Internet & Tech

Paying up

Kuaishou spends big on CCTV’s Spring Festival gala


CCTV’s partner of choice

Super Bowl Sunday is a day when brands pay millions of dollars for the opportunity to make an impression with consumers. The average cost of a 30-second TV ad spot climbed to $5.2 million in 2018.

There is an even more watched televised event in China: the state broadcaster CCTV’s Spring Festival Gala. Xinhua reported 1.173 billion tuned in on TV or online this February. However, local advertisers that want to promote themselves on the show literally have to put money in consumers’ wallets.

Last year, Baidu signed a deal to become the exclusive partner for the Chinese New Year event. This saw the search giant giving away as much as Rmb900 million ($130 million) of digital hongbao – red packets that are usually given out during the festival as a gesture of good fortune. To access this windfall viewers had to download Baidu’s mobile apps like short video site Haokan and social networking platform Baidu Tieba.

Despite the allure of extra cash in their pocket, netizens responded with little enthusiasm. “I would rather give up the free money, and not download [Baidu’s] apps,” one posted scornfully (Baidu’s services aren’t particularly loved in China; see this week’s “Answer Me: Baidu Faces New Challenge”).

Hopefully Kuaishou, the second most popular short video platform behind Bytedance’s Douyin (known as TikTok outside China), will have better luck this time when the gala is held on the evening of January 24. Kuaishou will become the “exclusive interactive partner” of the 2020 event. This will give it the right to send out hongbao through its app, plus exclusive management rights over the commercials and promotional ads leading up to the gala.

Reportedly Kuaishou has budgeted Rmb4 billion for the sponsorship of the seven-hour live show. Company’s executives later denied the figure, although they maintained that Kuaishou’s budget is significantly higher than that of Baidu this year.

Why the big marketing splash? “Since 2016, the CCTV Spring Festival Gala has become a key battlefield amongst major internet companies. In the past, WeChat, Alipay and Baidu have all given out hongbao. However, the problem is that while the tactic brings rapid growth in the short-term, it doesn’t solve the problem of retention in the long run. For Kuaishou, its goal is to ensure user retention,” reckoned 36Kr, a tech portal.

Kuaishou has made little secret that its target is to reach 300 million daily active users (DAU) by early 2020, up from 200 million as of the end of May. The move also comes at a time when competition between Kuaishou and archrival Douyin is more intense than ever. For comparison, Douyin notched 320 million DAU (as of the end of June this year).

Founded in 2011, Kuaishou allows users to film in either selfie or short video mode, after which they can add visual effects, augmented reality filters and (royalty-free) music clips to make the content fun and entertaining. Many share their creations on the app for everyone to see.

Kuaishou has also been seeing some success in livestreaming, especially streaming of video game content.

At the moment, the majority of Kuaishou users are in lower-tier cities and rural areas. Some of its most viral videos include farmers catching fish in rivers and men lighting firecrackers in their underwear. Only about 30% of daily users come from first- and second-tier cities.

In comparison, Douyin has the majority of its users in bigger cities but is now stepping more onto Kuaishou’s turf in lower-tier cities. The competing pair’s user overlap jumped from 18.7% last year to 46.5% this year, suggesting the competition between them in customer enrolment is intensifying, according to CBN.

“In the past, Kuaishou only focused on technology. But now it has started to turn its attention to marketing, which has long been Douyin’s strength. So now Kuaishou is aggressively expanding its marketing capacity,” noted LatePost, a news website.

Kuaishou has also expanded its product range. For instance, it now has a desktop version of the app that allows users to log in from their computer. There is also a simplified version of the app that only has the most basic functions to attract users that are less social media savvy.

However, Kuaishou now derives the majority of its profits from selling virtual gifts on the platform’s livestreaming sessions. Douyin, on the other hand, relies on advertising revenue. In May, Kuaishou made Rmb3 billion from virtual gifts alone. Douyin made Rmb400 million from virtual gifts but it banked Rmb2.6 billion from advertisements that month.

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