Recently, we had the pleasure of being joined by Mr. Benjamin Chen, Co-Founder & Vice President of R2Games, who provided us with several insightful tips about how Western advertisers should go about targeting and acquiring Chinese gamers.
Below, we present you with the highlights of our interview:
How have the ad preferences of Chinese gamers evolved over the years, and how should Western advertisers approach them today?
The majority of the gamers were born after 1980. For gamers born between 1980 -1990, most of them played PC MMORPG from Korea and Japan, so they can accept lower definition games, and like PvP, so it’s useful to display some classic PvP or weapons video ads to them. As for the gamers born after the 1990s, they are concerned a lot about the quality of the game and its benefits, so to get a higher CTR, the advertisers would pay attention to the quality of the ads’ assets and highlight the most attractive points of the game. And the ad’s text contains glossaries from hot social topics usually has a much higher CTR.
With Chinese gamers being willing to invest more money in the country’s growing gaming industry, will that make them significantly more expensive to acquire for Western advertisers soon?
The numbers of Chinese gamers have exploded in recent years, and the game market is very broad.
Besides Tencent and Neteasy, there are nearly two hundred publicly-listed companies. The public companies can enjoy 20-40 times the PE in the stock marketplace, which is much higher than their counterparts in the West, so they have enough money to acquire new users, and the competition is fierce. For mid-hard-core games, it takes $5-$25 for the Android version and $15-$50 for the iOS version.
What is the level of Western advertisers’ presence in the Chinese gaming market, and how do you expect it to change in the near future?
At present, they’re at a comparatively low level. Improvements should be made in the following areas:
- In terms of the game itself, they need to localize. When I speak about localization, I’m not just talking about the translation of in-game content (of course, the translations should be suited to the market). There is also localization in terms of local laws and regulations, and also in terms of the consumer habits of Chinese gamers;
- In terms of game operations, the operations team needs to understand China;
- In terms of advertising, they need to know all the various advertising channels. Advertising materials and documents need to fit the customs of Chinese advertisers, and advertising costs are typically more expensive than they are overseas.
How difficult do Western advertisers currently find it to structure their campaigns’ messages towards Chinese gamers?
It’s very difficult at present. There are so many differences in terms of rules and regulations, economic development, and culture, that there needs to be a period of adaptation. It should get easier as time goes on, but advertisers will still need to follow the changes in the market closely.
With the continuous globalization and interconnectedness of the gaming industry, how long do you think it will take before cultural differences are no longer a significant obstacle?
This will become a reality in the near future. Firstly, with globalization, players from countries around the globe are more willing to communicate and share with each other. Secondly, games are developing towards global connectedness. Thirdly, the rapid development of the internet has resulted in netizens who are more and more able to understand and accept cultural differences.
How do Western advertisers perceive Chinese online advertisement laws, and are they able to adjust to them?
When Western advertisers cooperate with various advertising platforms, advertising agencies will keep up with the relevant laws & regulations. During the advertisement audit process, the business can also quickly become familiar with the legal norms themselves, and adjust their requests accordingly. When an advertisement does not pass the audit, there will be a detailed explanation of the reasons why, so the advertiser can make changes based on the demands of the auditors and resubmit their advertisements.
Do said laws contribute significantly to increasing payouts to publishers due to the difficulty of acquiring Chinese players?
Laws and regulations can result in difficulties in user acquisition, but they don’t “contribute significantly to increasing payouts”. This is because the biggest influences in getting ad traffic are the top advertising channels. For example, Toutiao was forced to take down their Neihan Duanzi app by the government. Their greatest loss in that instance was the traffic lost from app users, but it did not affect the cost of advertising.
How does one go about introducing a Western app in China, especially in some of its cities with less-advanced Internet capabilities?
Firstly, the Chinese people might not necessarily accept the introduction of some Western apps. This is a risk in and of itself. However, what is possible is to introduce the concept of some Western apps into China and integrate it to fit China. From there, you can create an app that Chinese people can accept. Secondly, once a Western app has been introduced to China, the initial validation would be in the first tier cities which have high internet penetration. Thereafter, would be the third and fourth tier cities which have lower internet penetration compared to first-tier cities, but which follow after the trends in the first tier cities, and then the villages. Lastly, it would of course be beneficial to Western advertisers themselves if a Western app was introduced to China and accumulated traffic that they could use to promote their games.
What are the predominant payout deal metrics for Chinese games, and are there any that are considered to be more suitable than others?
There is not one best or one worst method. Different pricing methods are determined by the type of game, the advertising goal, and the type of advertising platform used. Each platform has a different pricing method. Pricing for most advertising and promotions in China use CPC & CPM. This depends on the platform that is selected. For example, the CPA pricing used by Toutiao is already quite mature, so CPA pricing will be used if this channel is selected. On the other hand, UC Toutiao has always used CPC pricing, so if you advertise on this platform, then you can only choose CPC pricing.
Furthermore, are there many opportunities for Western advertisers to promote desktop games in China, or will mobile completely take over, making it unprofitable?
There are more opportunities for mobile. Smartphone penetration in China is very high. Most people will choose to use their phones to go online.
How likely is it for games advertisers to succeed in establishing working relations with Chinese influencers on social media?
Promoting a game in China by working with Influencers is one of the most efficient ways to target accurate audiences. Some popular streamers boast over 10 million followers, and they are used to promoting other [foreign] games to monetize their traffic. So it’s easier for western game advertisers to contact and work with influencers to market their games.
Moreover, would Chinese consumers be convinced, or is there a strong preference for their own games/brands?
To a certain extent, Chinese consumers have a stronger preference for their own games/brands. For example, Chinese gamers would trust the quality of games published by Tencent or Netease more, and choose to download these games [instead].
So, based on everything we’ve discussed, what would your most important advice be to a Western games advertiser intending to enter China?
Respect China’s laws and regulations regarding the Internet, and localize.
iQU would like to sincerely thank Mr. Chen and the team over at R2Games for their contribution, and we hope that you enjoyed reading about his observations and recommendations relating to the Chinese gaming market!
Since publishing this transcript, there has been yet another development in the Chinese gaming industry. For this reason, we thought it’d be useful to summarize the most major advertising restrictions since the beginning of this year:
- Firstly, there was the announcement earlier in March of a temporary game approval freeze due to the restructuring of several media regulatory bodies. While the situation will likely improve in the future, considering the gaming demand in China, there will surely be a difficult initial adjustment period for foreign advertisers.
- In August, this limit on newly-released games was further enforced by the Chinese government in an attempt to control and reduce the myopia rate in children.
- Finally, just a few weeks ago, the video game streaming site and app Twitch was suddenly banned, leaving both local and foreign businesses which heavily rely on influencers to achieve their campaign goals in quite the problematic situation.
Thus, it seems that now, more than ever, it is becoming increasingly essential for foreign game advertisers to receive assistance, when attempting to enter and succeed within the Chinese market.
Therefore, if you aim to launch and market your newest game in China soon, we highly encourage you to learn more about how we can help Westerner advertisers to establish and promote their games in China. You can do that by clicking on the link and submitting a request for a free consultancy session with us. We can assure you that our accumulated experience and trustworthy Chinese partners allow us to help you with:
- dealing with all necessary country regulations
- finding the best-fitting acquisition models for each of the game’s developmental stages
- localizing the game and various advertising solutions for the game
- finding the highest quality players through the most appropriate means
for desktop and mobile in the Chinese market.