By Zac Wang
Published September 17, 2024
They favor the present over the future, even as they’re nostalgic for the past. They defy consumerism, opting for the budget-friendly instead of the expensive. They’re digital natives — blurring the line between physical and virtual worlds — and devoted pet owners.
This is a snapshot of China’s Gen Z, according to a new report by Dentsu that aims to help global advertisers understand the market potential of this coveted cohort. China boasts one of the highest rates of consumer confidence among 18- to 24-year-olds in the world — even as it faces economic headwinds — outranking peers in the U.S., U.K., Germany and Japan. What’s more, the group’s spending is growing faster than any other generation in China’s history, making it vital to understand how these “multidimensional” consumers think.
A few factors are propelling urban Chinese Gen Zers in particular, according to a recent McKinsey survey, including strong family support and the ongoing intergenerational transfer of wealth. But they’re not a monolith, as Dentsu points out: They’re a generation that honors traditional Chinese culture, values the authentic, believes in the AI revolution and may even resemble “full-time adult children” living with their parents.
Marketers may soon have more options to reach and influence them as regulatory pressures drive the country’s internet giants to slowly open up their walled gardens, allowing for unprecedented ad tech innovation and collaboration.
A primer on Chinese Gen Zers’ media habits
“Chinese Gen Zers are individuality-oriented, informed and immersed,” says Zhai Fei, vice president and head of commercial strategy at Fliggy, a travel and content platform owned by Alibaba that counts over 500 million registered members.
“Especially for new players entering the Chinese market, successful advertising cannot be just about branding without achieving sales, nor can it be just sales-focused without strong brand development, because their attention and interest are fleeting,” says Fei.
Balancing branding and performance across China’s internet landscape, however, is no easy feat. From social media apps that increasingly resemble e-commerce megasites to a messaging superapp that combines chats, payments, and even health services, China’s media landscape can appear sprawling in nature and bewildering in complexity to global marketers.
Gen Z, of course, is shaking up media globally, leading advertisers to pursue omnichannel strategies to meet them across a variety of platforms. What’s different in China is the variety and nature of the platforms at marketers’ disposal. “Unlike Western markets dominated by a few large platforms, China’s ecosystem is characterized by a vast array of specialized platforms that cater to very specific user segments,” says Subbu Bhatt, founder and CEO at China Trading Desk.
Two of the most popular channels among Chinese Gen Zers are Douyin (China’s TikTok) and Xiaohongshu (known as “RED” and similar to Instagram). But marketers shouldn’t forget superapp WeChat; video apps Kuaishou and Bilibili; streaming apps Youku and iQIYI; community site Zhihu; and travel platform Fliggy.
Kuaishou, often seen as Douyin’s chief competitor in China, is a short-video platform “with a more rural and lower-tier city focus, but with a significant urban and younger user base,” says Bhatt. “The platform offers robust e-commerce integrations, making it a key player for brands looking to engage Gen Z.”
Zhihu, a Q&A site akin to Quora and Reddit, counts “a more professional and intellectual audience,” says Bhatt. “While it might seem less intuitive for targeting Gen Z, Zhihu has seen growing popularity among younger, educated users. It’s particularly useful for brands that want to engage in more thoughtful, content-rich interactions with their audiences, providing deeper insights or discussing product features in detail.”
Although WeChat is used by virtually all strata of the Chinese population, its Channels section, which offers “social commerce” capabilities linked to its short videos and livestreams, is also growing in popularity among Gen Zers.
“With the new generation of online shoppers favoring convenience and efficiency, the fact that they can transition from watching video content to buying a product is the primary driver of Gen Z traffic on WeChat Channels,” says David Henriques, founder and CEO at Sekkei Digital Group.
Reaching across the (internet) divide
Beyond the platforms themselves, differences between China and the West’s internet also extend to how media buyers can access their ad inventory.
For many years, Chinese tech giants kept a tight lid on their ecosystems, going as far as blocking outbound links to competitor platforms. But recent regulatory moves have altered the landscape and spurred firms to open up, to the point that Taobao, Alibaba’s Amazon-like e-commerce site and its crown jewel, recently announced it would allow payments via WeChat Pay.
The landmark development indicates a key turning point for China’s internet ecosystem. “Openness, collaboration, innovation, and sharing are fundamental principles of the internet and the driving force behind the industry’s growth,” Alipay, Alibaba’s payment affiliate, said in a statement.
For marketers, the rising — if still limited — interconnectivity among the country’s biggest tech ecosystems “expands the historical limitations of typical ad planning tools,” says Henriques. “Marketers are now more capable of offering a more consistent user experience across different consumer touchpoints.”
This means that marketers “can take advantage of new features and tools that make it easier to engage consumers, process payments and track results across platforms,” says Henriques.
With one exception — RED — most of Chinese Gen Zers’ top media destinations, WeChat included, have opened up their ad inventories programmatically to some third-party DSPs. Access still remains limited in some cases; with WeChat, for example, only allowing marketers to tap in to its first-party data through its own ad platform.
“As of now, the core nature of these walled gardens remains that they do not easily interoperate with one another,” says Bhatt. Nonetheless, this growing availability of programmatic inventory bodes well for marketers. “This capability is very good for marketers looking to run campaigns across a wide range of inventory and at a lower cost,” adds Bhatt.
This growing level of openness allows marketers to lean on the efficiencies afforded by omnichannel advertising across China’s premium internet. Relying on third-party data sources in China can offer marketers audience consistency as they cater to Gen Z audiences across the web, from Bilibili videos to Zhihu communities to Fliggy travel content.
“For marketers, the most important thing is to have a three-dimensional and profound understanding of people,” says Fliggy’s Fei. “Consumers’ differing behaviors on different channels are essentially people’s segmented needs in different scenarios, but behind this, people’s values remain consistent.”
Managing omnichannel campaigns from one DSP can also help address concerns around tracking and measurement in China. “Most [Western] tracking tools either do not work or have higher discrepancy compared to platforms’ reports,” says Bhatt. The lack of providers like Nielsen or Comscore means that local third-party tracking platforms, like Miaozhen, often take on the role of independent arbiters of campaign performance.
China’s strict data privacy regulations, such as the Personal Information Protection Law, also need to be taken into consideration by global brands in terms of data collection, processing and targeting. “Marketers must ensure that their programmatic strategies comply with local regulations, which can differ significantly from global standards,” says Bhatt.
These challenges suggest an internet ecosystem in constant evolution, but one that is not as monolithic or closed as may first appear from outside of China’s internet walls.
For marketers intent on reaching one of the world’s most significant consumer cohorts, China’s Gen Z, an appetite for quick adaptation to change will be essential.
“China offers unparalleled opportunities for data-driven marketing. And China is at the forefront of innovative ad formats, particularly in areas like livestreaming and interactive ads,” says Bhatt.“Programmatic platforms in China often support these advanced formats, offering unique opportunities to engage audiences in new ways.”
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