership with Kantar, which will see the ecommerce giant and research company pool resources in a bid to establish the effectiveness of the tool.

Based on the vast amount of data it holds about the consumption habits of Chinese shoppers, Tung urges Western companies not to underestimate how advanced these consumers are in terms of early adoption of live video, their love of cashless payments or how much they already know about their brand.

They are also more than familiar with Western brands. Tung points out there are two billion different products available on Taobao, so Chinese consumers can get almost anything they want from the site, including Western brands. As a result he believes Chinese consumers are spoilt for choice as they are used to getting what they want from around the world. 

“Don’t underestimate the level of understanding the Chinese customer has right now,” he warns.

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