CCI Q&A: Steven Ekstract on the Year in Content-Commerce
Plus: "Fourtry" is back, BMW takes to Bilibili, and is China already past the luxury e-commerce wars?
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As 2020 draws to a close, Content Commerce Insider has been catching up with leaders in their fields to share reflections on this transformative period as well as predictions for what comes next. In the first installment of our year-end Q&A series, we caught up with Steven Ekstract, Managing Director of Global Licensing Advisors, a consultancy that provides companies with insight and strategic direction to succeed in the $300 billion a year licensing business.
Ekstract was the founder and publisher of License Global magazine, the leading information source for the consumer licensing business, and has more than two decades of experience in the sector. For more insights from Ekstract, please check out CollaBrands, his weekly series on licensing and collaborations, in our newly launched CCI Global Edition on Fridays.
CCI: How would you summarize the year in content-commerce?
Steven Ekstract: The pandemic has accelerated the growth and acceptance of content commerce here in the United States at a much quicker pace than anticipated last year. Several critical factors include the acceleration of e-commerce and the accelerated demise of retail malls and department stores. The West discovered what China already knows, that e-commerce works best when consumers are entertained while they shop, so content has really driven commerce. Social media like Instagram, Snapchat, TikTok, Pinterest, and Facebook have all accelerated their commerce through content. TikTok alone has been a cultural phenomenon that not even the government could stop. The commerce coming from TikTok is just a small drip compared to what will happen when the tap is turned on.
2020 also has seen the launch of behemoth SVOD providers like Disney+, AppleTV+, Peacock, and HBOMax, all of which have commerce as an end goal strategy. In the past month, Netflix, the leading Western SVOD provider, has created a huge trend in chess playing with its airing of “The Queen’s Gambit.” This is a textbook example of how content drives commerce — a popular Netflix drama featuring an archaic board game created a chess craze.
CCI: What are some of the key marketing lessons that companies should take from the Covid-19 pandemic?
Ekstract: Licensing is a powerful marketing tool that uses brand equity as content in order to drive commerce. Consumers enjoy brands that they trust. Brands that are fun and that entertain create greater emotional connections with consumers, who will buy more of those brands’ products as a result. Brands need to stand for something. Licensing into new product categories reinforces core brand equity, and provides the consumer with familiarity and trust at a time when they need it the most.
CCI: Content-commerce strategies like livestreaming e-commerce, brand collaborations, and brand-funded entertainment are becoming mainstream globally. For a brand just starting to look into content-commerce as an avenue to drive more revenue, how would you recommend they start?
Ekstract: Start small with an analysis of your branding on social media. How are you building your community of fans? Is there a cohesive marketing strategy to build your visibility through your social media channels? This is hypercritical to the success of your commercial strategy. How are you using social media as a marketing tool to build your fan base? If you are licensing, are you including your licensed partners in your social media strategy? Social media is a great way to measure brand engagement among your most dedicated customers. Thus, your social media managers have a critical role in the brand’s value chain.
CCI: How has the world of licensing changed this year?
Ekstract: The single largest category of licensed consumer products, Entertainment and Character, which represents 44% of licensed consumer product sales ($128.3 billion), saw significant disruption on the theatrical film side of the business. Hollywood franchises, which help sell licensed movie merch, completely shut down. The world’s largest licensor, Disney, while seeing great success with its Disney+ premium streaming service, has seen significant revenue declines in licensed consumer products due to its strong dependence on brick and mortar retail and marketing plans that call for products being placed at retail weeks prior to film releases. Traditional sports merchandise has also seen a significant drop-off in sales, both for professional leagues and teams as well as collegiate. Major areas of growth in licensed products: video games and esports, food and beverage, home decor and home goods (kitchenware and appliances).
CCI: What companies do you find are doing the most effective job at leveraging brand licensing and why?
Ekstract: Traditional brands that typically are conservative when it comes to licensing have seen the pandemic as a chance to try new, innovative ways to extend their brands through licensing, with an understanding that consumers are seeking comfort and familiarity in products as well as using brand licensing as a way to entertain and delight consumers. In this regard, many brands are using licensing to create out of the box products like the Pizza Hut weighted blanket, the Kentucky Fried Chicken Crocs shoes, Dunkin Donuts-branded, coffee-flavored cereal, and the Travis Scott meal at McDonald’s. They are showing us that commerce can also act as a form of entertainment. If consumers are not spending money going to movies, restaurants, sporting events, theaters, or amusement parks, they need other forms of leisure entertainment. Content with commerce brings them that.
CCI: What key trends are you closely watching in licensing for the year ahead?
Ekstract: Given the continued need for consumers to stay home due to the pandemic, we will continue to see significant growth in food and beverage licensing, with familiar, trusted brands extending and collaborating into the grocery aisles as well as into quick-service restaurants. Further, brands that can tap into home-based products like home décor, DIY, home improvement, cooking and baking will continue to see strong growth. The beauty and cosmetics business was already experiencing significant growth pre-pandemic, but has really exploded as a result of consumers being at home and having more time to spend on beauty. Add to this the focus on Zoom and Facetime calls with people hyper-aware of their appearance on-screen, and we are seeing huge numbers in licensed beauty collabs. How many celebrities now have beauty brands? Those are all licensed. Brands that tap into nostalgia will see significant licensing growth. Consumer packaged goods brands will become more creative and daring in their licensed collaborations. For example, just announced was the Lady Gaga Oreo cookies.
Mentioned in today’s newsletter: Alibaba, Apple, Bilibili, BMW, Dior, Disney, Dunkin Donuts, Estée Lauder, Facebook, HBOMax, Instagram, iQiyi, Louis Vuitton, McDonald’s, Netflix, Oreo, Pinduoduo, Pinterest, Pizza Hut, Rimowa, SK-II, Snapchat, Tencent, TikTok, Xiaohongshu.
iQiyi Upgrades Content-Commerce Show “Fourtry” With Art and Culture
by Ginger Ooi
Video streamer iQiyi announced the return of its content commerce-focused streetwear show “Fourtry”(潮流合伙人2, literally “trend partners”) back in July, and the second season finally launched on December 4 with a new celebrity guest line-up and a focus on China’s cultural heritage and its links to art and fashion.
The new season stars commercially popular stars Liu Yixin, who earlier this year won iQiyi’s idol competition show “Youth With You” (青春有你), musician/singer/actress/influencer Ouyang Nana, singer William Chan, who also has his own fashion label, Canotwait, and rapper Fan Chengcheng, who recently appeared on rival Youku’s own streetwear series, “720 Trend Manager” (720潮流主理人), where he developed his own line of fashionable products within a 720-hour time limit. The show follows them as they live together while they create and curate a selection of stylish products to sell in a pop-up shop that they manage.
While the first season was set in Tokyo’s trendy Harajuku district, this year “Fourtry” is going local with its turn to the southwest Chinese city of Chengdu. While the need to stay local may have been forced by ongoing travel restrictions due to the ongoing coronavirus pandemic, iQiyi has turned the situation around to its advantage by highlighting Chengdu’s traditional culture and incorporating it into the series in a way that appeals to Gen Z and millennial consumers obsessed with limited-edition, “national trend” products. And though the series offers an in-depth look into physical retail, iQiyi has also developed a strong online presence for “Fourtry” to boost the reach of the content-commerce reality show, which includes a VR version of the shop that fans can interact with via WeChat, in addition to a more straightforward online store to shop the dozens of co-branded products developed under the “Fourtry” IP umbrella.
Brand sponsors are also looking at deeper integration with the show’s themes of trendy streetwear. Chengdu-based hotpot chain Xiaolongkan (小龙坎) created a collection of limited-edition “Fourtry” merchandise including bucket hats, umbrellas, tote bags, and sweaters, while Amway Nutrilife launched a compelling branded video campaign featuring the stars and announced Fan Chengcheng as its new brand ambassador, boosting its “Fourtry”-linked exposure.
And in an upgrade to the show’s globally-oriented cultural cachet, the current season of “Fourtry” includes a collaboration with American artist Daniel Arsham, who created a bronze installation, inspired by tiles of the traditional game of mah jong, in collaboration with the show. The artwork was teased via social media before going on display at the annual street-culture convention Innersect in Shanghai, bridging the worlds of “Fourtry” with those of art and luxury, as Arsham has previously worked with brands such as Louis Vuitton, Rimowa, and Dior.
The debut of “Fourtry” saw it ranked third among the week’s reality shows, and viewer engagement has been boosted via a Weibo campaign that invites the creation of personal hashtags that play on the show’s title in Chinese. The Weibo hashtag for “trend xx person” (潮流XX人) has been viewed nearly 53 million times, with contributions such as “trend worker” (潮流打工人) playing on popular phrases.
Luxury Look: Why China Could Leapfrog the “Luxury E-commerce Wars”
by Avery Booker
The key factor to consider regarding luxury e-commerce in China — and one that either sets it completely apart from the rest of the world or makes it an industry bellwether — is that its consumers generally do not align themselves to e-commerce platforms or turn to them to discover brands. In the customer journey, the online retailer is simply the point of completion for a sale that was quite a long time in the making, with the decisionmaking process conducted through a great deal of content-commerce consumption across various other platforms (many of which are now also increasingly shifting their focus to boosting their e-commerce capabilities).
As CCI columnist Tanya Van Gastel recently noted, “China’s shoppers will not buy via internet browsers.” Everything from the discovery of a luxury item (via branded placement in a show like “Nothing But Thirty,” for example), to researching every aspect of it (such as via Xiaohongshu) and finally completing the purchase (perhaps through a livestream on Taobao Live) is often done solely on a mobile device, which of course is also used for post-delivery posting on social media.
It’s a self-contained mobile bubble that, while it includes e-commerce platforms as needed to complete sales, doesn’t entail spending a significant amount of time spent on them to learn about or discover new items.
But this isn’t news for anyone with experience in the Chinese market, where consumers regularly leapfrog digital technologies. What is more compelling is the question of whether this will be the case in the West as well. For all the talk of building luxury e-commerce coalitions or super-groups that can fend off competition from Amazon or Alibaba, consumers may simply move on, making their luxury purchases not on fussy, semi-gated luxury sites but instead via brands themselves or through social media. That would be a blow to the type of e-commerce “experience” that the platforms want to build, which is a sort of digital approximation of offline retail.
Read the full article on Content Commerce Insider
Brand Film Pick: BMW Gallops Onto Bilibili
Bilibili’s ongoing transformation from a niche hub for China’s ACG (Anime, Comics and Games) community into a more mainstream Gen Z video platform with nearly 200 million monthly active users has brought attention from investors and brands alike. Authenticity is key for brands seeking to establish a presence on the platform, whether through partnerships with trusted creators (known as Uploaders) or by launching their own brand accounts with content that meets the high expectations of the platform’s user base (80% are 25 and under).
BMW adopted the latter approach with its official Bilibili channel and marked its debut with “High-Performance Horse” (高 能 的 一 匹), an animated video that is not the typical fare expected from the German luxury carmaker. The three-minute film, created by Beijing-based social agency Fractalist and Shanghai animation studio Final Frontier, uses a Monty Python-esque collage style to take viewers through history from horses to cars, with frequent allusions to popular memes and wordplay involving BMW’s Chinese name (宝马), which translates as “precious horse.” (The word for horse is also a critical term in China’s internet mythology, as the founders of both Tencent and Alibaba share the surname, with the former adopting Pony as his given name in English.)
Fractalist project manager Julien Li told SHPPLUS that getting the tone right was “quite a daunting task because the type of creative content that a car brand can play with is somewhat more limited than other categories of consumer brand,” and the plan is to continue creating innovative films for Bilibili and other platforms, incorporating elements such as 3D to enhance the brand’s storytelling.
News From China
Can content-commerce keep the “Double 11” momentum going for “Double 12”?
Alibaba is turning the December sales event into a month-long campaign with participation from more than 9 million merchants on Alipay, and introduced a series of Taobao upgrades to transform the consumer experience on the platform. To promote sales, Taobao produced a 15-minute futuristic fantasy caper, “Three Golden Coins” (三个金币) starring actor-comedian Shen Teng.
Meanwhile, rival Pinduoduo will partner once more with Hunan Satellite TV to host a star-studded prime-time gala on December 11, promising RMB 10 billion ($1.5 billion) in consumer subsidies and the lowest prices on sought-after premium products such as SK-II and Estée Lauder skin care, Dyson hair dryers, and iPhones (thousands of phones will also be given away during the broadcast).
While the Pinterest-like social media platform Xiaohongshu is best known for its fashion and beauty content, the year 2020 has apparently upended its focus, with food taking over.
At a business leader’s summit last week, Xiaohongshu co-founder Miranda Qu said that in February, when China was in the throes of its coronavirus epidemic, the number of daily active users viewing food-related content surpassed viewers of beauty content, making the former the top vertical category on the platform. By the end of November, Xiaohongshu had seen more than 1.3 billion searches for food-related content for the year.
Following the success of the summer’s 30-and-over women’s shows such as “Sisters Who Make Waves” and “Nothing But Thirty,” it looks like 40 could be the next frontier in female-focused entertainment.
Chen Fei, co-founder and CEO of boutique studio Ningmeng Pictures (which produced “Nothing But Thirty” and its younger cousin, “Twenty Your Life On”), recently confirmed that a series titled “Forty Just Right” (四十正好) is in the pre-production stage. Fans have been calling for this sequel of sorts for some time now, and it’s likely to be a boon for any brands featured on the show.
News in English
The coronavirus pandemic has given a boost to domestic brands across the consumer spectrum, with China’s top 500 brands doubling their value over the past four years to a combined $3.8 trillion. Bloomberg
Domestic brands are also outperforming their global rivals when it comes to creating advertising that resonates and converts into sales. GroupM
Discount retailer Miniso is leveraging its strength in offering IP licensed products to launch a new store chain focused on the trendy collectible toys that are all the rage among young Chinese. Bloomberg
Weibo’s emphasis on “pay-to-play” to generate revenues is rankling users who have had their non-commercial posts restricted. Week in China
China’s internet regulator is seeking comment on what types of user information apps may collect, part of a broader overhaul of digital privacy laws currently underway. Techcrunch
Italian fashion house Valentino will stage a curated “brand experience” in Shanghai, highlighting the growing importance of China as a venue for global luxury brands to conduct live events. WWD
Baidu’s buzzwords: The search giant’s list of top terms for the year 2020 includes “worker” (for both blue- and white-collar employees), “Shanghai ladies,” or women who pretend to be rich on social media, and the phrase “would you like to go hiking” from iQiyi’s suspense hit “The Bad Kids.” Dao Insights
Cheers to China: Beer giant Heineken is celebrating the 150th anniversary of the Amstel brand by launching it in the country for the first time. Branding in Asia
A focus on young consumers with affordable products have helped C-beauty newcomer Perfect Diary take on global cosmetics giants. Nikkei Asia
Wanderlust and the ongoing global coronavirus pandemic have fueled a surge in demand for RV travel among Chinese, with new parks for travelers springing up across the country. SCMP
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