L2 Prestige 100®: China IQ by L2

September 13, 2011

China IQ

SCOTT GALLOWAY NYU Stern DOUG GUTHRIE The George Washington University School of Business ÂŠ L2 2011 L2ThinkTank.com

Friday, October 14 CEIBS, Shanghai China Europe International Business School

HOSTED BY:

Pre-event reception:

Thursday, October 13 Four Seasons Shanghai

For an invitation & more information, contact:

CLINIC

Joseph@L2ThinkTank.com

CORPORATE PARTNERS:

The Social Graph: China L2’s inaugural event in China will probe the underpinnings, platforms, and best practices of social media in China. Year upon year of double-digit economic growth and urbanization has armed tens of millions of Chinese consumers with increasing disposable income and a voracious appetite for luxury goods. In 2009, China surpassed the United States as the world’s second-largest luxury market, trailing only Japan. However, while several prestige brands have been operating in China for almost 20 years, most are still trying to determine how to best tap this enormous but complex opportunity. The social media landscape in China is dramatically different from other markets. Industry leaders like Facebook, Google, YouTube, and Twitter are non-factors in the market, requiring even the most digitally adept brands to fundamentally adapt their social media strategies to local platforms like Baidu, Youku, Sina Weibo, and RenRen. The L2 China Clinic will provide a framework for thinking about the overall opportunity in China for prestige brands. Speakers will explore the key digital players and strategies that lead to success, as well as findings from the 2011 L2 Prestige 100®: China IQ.

MEDIA PARTNERS:

工学坊 GONGXF.COM

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China:

The greatest opportunity for prestige brands in a generation Tomorrow Belongs to Me

McKinsey reports that 73 percent of Chinese luxury consumers are

Over the next 15 years, the global addressable market for luxury goods is expected to grow by 600 million consumers, provoking growth forecasts of 2.2 times GDP.1 Much of this growth is projected to come from one market: China. In 2000, the Chinese market accounted for a fraction of luxury sales globally, however torrid growth means in 2015, China will likely overtake Japan as the world’s largest luxury market.

Forget What You Know The algorithm for success in China is different: • Less about a 50-something millionaire, more about a 30-some

1. McKinsey & Company, “Understanding China’s Love for Luxury”, March 2011. 2. Ibid. 3. Ibid. 4. Pao Principle, 2010. 5. Bain & Company, “China’s Luxury Market Study 2010”, November 2010.

thing, upper middle class consumer

under the age of 45, and upwards of 45 percent are under the age of 35, suggesting that the majority of prestige purchasers are digitally native.3 In the U.S., the average female prestige consumer registers household income of $150,000 and spends $3,000 annually on handbags. In contrast, the average female prestige consumer in China makes $18,300 (125 RMB) and spends $2,000 annually on handbags.4 Often these purchases occur after two to three months of research and consideration, most of it done online.

The fastest growing luxury channel(s) in China: Paris and New York Increasing wariness of counterfeit merchandise, coupled with significantly lower prices abroad, has led to 56 percent of Chinese luxury purchases occurring outside of China, suggesting that a

• Less about retail in Tier I cities, more about new modes of distri-

brand’s digital marketing investments on the mainland drive sales

in Shanghai and Beijing... and New York, Paris, and Hong Kong.5

bution in Tier ll and lll cities

• Less about print, more about mobile and emerging platforms • Less about “expert” editorial, more about peer reviews, as

Digital Is Different

60 percent of consumers indicate that the Internet is one of the

Not a single global Internet leader is number one in China. The pro-

primary sources for information on luxury goods (up from 30

liferation of SNS platforms, BBS sites, and other digital channels

percent in 2008)2

present a challenge to marketers. The environment favors brands

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that adopt nimble, platform-agnostic digital strategies that can be

Internet Tidal Wave

adapted to multiple channels. A testament to the pace of change,

INTERNET USERS IN THE WORLD’S LARGEST LUXURY MARKETS 2010 vs. 2015

Chinese microblogging platform Sina Weibo was not analyzed in our May 2010 study. Launched in August 2009, the platform has

(in Millions)

added more than 10 million users per month and recently topped

800

200 million registered accounts. Sina Weibo has become the platform of choice for prestige brands—57 percent of the brands

= CHINA

in the study now maintain an official presence.

= U.S.

740

= JAPAN = U.K.

China IQ = Growth

= FRANCE

600

Our thesis is that success in the world’s fastest-growing prestige market is inextricably linked to digital competence. This study brands (The Prestige 100®). The majority, 91, compete globally, while nine are of Chinese/Hong Kong origin. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses and help managers achieve greater return on incremental investment. Like the medium we are assessing, our methodology is dynamic,

Internet Users (in Millions)

attempts to quantify the digital competence in China of 100 iconic TOTAL:

400

401

50 97

200

Sincerely,

257

224

DOUG GUTHRIE

Founder, L2

Dean, The George Washington University School of Business

Clinical Professor of Marketing, NYU Stern

447

our approach, investigation, and findings. You can reach us at

SCOTT GALLOWAY

TOTAL:

and we hope you will reach out to us with comments that improve scott@stern.nyu.edu and guthrie@gwu.edu.

450

2010

2015 Source: eMarketer, April 2011.

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Addressable Market for Luxury Brands POPULATION WITH INCOME > $30,000 USD (1995-2025 Estimates, in Millions)

1,500 = REST OF THE WORLD

+600 million

= CHINA = JAPAN

(2010-2025)

= EUROPE = U.S.

Population (in Millions)

1,200

900

+300 million (1995-2010)

600

300

199

200

201

202

Source: Goldman Sachs, March 2011.

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Methodology 40%

SITE:

China Digital IQ Classes

Effectiveness of brand site. FUNCTIONALITY & CONTENT: 70%

BRAND TRANSLATION: 30%

• Site Technology: Load Time, • Chinese Social Media Hosting Location Integration

• Site Aesthetics

• Site Navigation & Search • Customer Service

• Chinese Relevance & Translation

• Product & Promotions • Account Services • E-Commerce

30%

140+

• Content Localization

Brand presence, community size, content, & engagement on major Chinese social media platforms. MICROBLOGGING: SNS:

ONLINE VIDEO:

• Sina Weibo: Presence, Programs, • Renren: Presence, Programs, Community Size, Interaction Rate Community Size, Interaction Rate

• Youku: Views, Number of Uploads, Subscriber Growth, Viral Videos

• Kaixin: Presence, Programs, Community Size, Interaction Rate • Douban: Presence, Programs, Community Size

110-139

90-109

DIGITAL MARKETING: • Search: China Site Traffic, Web Authority, SEO and SEM on Baidu and Google

70-89

MOBILE: Compatibility and marketing on smartphones and other mobile devices. • Mobile Site: Compatibility, Functionality, Transaction Capability • iOS Applications (iPhone & iPad): Availability, Popularity, Functionality • Android & Ovi Applications: Availability, Popularity, Functionality

AVERAGE

CHALLENGED Limited or inconsistent adoption of mobile and social media platforms. Site lacks inspiration, does not translate to the Chinese consumer.

• Email: Frequency, Language, Content, Chinese Social Media Integration, Promotions

15%

GIFTED

Digital presence is functional yet predictable. Efforts are often siloed across platforms.

Marketing efforts, off-site brand presence, and visibility on search engines.

• Brand Buzz: Mentions and Video Uploads on Chinese Social Platforms

GENIUS

Brands are experimenting and innovating across site, mobile, and social platforms. Digital presence is consistent with brand image and larger marketing efforts.

• Tudou: Views, Number of Uploads, Subscriber Growth, Viral Videos

• Advertising & Innovation: Recent Brand Initiatives, BBS, Taobao and Jiepang Activity

IQ Class

Digital competence is a point of differentiation. Site content is innovative and optimized for the Chinese consumer. Chinese social media efforts complement broader digital strategy. Brand experience seamlessly extends across mobile platforms.

SOCIAL MEDIA:

• Tencent Weibo: Presence, Programs, Community Size, Interaction Rate

15%

• Messaging & Imagery

IQ Range

< 70

FEEBLE Investment does not match opportunity.

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

AUDI

Automobiles

170 Genius

Innovation in technology: maintains presence on six different social media sites in addition to its own OurAudi.com

BURBERRY

Fashion

157 Genius

Luxury’s digital darling doesn’t disappoint. From Jiepang VIP guest passes for Beijing grand opening to Christopher Bailey soundtrack on Youku, Burberry claims the fashion crown

BMW

Automobiles

155 Genius

From “beasts to joy”—sheer social pleasure; great translation of a global campaigns for the Chinese market

VOLVO

Automobiles

133 Gifted

C70 Sina Weibo challenges consumers to design the plot for the next Volvo commercial

BENEFIT COSMETICS

Beauty

127 Gifted

Local e-commerce launch caters to consumers with samples and gift-with-purchase offer; Sina Weibo and Kaixin “Benefit Beach Honey” contests delight

CADILLAC

Automobiles

124 Gifted

Recently released Route 66 short film starring Karen Mok across site and social media

ESTÉE LAUDER

Beauty

124 Gifted

EL-Lady BBS includes videos, games, Q&A, and link to purchase

LAND ROVER

Automobiles

122 Gifted

“The Evoque Effect” sets the standard for multichannel digital campaigns

MERCEDES-BENZ

Automobiles

122 Gifted

SLK Mask Party contest provides winners tickets to China Fashion Week and site visitors an opportunity to create their own virtual mask

PORSCHE

Automobiles

112 Gifted

Innovative comparison tool and stunning microsites for each model are the engine of their online presence

FERRARI

Automobiles

111 Gifted

Sina Weibo fans earn tickets and tees for Ferrari Racing Days in Shanghai

INFINITI

Automobiles

110 Gifted

Online owners club provides access to forums, downloads and events; however could be updated more frequently

HERBORIST

Beauty

108 Average

Launched sampling program through popular fashion BBS communities Only Lady and Metroer

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

SWAROVSKI

Watches & Jewelry

108 Average

Dedicated channel on PPTV sparkles with live event feeds

CARTIER

Watches & Jewelry

107 Average

Love microsite is shareable across Kaixin, Douban, and Sina Weibo

GUCCI

Fashion

107 Average

Gucci Style iPhone app transcends language barrier

LANCÔME

Beauty

107 Average

Rose Beauty continues to score points, but Sina Weibo hasn’t been updated since October 2010

LOUIS VUITTON

Fashion

104 Average

Voyages microsite and Jiepang tie-in promote exhibit at National Museum of China

CHANEL

Fashion

103 Average

Chinese iPhone app provides access to Chanel News content and fashion videos

KIEHL’S

Beauty

102 Average

Dedicated Sina blog profiles local influencers

CHRISTIAN DIOR

Fashion

101 Average

Lady Blue Shanghai film disappoints with only 146 views on official Tudou page

CLINIQUE

Beauty

100 Average

More than 145,000 users participated in Renren “Knock Out the Old Me” campaign in early 2011

DOLCE & GABBANA

Fashion

100 Average

Live-streamed summer men’s fashion show exclusively through iOS and Android platforms

SK-II

Beauty

98 Average

More that 180,000 user wishes have been submitted through the “Start Early” microsite for a chance to win gifts and samples

OMEGA

Watches & Jewelry

96 Average

Resting on the laurels of China legacy; dedicated Youku page and well-configured watch finder aren’t enough to keep time

M•A•C

Beauty

95 Average

Dynamic product recommendation engine transcends borders

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

HENNESSY

Champagne & Spirits

94 Average

China-only Hxindian microsite hosts online contests, product videos and a members-only zone

JOHNNIE WALKER

Champagne & Spirits

91 Average

Yulu campaign features 12 mini films highlighting local personalities

LEXUS

Automobiles

91 Average

Generic site fails in pursuit of perfection

COACH

Fashion

90 Average

Mobile optimized site features the men’s collection

DIANE VON FURSTENBERG

Fashion

90 Average

Diane’s personal Sina Weibo account gets a boost from media mogul Hong Huang

LONGINES

Watches & Jewelry

90 Average

China-specific iPhone app cross-promoted on site

ACURA

Automobiles

89 Challenged

Creative promotions on Sina Weibo drive to the dealership

CHOW TAI FOOK

Watches & Jewelry

89 Challenged

Hong Kong jeweler showcases dedicated Taobao shop

JAGUAR

Automobiles

89 Challenged

Live-streamed a press conference announcing its new models, but needs to push the accelerator on its digital efforts

GUERLAIN

Beauty

88 Challenged

1,570 participants on the Rouge Aomatique microsite indicates the brand is puckering up to the Chinese market

HUBLOT

Watches & Jewelry

87 Challenged

Teaming with Formula 1 racer/blogger Han Han to create limited edition watch and accompanying Sina Weibo page

CLARINS

Beauty

86 Challenged

“Looking for V-Girl Contest” in search of perfect face shape received more than 7,000 entrants

YUE-SAI

Beauty

83 Challenged

Dedicated Youku page for eight episode miniseries directed by Gil Wadsworth received more than 1.5 million views

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

CHLOÉ

Fashion

82 Challenged

Chloé’s short-lived Chinese-language blog live-streamed runway shows and garnered more than 40,000 visitors

SHISEIDO

Beauty

82 Challenged

Almost 9,000 votes were cast in the search to find the best beauty expert on the brand’s 13,660 member BBS

MASERATI

Automobiles

80 Challenged

Strong configurator, but available only in English

ROLEX

Watches & Jewelry

80 Challenged

Must spend time on more than a mobile-optimized China site and a Youku channel if it wants to raise its profile

SHANGHAI TANG

Fashion

80 Challenged

E-commerce enabled iPhone app features city guides and taxi cards for Western visitors, but brand is lost on Baidu to Chinese consumers

JAEGER-LECOULTRE

Watches & Jewelry

79 Challenged

Translated microsite allows Chinese consumers to celebrate the 80th anniversary of the Reverso collection

RAYMOND WEIL

Watches & Jewelry

79 Challenged

Global video contest boasts dedicated pages on Douban and eYeka

TIFFANY & CO.

Watches & Jewelry

79 Challenged

Single post on Sina Weibo account suggests “What Makes Love True” site will be launched in September

BULGARI

Watches & Jewelry

78 Challenged

Exhibition at National Museum of China has no digital footprint

IWC SCHAFFHAUSEN

Watches & Jewelry

78 Challenged

Interactive IWC forum is mobile-optimized but available only in English

IDO

Watches & Jewelry

77 Challenged

Sina Weibo following more than 400,000 strong; decicated Sina Weibo account provides customer service

CALVIN KLEIN

Fashion

76 Challenged

CK One virtual box extends life of event

L’OCCITANE

Beauty

76 Challenged

One of three in Index with e-commerce enabled mobile app

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Rank Brand

Category

AUDEMARS PIGUET

Watches & Jewelry

75 Challenged

Royal Oak Offshore collection microsite is buttressed by Chinese translation

RÉMY MARTIN

Champagne & Spirits

74 Challenged

“Real Man” video contest via Youku encourages user-generated video from macho entrants

PANDORA

Watches & Jewelry

73 Challenged

Limited Chinese site content leaves a lot still trapped in the box

LANEIGE

Beauty

72 Challenged

Café Laneige online community enhances interactivity

LUK FOOK

Watches & Jewelry

72 Challenged

Faulty store locator is limited to Hong Kong site, but only brand to support Taobao plug-in on homepage

PIAGET

Watches & Jewelry

72 Challenged

Official Sina blog has registered only 5,000 visits

ARMANI

Fashion

71 Challenged

E-commerce pioneer with Emporio Armani launch, but fails to innovate elsewhere

BOTTEGA VENETA

Fashion

71 Challenged

Site is slow to load and lean on Chinese customization

FENDI

Fashion

71 Challenged

Placing in-video ads through Youku, but not placing enough attention on its overall strategy

LAMBORGHINI

Automobiles

70 Challenged

Brand-approved Taobao shop showcases eight different models but has yet to post a sale

ROLLS-ROYCE

Automobiles

70 Challenged

It’s hard to “contact us” when info is only for North America

HUGO BOSS

Fashion

66 Feeble

Online footprint pales in comparison to monstrous brick-and-mortar presence

MONTBLANC

Watches & Jewelry

66 Feeble

Huge SNS buzz, but not much else

China IQ Class

Beauty

Fashion

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

TAG HEUER

Watches & Jewelry

66 Feeble

Tick tock—patience runs out waiting for site to load

VERSACE

Fashion

66 Feeble

Versace Home is e-commerce enabled; Versace Fashion, not so much

ALFRED DUNHILL

Fashion

65 Feeble

Day 8 blog available in Chinese, but only shareable via Facebook and Twitter

BALENCIAGA

Fashion

65 Feeble

July site launch fails to incorporate Chinese language version

BOBBI BROWN

Beauty

64 Feeble

Users can tune into tips from experts on Sina Weibo, but site doesn’t support e-commerce

CHOPARD

Watches & Jewelry

63 Feeble

Chopard Diary boasts strong content; too bad it isn’t in Chinese

GIVENCHY

Fashion

63 Feeble

Sina Weibo alone is not going to move the needle

MIU MIU

Fashion

62 Feeble

Falling into fashion with global site redesign; noticeably absent from SNS

PORTS 1961

Fashion

62 Feeble

First mover is one of few in Fashion to sell online

BALLANTINE’S

Champagne & Spirits

61 Feeble

Chinese golf fans can follow the action at the Ballantine’s Championship via online and mobile

WULIANGYE

Champagne & Spirits

61 Feeble

More than 9,000 members on site BBS

DE BEERS

Watches & Jewelry

60 Feeble

April site relaunch included simplified Chinese translation

FERRAGAMO

Fashion

60 Feeble

Not much other than a Sina Weibo account with 30,000 fans and not a single post

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

HERMÉS

Fashion

60 Feeble

Offline innovation doesn’t translate online

MOUTAI (MAOTAI)

Champagne & Spirits

58 Feeble

Eagerly awaiting impending BBS launch and reactivation of online e-commerce

PRADA

Fashion

58 Feeble

Luxury’s digital laggard; Sino efforts aren't any different

VALENTINO

Fashion

56 Feeble

Global e-commerce site ships to China, but consumers must be comfortable shopping in English

ASTON MARTIN

Automobiles

55 Feeble

One of two brands with mobile app for Nokia’s Ovi platform

CHIVAS REGAL

Champagne & Spirits

55 Feeble

Supporting site info for “Craft of Chivalry” concert tour is first step

ERMENEGILDO ZEGNA

Fashion

55 Feeble

Men’s runway at fashion week featured projections of Chinese landscapes; but with limited visibility on Baidu, did content even reach Chinese consumers?

MARC JACOBS

Fashion

54 Feeble

Should read Louis Vuitton’s manual on courting China

MOVADO

Watches & Jewelry

52 Feeble

Company website has good localized Chinese content but limited interactivity beyond flash navigation

RALPH LAUREN

Fashion

52 Feeble

U.S. digital fluency has yet to translate

VAN CLEEF & ARPELS

Watches & Jewelry

52 Feeble

Lacks SNS presence and Chinese-specific content on its translated site

PATEK PHILIPPE

Watches & Jewelry

51 Feeble

Strong brand equity; weak digital presence

HARRY WINSTON

Watches & Jewelry

50 Feeble

Rich site heritage content is tempered by poor load times

China IQ Class

Beauty

Watches & Jewelry

Description

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Brand Ranking

Automobiles

Champagne & Spirits

Fashion

Rank Brand

Category

MOËT & CHANDON

Champagne & Spirits

50 Feeble

Recent “Mr. & Miss Moët” Sina Weibo contest suggests IQ is about to pop

VACHERON CONSTANTIN

Watches & Jewelry

49 Feeble

English-only watch configurator and absent concierge need resetting

BELVEDERE VODKA

Champagne & Spirits

46 Feeble

Facebook focus doesn’t help in the East

MACALLAN

Champagne & Spirits

44 Feeble

Interactive elements not translated—blogs, artistry, and photo contest in English only

YVES SAINT LAURENT

Fashion

43 Feeble

Despite the iconic brand’s worst efforts, it still manages to gain some buzz on Chinese social media

DAVID YURMAN

Watches & Jewelry

42 Feeble

Compared to the global site, the Chinese site has no luster

BACCARAT

Watches & Jewelry

41 Feeble

Struggling to shine online

DOM PÉRIGNON

Champagne & Spirits

26 Feeble

China is in love with the brand; its digital presence not so much

100

VEUVE CLICQUOT

Champagne & Spirits

24 Feeble

Flat

China IQ Class

Beauty

Watches & Jewelry

Description

KEY FINDINGS Want to know more about your brand’s China IQ? CONTACT US

China IQ Distribution

Key Findings

% OF BRANDS PER CHINA DIGITAL IQ CLASS:

GENIUS

In the Company of Genius

Volvo

Benefit Cosmetics

Two of 2010’s five Genius brands, Audi and

Estée Lauder

Lancôme, Estée Lauder, and Clinique,

Land Rover Mercedes-Benz

remained solidly in the top quartile, buttress-

CHINA IQ

>140

GIFTED

Cadillac

BMW, retained their status, the other three,

Audi

CHINA IQ

110-139

Porsche

ing the notion that constant innovation and

AVERAGE

Ferrari

investment are requisites for digital success in

Infiniti

this dynamic market. New to the Genius and Gifted ranks, Burberry and Benefit Cosmet-

20%

ics, were among 2011’s biggest winners, both launching e-commerce in the past 12 months and making significant investments in Chinese social platforms.

Acura Chow Tai Fook Jaguar Guerlain

More than two-thirds of the Prestige 100® posted a Challenged or Feeble IQ, suggesting digital efforts in China remain nascent across

Hublot Clarins Yue-Sai Chloé

the industry. The biggest differentiator between

Shiseido

Genius and Gifted brands occurred across

Maserati

the Site dimension. Brands that score well have developed transaction-oriented sites with superior customer service, Chinese-specific technology integration, tailored content, and consistent translation.

Rolex Shanghai Tang JaegerLeCoultre Raymond Weil Tiffany & Co. Bulgari

CHINA IQ

90-109

Burberry BMW

Herborist

SK-II

Swarovski

Omega

Cartier

M•A•C

Gucci

Hennessy

Lancôme

Johnnie Walker

Louis Vuitton

Lexus

Chanel

Coach

Kiehl’s

Diane von Furstenberg

Christian Dior Clinique

IWC Scaffhausen IDo

CHALLENGED

Calvin Klein

Hugo Boss

L’Occitane

Montblanc

Audemars Piguet

TAG Heuer

Rémy Martin

CHINA IQ

Pandora

70-89

Versace

31%

Alfred Dunhill Balenciaga

Laneige

Bobbi Brown

Luk Fook Piaget

Chopard

Armani

Givenchy

Bottega Veneta Fendi

Longines

Dolce & Gabbana

Miu Miu

FEEBLE

Ports 1961

Ermenegildo Zegna Marc Jacobs Movado Ralph Lauren Van Cleef & Arpels Patek Philippe Harry Winston Moët & Chandon

Lamborghini

Ballantine’s

Vacheron Constantin

Rolls-Royce

Wuliangye

Belvedere Vodka

De Beers

Macallan

Ferragamo

Yves Saint Laurent

37%

CHINA IQ

<70

Hermés Moutai (Maotai) Prada Valentino Aston Martin

David Yurman Baccarat Dom Pérignon Veuve Clicquot

Chivas Regal © L2 2011 L2ThinkTank.com

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Top 20 Brands

2010 Rank

China Digital IQ Scores = BRANDS THAT RANKED IN THE SAME IQ CLASS IN 2010 & 2011

TIE

= BRANDS THAT RANKED IN THE TOP 20 IN BOTH 2010 & 2011 BUT CHANGED IQ CLASSES

KEY

Automobiles

Beauty

Champagne & Spirits

TIE Fashion

Watches & Jewelry

TIE

Brand

2011

IQ Class

IQ Score

Rank

Brand

IQ Class

IQ Score

Lancôme

Genius

167

Audi

Genius

170

BMW

Genius

157

Burberry

Genius

157

Estée Lauder

Genius

157

BMW

Genius

155

Audi

Genius

150

Volvo

Gifted

133

Clinique

Genius

146

Benefit Cosmetics

Gifted

127

Mercedes Benz

Gifted

138

Cadillac

Gifted

124

Clarins

Gifted

137

Estée Lauder

Gifted

124

Acura

Gifted

130

Land Rover

Gifted

122

Cadillac

Gifted

124

Mercedes Benz

Gifted

122

#10

Wullangye

Gifted

121

#10

Porsche

Gifted

112

#11

Lexus

Gifted

119

#11

Ferrari

Gifted

111

#12

Infiniti

Gifted

118

#12

Infiniti

Gifted

110

#12

Land Rover

Gifted

118

#13

Herborist

Average

108

#14

Moutai (Maotai)

Gifted

115

#13

Swarovski

Average

108

#15

Cartier

Gifted

114

#15

Cartier

Average

107

#16

Porsche

Gifted

113

#15

Gucci

Average

107

#17

Herborist

Gifted

112

#15

Lancôme

Average

107

#18

Christian Dior

Average

109

#18

Louis Vuitton

Average

104

#19

Louis Vuitton

Average

108

#19

Chanel

Average

103

#19

Tiffany

Average

108

#20

Kiehl’s

Average

102

#19

Luk Fook

Average

108

TIE

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Key Findings GENIUS BRANDS:

Audi

Sina Weibo: A branded Sina event page, linking to the official Weibo account, features the interactive Audi Driving Experience game. The winner receives a PS3 or iPad 2. Fans on the brand Sina Weibo page grew 70 percent to almost 61,000, from July 1 to August 1. The Audi Driving Experience hashtag #奥迪驾控汇# has generated 147,850 posts on Sina Weibo. Audi also maintains separate Weibo pages for many of its models.

Renren: Users compete for a chance to win professional racecar training at Shanghai’s Formula 1 race track.

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Key Findings GENIUS BRANDS:

Mobile: Multiple Chineselanguage mobile apps provide virtual tours of the Audi A8L and complement a mobile optimized brand site.

Audi

Tencent Weibo: Presence on Tencent Weibo is in its infancy.

Kaixin: 181,450 followers. Youku: 275,590 video views.

ÂŠ L2 2011 L2ThinkTank.com

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Key Findings GENIUS BRANDS:

Burberry Mobile: E-commerce enabled Chineselanguage mobile site translates.

Site: Chinese-language, e-commerce enabled site mirrors the brand’s global experience, including Chinese subtitled versions of the Burberry Acoustic video series.

Digital Innovation at Brick and Mortar Stores: Burberry’s Chinese stores are outfitted with the latest in digital technology, including full-length touch screens and iPads.

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Key Findings GENIUS BRANDS:

Burberry

Youku: Milan Fashion Show live stream on Youku garnered Burberry almost 1.2 million views on its channel. Live Stream: An all-digital, holographic fashion show was streamed on brand site, marking the grand opening of the flagship Beijing store.

ÂŠ L2 2011 L2ThinkTank.com

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Key Findings GENIUS BRANDS:

Burberry Kaixin: 61,920 followers.

Sina Weibo: 182,250 Sina Weibo fans are treated to product videos and pics, magazine covers, and celebrity sightings.

ÂŠ L2 2011 L2ThinkTank.com

Douban: 20,780 members enjoy Acoustic series videos, product photo galleries, and a music channel on Douban.fm.

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Key Findings GENIUS BRANDS:

BMW

Mobile Site: Provides BMW model overviews and pricing, but fails to take advantage of mobile features.

Sina Weibo: 240,300 fans on Sina Weibo experience the Joy of BMW.

iPhone App: Exclusive iPhone app for Chinese BMW owners, MyBMWClub includes click-to-call customer service, a dealer locator, and offline meet-ups and events.

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Key Findings GENIUS BRANDS:

BMW

Youku: There are 31,800 unofficial BMW videos on Youku, the most of any brand and testament to brand strength.

Tencent Weibo: BMW has the largest brand following on Tencent Weibo, with more than 173,000 fans.

Jiepang: Fans checked in on Jiepang to the Bird’s Nest National Stadium in Beijing for a virtual badge and a chance to win tickets to the BMW 3 Series fashion concert. Kaixin: 622,640 followers.

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Key Findings

Top Five Biggest Winners & Losers 2010 VS. 2011 IQ PERCENTILE RANK

Benefit FEEBLE

GIFTED

Top-notch e-commerce and program launches on Youku, Tudou, Kaixin, and Sina Weibo propel this LVMH brand to the top of the Beauty rankings.

+67%

Dolce & Gabbana FEEBLE

AVERAGE

Fighting on every front; has launched a presence on nine social media sites globally including three in China. Developed mobile app for Ovi platform.

+48%

Johnnie Walker FEEBLE

AVERAGE

Launched presence on Sina Weibo and Douban; Yulu campaign featuring Jia Zhangke documentaries is shareable across social media.

+44%

Burberry CHALLENGED

GENIUS

One of first in Fashion to launch e-commerce. Has extended social media prowess to Chinese platforms.

+40%

Audemars Piguet FEEBLE

CHALLENGED

Launch of Chinese site launches brand from Feeble to Challenged.

+37%

-41% -43% -56% -67% -68%

Vacheron Constantin FEEBLE

FEEBLE

Hour Lounge BBS available in Chinese receives minimal updates.

Van Cleef & Arpels CHALLENGED

FEEBLE

Flash and media-heavy site has had few technology or functionality updates.

Chivas Regal AVERAGE

FEEBLE

With the exception of Douban page, few updates since 2010.

Wuliangye GIFTED

FEEBLE

Localized site and high participation BBS forum aren’t enough to hold their ground.

Moutai (Maotai) GIFTED

FEEBLE

E-commerce functionality alone isn’t enough to keep this iconic liquor brand in the Gifted ranks.

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Key Findings

Brand Site Sophistication % OF SITES WITH THE FOLLOWING ATTRIBUTES:

Selling Is Knowing

(2010 vs. 2011)

The biggest change in site investments year on year are tied directly to sales. The number

= 2011

88%

of brands that were e-commerce enabled

= 2010

85%

80%

doubled, and one-fifth now sell online. In addition, 23 brands have added offline retail locators. E-commerce continues to be directly correlated with strong digital performance

62%

registered average IQs 16 points higher than those without online sales, suggesting that as an organization begins generating revenue online, additional resources are allocated to digital marketing.

Feature Adoption (%)

across dimensions, and brands selling online

33% 32%

The Beauty category leads the way with 11 of the 15 brands in the study boasting e-commerce 20%

capability. The Fashion category posted the largest year on year change as the percentage 10%

of brands selling went from just seven percent to 24 percent. Some Fashion brands, such as Valentino and Diane von Furstenberg, that do not host a Chinese site sell and ship to China

via their global site. (continued on next page)

ÂŠ L2 2011 L2ThinkTank.com

Chinese Language

Locate Retail Within China

Site Hosted in China

E-Commerce Enabled

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Key Findings

E-Commerce Payment Methods % OF E-COMMERCE ENABLED SITES EMPLOYING THE FOLLOWING:

Selling Is Knowing

(August 2011)

(continued from previous page)

Weak credit card penetration rates and online fraud fears continue to present e-commerce

79%

obstacles. E-commerce enabled brands tackle the payment infrastructure in a variety of ways, the most popular being accepting payments

63%

from the customer’s bank online. More than through Alipay, a PayPal equivalent, popularized by B2C e-commerce site Taobao. Nearly 60 percent of brands still accept cash on delivery.

58%

% of E-Commerce Enabled Sites

60 percent of brands provide payment option

32%

21%

OTHER Online Banking

Alipay

Cash on Delivery

Credit Card

Other

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Key Findings Missed Opportunities Site Features:

Fifty-six percent of Chinese luxury purchases are made abroad, however, just over half of

% OF SITES WITH & WITHOUT THE FOLLOWING TOOLS

Chinese language sites provide a U.S. and

(August 2011)

European store locator, a missed opportunity to provide information to Chinese tourists.

% of Sites WITHOUT the following:

% of Sites WITH the following:

Although, specific international information is limited on many sites, so is local customization,

42%

and less than a third of sites publish prices in

European & U.S. Store Locator

58%

Renminbi. 52%

Common 2.0 tools including user reviews and

Wish List

48%

social media integration, that are ubiquitous on U.S. sites, particularly in commerce-oriented categories such as Auto and Beauty, are only

68%

incorporated on eight sites. In most cases, when

Prices Viewable in RMB

32%

incorporated, social sharing via Chinese SNS and solicitation of user reviews is relegated to

92%

User Reviews

92%

Content Shareable on Chinese SNS

simple interface BBS forums.

ÂŠ L2 2011 L2ThinkTank.com

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Key Findings

Google: A Distant Second Google continues to lose share in the Chinese search market since redirecting searches to Hong Kong in early 2010. The market share of

Brand Name Search Results

Paid Search Tactics

POSITION OF BRAND SITES IN ORGANIC SEARCH RESULTS

% OF BRANDS PARTICIPATING IN THE FOLLOWING FOR BRANDED SEARCH TERMS

(August 2011)

= 2010: 1ST POSITION

= 2010: OUTSIDE TOP 3

= 2011: 1ST POSITION

= 2011: OUTSIDE TOP 3

= CHINESE = ENGLISH

local search engine Baidu stands at 76 percent 71%

versus Google’s 19 percent.6 This is a dramatic

67%

shift from 2009, when Baidu controlled 58 percent of the market versus Google’s 36 percent. Prestige brands continue to struggle with visibility on the local leader. Only 31 percent of brand sites come up first in organic search

43%

results for the Chinese brand name, and 42 percent of sites are not returned in the top

42%

31% 29%

three. Organic visibility has actually declined

30%

on the platform since our May 2010 report,

26% 25%

22%

as the Baidu algorithm increasingly prioritizes 15%

organic returns of customers purchasing terms

18% 13% 12%

on other Baidu platforms. Brands are doing better on Google, however optimizing for a search engine that has de-

creasing relevance is short-sighted.

Baidu: Chinese Brand Name

6. Analysys International, “Seasonal Survey of China Internet Search Market in Q2, 2011”, July 2011.

Google: Chinese Brand Name

Baidu: Brand Zone

Baidu: Paid Search

Google: Paid Search

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Key Findings

Six Simple Strategies for Successful SEO in China:

Pay to Play Paid search accounts for 31 percent of total online ad spend in China and search revenues were up 67 percent year-over-year for 2010.

A quarter of the brands are engaging in paid search on Baidu. Many are using paid search to bypass Baidu’s algorithm and ensure visibility of their Chinese site. Despite being a proven source of traffic, less than a quarter of the brands are purchasing Baidu brandzones.

Without a presence on Baidu, brands are virtually invisible in China. Baidu’s algorithm is different than Google’s and requires a dedicated strategy. In many ways, Baidu is simpler and more accessible than Google, and can be a very powerful tool with minimal investment.

7. iResearch, “2010 Q4 China Search Engine Market” January 2011.

1 2 3 4 5 6

Get Your License: A legal ICP license is crucial. Without a certificate, site may be omitted from search results.

Host Your Site in China: Baidu’s crawler is “impatient” and will skip sites experiencing even minor latency issues eliminating the chance to appear in organic search results.

Buy a Baidu Brandzone: Brandzones drive results. Brands report up to 30 percent of their traffic originating from a brandzone and have seen click through rates up to 75 percent.

Reap What You Sow: Baidu content is prioritized in the search results. Curating brand content on Baidu platforms Tieba (à la forums), Baike (à la Wikipedia), and Zhidao (à la Yahoo Questions) is “free” and can improve search results 10-20 percent if done right.

Cut the Code: Baidu’s crawler is not very sophisticated and requires aggressive spoon-feeding. Streamlining code and adding alternative text improves visibility. As with Google, flash-heavy sites encumber the crawler.

Backlinks Boost: Targeted efforts to acquire backlinks can significantly improve ROI and search visibility.

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Key Findings Empty Inbox Email in China is often overlooked in favor of

Email Marketing:

SNS or BBS communication. However, more

% OF BRANDS WITH & WITHOUT THE FOLLOWING:

than 65 percent of Chinese Internet users

(August 2011)

regularly use email. The level of adoption across the Prestige 100® indicates a missed

% of Brands WITHOUT the following:

% of Brands WITH the following:

opportunity. Although 69 percent of brands provide email opt-in, only 35 percent send 31%

Chinese language emails and just 17 percent

Email Opt-in

69%

send marketing emails after an initial welcome email. Furthermore, 46 percent of Chinese users access email through a mobile device,8

57%

Welcome Email

43%

but not a single brand optimized emails for a mobile phone. 65%

As brands continue to push towards e-com-

Chinese Language

35%

merce, email marketing becomes imperative. Global consumer research suggests that the 83%

Chinese are more receptive when it comes to

Marketing Email

17%

email as a call to action. Seventy-five percent of Chinese Internet users indicate willingness 90%

to purchase after receiving an email, versus 51 percent in the U.S. and 43 percent in the U.K.9 100%

Link to Chinese Social Media

Viewable on Mobile

10%

8. “2010 China Internet Market Annual Review Report”, iResearch, April 18, 2011. 9. China Internet Network Information Center (CNNIC) 2011, eDialogue 2010.

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Key Findings

Social Media Adoption % OF PRESTIGE BRANDS PRESENT ON CHINESE SOCIAL MEDIA PLATFORMS (August 2011)

Social Mania Unlike other global markets, where network

Average # of Followers

effects lead to natural monopolies, the social

CHINESE PLATFORMS VS. FACEBOOK

= 2011

media ecosystem in China is fragmented.

(August 2011)

= 2010

588,902*

Sixty-six percent of Prestige 100 brands have ®

presence on at least one platform, up from less than five percent in April 2010. More than half

57%

are present on two or more, typically combining a microblogging platform (Sina Weibo or Tencent Weibo) and a video site (Youku or Tudou). Geniuses Audi and Burberry are fighting a war

25,986

50,501

Tencent Weibo

Sina Weibo

133,275

101,130

across several fronts and are present on six and five different social platforms, respectively. 22%

Social media fragmentation coupled with the fact that most efforts were launched in the past

14%

12 months, leads to social media communities and Twitter equivalents. Brand communities on Kaixin and Renren, Facebook substitutes

Kaixin

Facebook *June 2011

13% 9%

that are much smaller than average Facebook

Renren

8% 0%

7% 1%

with some of the longest brand legacies, are the largest, averaging slightly more than 133,000 and 101,000 members, respectively. In contrast, the average brand page in the June

Sina Weibo

Youku

Tencent Weibo

Kaixin

Douban

Tudou

Renren

490%

16%

No Data

-29%

12%

3-Month Traffic Growth

200

231

233

116

191

124

Registered Users (in Millions)

2011 L2 Prestige 100®: Facebook IQ registered almost 600,000 likes.

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Top 10 Brands: Largest Sina Weibo Fan Base:

Key Findings

(August 2011)

Top 10 Brands: Sina Weibo Follower Growth

Wild About Weibo Traffic to Sina Weibo is up more than 490

(August 2011)

percent in the past three months, and prestige

IDo

Cadillac

Mercedes-Benz

BMW

Burberry

Diane von Furstenberg

Followers: 409,374

brands can’t get enough of the microblogging platform. Local jeweler IDo leads all brands on

Ports 1961

Weibo on the heels of its “Irresistibly Appealing” campaign in which users could spin a daily

140%

Ferrari

136%

Shiseido

135%

most integrating Sina Weibo efforts with a wealth of cross-platform digital campaigns. In July, prestige brand Weibo fan growth averaged 41 percent among brands with accounts on the platform, a testament to its growth. Ports 1961 led all brands in growth on Sina Weibo, tripling its base over the course of the KEY

Automobiles

month by referencing popular celebrities in its posts. Audi was able to grow its already

Beauty

Herborist

Followers: 366,179

Followers: 293,882

Followers: 231,056

128% Followers: 180,964

Moët & Chandon

Calvin Klein

Audi

70%

Audi

Rémy Martin

70%

Volvo

#10

69%

Benefit

substantial base by 70 percent to more than 148,500 fans through its “Audi Driving Experi-

314%

Luk Fook

prize wheel on the platform to win diamonds. Auto brands claim five of the top 10 spots,

108%

77%

Followers: 153,693

Followers: 148,567

ence” promotion.

Champagne & Spirits

Dolce & Gabbana Fashion

100%

200%

Followers: 110,803

300%

#10

Watches & Jewelry

Followers: 117,103

Louis Vuitton

Followers: 107,408

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Key Findings

Top 15 Brands: Organic Buzz RELATIVE AGGREGATED ORGANIC MENTIONS ON SINA WEIBO & QZONE & NUMBER OF VIDEOS ON YOUKU & TUDOU (August 2011)

BMW

Audi

Chanel

Tiffany

KEY

Ferrari

Porsche

Lamborghini

Gucci

#10

Moutai (Maotai)

Volvo

Automobiles

Beauty

Champagne & Spirits

Fashion

#11

#12

Hermès

#13

Dior

#14

Prada

Burberry

#15

Shiseido

Watches & Jewelry

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Mobile Adoption Rates

Key Findings

60%

(2010 vs. 2011)

Mobile Incompatible Of the 485 million Internet users in China,

25%

318 million access the web through their mobile

= 2011

phone.10 Many Internet users have gone from

= 2010

16%

no Internet directly to mobile Internet. While prestige brand programming on mobile plat-

forms has increased dramatically from 2010,

it has not kept pace with the opportunity.

Mobile Site

Mobile App

Slightly more than half of brands have apps available in the Chinese iTunes store, but two

Mobile Adoption Rates Across Platforms

thirds of these apps do not provide a Chinese

% OF BRANDS ON THE FOLLOWING MOBILE PLATFORMS:

language option, and only three—Lancôme,

(August 2011)

L’Occitane, and Shanghai Tang—are commerce TOTAL:

enabled. Furthermore, only two brands, Aston

51%

Martin and Dolce & Gabbana, have created

= AVAILABLE IN CHINESE

apps for Nokia’s Ovi platform. TOTAL:

31%

TOTAL:

25%

19% 14% 6%

TOTAL:

10% 3%

TOTAL:

iPhone

10. China Internet Network Information Center (CNNIC), July 2011.

iOS

iPad

Mobile Site

Android

Ovi

Market Share

12%

31%

39%

YOY Change

116%

-30% 34

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Flash of Genius LAND ROVER:

The Evoque Effect Land Rover’s 360 digital campaign, “The Evoque Effect,” highlights an ability to expand and customize the user experience across a variety of digital and social platforms. At the core of the campaign is a half-animated, eight- episode, mini action movie series, City

of Aurora. Android, iPhone, and iPad apps provide additional screens for viewing the episodes.

“The Evoque Effect” microsite

On Sina Weibo users can view the mini movies and answer a series of questions for a chance to win a Macbook Air or create a custom poster

Sina Weibo page used to drive traffic to custom Sina event pages

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Flash of Genius The Evoque Effect

continued

A virtual drive-in movie theater on Tudou allows users to view the movies, leave comments, create their own version of the movie using an online editing tool, and paint their own comic cells with an online tool

On Douban users write their own script or use an online tool to paint the city for a chance to win prizes ranging from model cars to notebooks and pens On Renren users answer quizzes around the movie’s plot and characters for a chance to win prizes. The page also included links to other social media properties and a behind-the-scenes photo gallery © L2 2011 L2ThinkTank.com

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Flash of Genius Lambos on Taobao Taobao controls 75 percent of all e-commerce transactions in China, with 48,000 items purchased every minute. Among the 800 million products sold on Taobao, is a $1 million Lamborghini.11 The online Taobao store, built by a Shanghai dealer and approved by the brand, is the only Chinese showcase for Lamborghini. The store highlights the brand history that would otherwise be lost in translation on the English language site. Detailed product pages for eight different models feature stunning images and performance specs in Chinese. Customers can leverage Wangwang, Taobao’s online chat functionality, to receive more information about specific models and after-sales customer service. The site is more buzz than business, however. Although it attracted more than 8,000 orders, none of them resulted in an actual purchase.12 In addition to e-commerce enabled sites, Chinese brands Chow Tai Fook, Herborist, Luk Fook, and Wuliangye also maintain Taobao stores. Lamborghini is the 11. “E-Commerce in China: Patriarchic Benevolence”, Tom Doctoroff, Huffington Post, August 14, 2011.

only Western brand in the study with a Taobao presence. Lamborghini’s Taobao sales stunt succeeds in gaining buzz and raising the brand profile

12. “Selling Lamborghini’s on Taobao. com”, Red Luxury, May 26, 2011.

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Flash of Genius Counteracting Counterfeiting Counterfeiting is a challenge for both brands and consumers. Chinese spirit brand Wuliangye has digitally armed its customers with the means to authenticate its product. Through its website, customers can enter the RFID code from the box or the product code from the bottle. Consumers can also text the RFID code to a designated phone number to receive authentication and to report manufacturers and resellers of counterfeit products online. In-store, Wuliangye provides RFID kiosks at authorized retailers.

Wuliangye allows consumers to authenticate their product online ÂŠ L2 2011 L2ThinkTank.com

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Flash of Genius Gucci Style The recently updated Gucci Style app available for iPhone and iPad, although only partially translated into Chinese, and lacking e-commerce capability and Chinese social networking integration, has garnered more than 700 ratings—the most of any brand in the study—and is currently among the 60 most popular lifestyle apps in the Chinese iTunes

The Gucci Style app available in Chinese has the most ratings of any in the study

store. Users can watch runway and travel videos, add products to wish lists, share products via email, and locate the closest store.

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DVF’s Sina Weibo brand page

Flash of Genius Personal Appeal Looking to extend their brands, Diane von Furstenberg and Bobbi Brown have joined forces with Tom Cruise, Ricky Martin, and

Diane Von Furstenberg’s personal Sina Weibo page

Radiohead in signing up for a Sina Weibo account. With the endorsement of Hong Huang, the editor of fashion magazine iLook,

153,693

Diane’s account has garnered almost 154,000 fans, more than 34 times the number of fans of the official DVF brand Sina Weibo account. Diane von Furstenberg’s weibos are in English and directly lifted from her Twitter account.

4,901

Followers on Sina Weibo

as of August 2011

Her account also reposts DVF brand weibos

107,397

in Chinese. Similarly, most of Bobbi Brown’s weibos are

29,142

curated from her Twitter account and in English. As she does on Twitter, Bobbi Brown accepts questions from her Chinese fans in a monthly series called “#Askbobbi.” Her answers are translated and posted in Chinese. The Sina Weibo accounts of the Chinese make-up artist team are highlighted. She also reposts from the brand account, which has only 29,000 fans compared with her 107,400 fans.

Bobbi Brown’s personal Sina Weibo page

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Flash of Genius IDo Does Sina Weibo IDo launched a Sina Weibo effort estimated to have cost the brand millions of Yuan. The “Irresistibly Appealing” campaign generated more than 80,000 posts and 100,000 new Sina Weibo fans.13 During the study period, IDo’s fanbase grew 28 percent to more than 409,000, the largest community on Sina Weibo in the

IDo’s “Irresistibly Appealing” interactive campaign on Sina Weibo

study. Each day fans were able to spin a virtual prize wheel on its Weibo page for a chance to win a diamond ring or pendant. Fans were also encouraged to post their dreams or submit via mobile, for the chance to have it fulfilled. Weibo was also used to drive online traffic offline. Instructions were posted on Sina Weibo for fans to obtain a free bracelet at an IDo store. These bracelets contained a code that was to be texted to a designated phone number for a chance to win a diamond. Within three days, more than 10,000 bracelets were given away and the company had to order 100,000 more to meet demand.14

13. “Weibo Marketing Is ‘Irresistibly Appealing’ to Luxury Brands”, Central People’s Broadcasting Station of China, August 22, 2011.

Fans show off their bracelets on Sina Weibo

14. Ibid.

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Flash of Genius Badges Before Bags Luxury brands have taken to Chinese Foursquare clone Jiepang to raise brand awareness and drive online/offline engagement. Virtual badges on the phone replace shopping bags as a digital symbol of exclusivity and being in the know.

Date

Brand Badge

Jiepang Followers

888

April 2011 Burberry

April 2011

June 2011

Promotion Sina Weibo fans that checked into one of three Beijing stores received a virtual badge and were entered into a drawing for the chance to win a VIP pass to the grand opening party for its Beijing Sparkle Roll Plaza store.

126

Users who checked in at any Chinese Swarovski boutique received a virtual badge. Swarovski provided location-based tips and activities to celebrate Spring.

676

Users who checked-in at the Louis Vuitton Art Cosmic Voyage exhibit at the National Museum of China and shared it via any of the Chinese social networks earned an LV virtual badge.

Guerlain and BMW have also experimented with event specific Jiepang promotions, but do not maintain a permanent presence on the platform.

ÂŠ L2 2011 L2ThinkTank.com

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Flash of Genius

“Joy Is BMW” microsite Users share their stories to collect votes in order to win a BMW bicycle

Joy Is BMW The “Joy Is BMW” microsite features content on the next generation of BMW hybrid technology and a series of videos in which everyday people describe the impact that BMW has had on their life. The site’s contest, launched simultaneously on Sina Weibo and Tencent Weibo, allows users to share their own story in 1,000 words or less. The author of the tale with the most votes per platform will win a BMW bicycle, and the best overall will get to appear in a BMW Joy video. The most popular story to date on the microsite has received almost 315,000 votes. Users submit their stories or place their votes through branded Sina and Tencent event pages. An app analyzes the content of their Weibo page to detect their joy level. If they share their results with 3 friends they receive a BMW virtual badge. BMW’s Tencent Weibo following grew 736 percent to more than 135,000. The hashtag #BMW之悦的故事# (#JoyOfBMWStories) generated 16,766 posts and 3,671,131 mentions during the month of July. The hashtag #BMW在创造什么#

“Joy Is BMW” Sina event page

(#WhatIsBMWCreating) generated 23,370 posts. BMW’s Tencent Weibo page

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Flash of Genius ESTÉE LAUDER:

Applauded on Social Media In July, Estée Lauder grew its Renren following more than 50 percent (the most of any brand) to more than 200,000. Its Renren page featured an interactive game in which users were chal-

Estée Lauder’s interactive game on Renren

lenged to collect coins. Additional points could be gained by sharing the game with friends. The top scorers received a tube of the new Idealist eye cream. More than 76,000 users

Estée Lauder’s Renren brand page

participated in the game, which linked to Estée Lauder’s e-commerce site. Estée Lauder’s BBS, EL-Lady, combines editorial content, interactive games, videos, promotions, product recommendations from featured community members, and online shopping. All BBS content is shareable to Kaixin, and select content can be shared on other SNS platforms. BBS members are encouraged to answer each other’s makeup questions and give tips. Interactive skin care surveys and online tests provide customized product recommendations. Estée Lauder has amassed more than 625,000 followers on Kaixin, a social platform whose traffic is down 28 percent in the last three months. The challenge for Estée Lauder will

Estée Lauder’s BBS, EL-Lady

Estée Lauder’s Kaixin page

be to migrate these fans to new platforms or to its own branded BBS, EL-Lady. Thus far, the brand’s Sina Weibo account has slightly more than 45,500 fans. © L2 2011 L2ThinkTank.com

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Flash of Genius

Sina Weibo account promotes the contests and encourages voting

Made for China Despite the Chinese’ love of foreign brands, a number of prestige brands have launched sub-brands, product lines, or special editions exclusively in China in effort to appeal to the local consumer, increase brand awareness, and build goodwill with the Chinese government. With its China-only brand, Classivm, Hennessy is leveraging digital to help it reach the young, urban Chinese consumer through a dedicated microsite and Sina Weibo account. The membership-based microsite, infused with street culture, promotes sponsored events, provides drink recipes, and hosts a series of contests. In the latest contest, users create a profile, upload their picture, assume one of four hip The microsite is sharable on Kaixin, Baidu Space, Renren, Qzone, and Sina Weibo

hop personas—rapper, breakdancer, beat boxer or graffiti artist—to create a custom video featuring their animated avatar or submit a new idea with an accompanying photo. Site members vote on the submissions with the top five vote getters for each contest receiving a $250 watch. Voters are also eligible for a prize. As of August 31, almost 900 people participated in the video contest, and the top five contestants had a combined 596,450 votes. Two hundred-fifty people participated in the “New Idea” contest, with the top five contestants

Site members create a profile and animated avatars that others can vote on

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Flash of Genius

Beijing Hologram Fashion Show Live Stream

Beijing Backdrop Luxury brands have harnessed online video to introduce themselves to the Chinese market and announce to the world its importance.

Fall/Winter Collection Beijing Event Live Stream on PPTV

Fall 2011 Ad Campaign–Shanghai

Lady Blue Shanghai

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Biographies SCOTT GALLOWAY Clinical Professor of Marketing, NYU Stern Founder, L2 Scott is the founder of L2, a think tank for digital innovation, and a Clinical Professor of Marketing at the NYU Stern School of Business where he teaches brand strategy and digital marketing. Scott is also the founder of Firebrand Partners, an operational activist firm that has invested more than $1 billion in U.S. consumer and media companies. In 1997, he founded Red Envelope, an Internet-based consumer gift retailer (2007 revenues: $100 million). In 1992, Scott founded Prophet, a brand strategy consultancy that employs more than 120 professionals in the United States, Europe, and Asia. Scott was elected to the World Economic Forum’s “Global Leaders of Tomorrow,” which recognizes 100 individuals under age 40 “whose accomplishments have had impact on a global level.” Scott has served on the boards of directors of Eddie Bauer, The New York Times Company, Gateway Computer, ecoAmerica, and UC Berkeley’s Haas School of Business. He received a B.A. from UCLA and an M.B.A from UC Berkeley. DOUG GUTHRIE Dean, GWSB Doug has been an expert in Chinese economic reform for more than decade, a trusted adviser of both multinationals and local Chinese companies, and a student of China for some 25 years. He is the author of Dragon in a Three-Piece Suit: The Emergence of Capitalism in China and China and Globalization: The Social, Economic and Political Transformation of Chinese Society, and is co-editor of Social Connections in China: Institutions, Culture, and the Changing Nature of Guanxi. He is currently writing China’s Radical Transformation: Economic Reform, Global Integration, and Political Change in the World’s Largest Nation, which is an © L2 2011 L2ThinkTank.com

in-depth look at how China’s government-driven form of capitalism has successfully overcome traditional theories of development and helped China become the economic and political juggernaut it is today. In addition to these major works, Doug has published more than 60 articles on China and has been an invited speaker on a number of occasions. Doug is currently the Dean of the George Washington School of Business and has taught at NYU Stern, Harvard Business School, INSEAD, and the Graduate Schools of Business at Stanford University, Columbia University, and Emory University. He received his B.A. in Chinese literature from the University of Chicago and a Ph.D. in organizational sociology from the UC Berkeley. MAUREEN MULLEN L2 Maureen leads L2’s Research and Advisory Practice where she helped developed the Digital IQ Index®. She has benchmarked digital marketing, e-commerce, and social media efforts of more than 300 brands across Pharma, Auto, Luxury, Specialty Retail, Beauty, and the Public Sector. Maureen also has led digital strategy consulting engagements for a variety of Fortune 1000 clients. Before joining L2, Maureen was with Triage Consulting Group and led managed care payment review and payment benchmarking projects for hospitals, including UCLA Medical Center, UCSF, and HCA. Maureen has a B.A. in Human Biology from Stanford University and an M.B.A. from NYU Stern. R. DANIELLE BAILEY L2 Danielle began her career at The Home Depot, Inc., where she led a variety of internal consulting engagements focused on supply chain, merchandising, and in-store process improvement. She went on to manage the implementation of award-winning mobile initiatives for several large

media clients, including The New York Times Company, NBC Universal, Disney/ABC, Maxim magazine, and Zagat. While at L2 she has benchmarked the digital competence of brands spanning the Specialty Retail, Public Sector, Pharma, Wine & Spirits, Travel, and Financial Services industries. Danielle has a B.S. in Systems Engineering from the University of Virginia and an M.B.A. from NYU Stern. CHRISTINE PATTON Creative Director, L2 Christine is a brand and marketing consultant with more than 15 years of experience creating brand identities and marketing communications for aspirational and luxury brands. As creative director of L2, she leads the translation of the L2 brand across all touchpoints, with a particular focus on the visual packaging of L2’s research. She began her career at Cosí, where she developed the brand and oversaw its evolution from concept through growth to 100 restaurants. Since then she has provided creative direction for a wide array of clients, including the launch of Kidville and CosmoGIRL! magazine. Christine received a B.A. in Economics and Journalism from the University of Connecticut and an M.B.A from NYU Stern. JESSICA BRAGA L2 Jessica, a freelance art director, specializes in identity, iconography, event graphics, and invitations. She began her career in fashion, designing textiles and prints at Elie Tahari’s design studio in New York City. She then focused on the Elie Tahari brand aesthetic and consistency in design across its many developing disciplines. She went on to become the art director of a small, prestigious design firm in Chelsea, where she focused on event graphics, digital and print collateral, and brand aesthetics for companies both large and small. Jessica has a B.F.A. in Graphic Design and an A.A.S. in Illustration from Rochester Institute of Technology.

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Biographies SAGE BRENNAN China Luxury Network Sage is a longtime media and Internet analyst in China, most recently based in Shanghai. He has a broad range of marketing, consumer research, market entry, and financial analysis experience, as both an advisor and a manager of entrepreneurial companies in China. Sage is a founder and curator of the Shanghai chapter of MobileMonday and TEDxShanghai. Most recently, Sage was research director of Hong Kongbased hedge fund Pacific Sun Investment Management and chief representative of the firm’s China operations, based in Shanghai. Before that, he was general manager of Shanghai-based Pacific Epoch, a boutique telecom and technology research firm later acquired by Pacific Crest Securities. He contributed the weekly “This Week in China” column to Dow Jones’ MarketWatch for two years, and remains a frequent commentator on China-related media and technology issues in print media and on programs such as CNBC’s Asia Squawk Box. A native of Boston, Sage has both an undergraduate degree in International Studies and an M.B.A. from the University of North Carolina at Chapel Hill and has been speaking and studying Mandarin since he first lived in Beijing in 1987. RICHARD HSU Brand Translation Expert H+ Branding Born in Shanghai, Richard studied architecture in the U.S., developing a career in retail, advertising, branding, and design across the U.S., Europe, Japan, and Asia. In 2003, Richard returned to China to lead the opening of Wieden+Kennedy’s China office in Shanghai. In 2006, he opened the brand consultancy firm [h+] in Shanghai, which focuses on China and China-related brands, talents, © L2 2011 L2ThinkTank.com

and education. Richard lectures regularly in the subjects of brand development and multi-disciplinary design at Columbia University, New York University, Tongji University, and the Central Academy of Fine Arts Beijing. EMMA LI L2 Emma has served as a research analyst in China and has worked on a number of engagements advising foreign companies on their China expansion strategies and market prospects. For two years, she supported the online publication Jing Daily, conducting research and assessing trends in the Chinese luxury and contemporary art markets. Born and raised in China, Emma speaks Mandarin and Cantonese. She received her Bachelor of Commerce degree from the University of Windsor and has a M.A. in Cross-Cultural Communication from New York University. XI CHEN L2 Born and raised in Beijing and a resident of New York for more than two years, Xi serves as a bridge between American and Chinese culture. Her experience running a store on Taobao provides her with a unique perspective on fashion and commerce in China. Xi previously worked in personal banking for RBC, providing customized and localized banking services to Chinese clients. Xi has a B.B.A. from Capital University of Economics and Business in Beijing and an M.A.in International Education from New York University.

Additional thanks to Yvonne Du, Winnie Rui, and Flora Lan, who served as additional data collection resources and advised on methodology.

L2 is a think tank for digital innovation. We are a membership organization that brings together thought leadership from academia and industry to drive digital marketing innovation.

UPCOMING 2011 EVENTS 10. 14.11 L2 Clinic

The Social Graph: China

SHANGHAI

L2’s inaugural event in China will probe the underpinnings, platforms, and best practices of social media in China. This intensive executive session will enhance participants’ fluency in

RES E A R C H Digital IQ Index®: The definitive benchmark for online competence, Digital IQ Index® reports score brands against peers on more than 350 quantitative and qualitative data points, diagnosing their digital strengths and weaknesses.

brand-driven social media efforts on Chinese platforms.

11. 10.11 L2 Forum Innovation 2011

NYC

Called the “TED for marketing,” L2’s third-annual Innovation

Prestige 100 : These reports index and analyze the IQs of 100 iconic prestige brands in areas key to

Forum will bring together the highest density of scholars,

future growth. Publications in 2011 will measure the performance of the Prestige 100® brand set in two

business leaders, startups, and marketing executives in

of the world’s largest “markets”, Facebook and China, as well as on Mobile platforms.

North America.

EVE N T S

11. 21.11 L2 Clinic The Social Graph: Europe

PARIS

Forums: Big-picture thinking and game-changing innovations meet education and entertainment.

Academics and industry professionals highlight the

The largest gatherings of prestige executives in North America. 300+ attendees

opportunities, challenges, and underpinnings of social media

Clinics: Executive education in a classroom setting with a balance of theory, tactics, and case

in the prestige industry in a one-day, intensive Clinic.

studies. 60 –120 attendees Working Lunches: Members-only lunches led by digital thought leaders and academics.

UPCOMING 2011 RESEARCH

Topic immersion in a relaxed environment that encourages open discussion. 12 – 24 attendees

PRESTIGE 100® Reports:

MBA Mashups: Access and introduction to digital marketing talent from top MBA schools.

Mobile DIGITAL IQ INDEX® Reports:

CON S U LT I N G Advisory Services: L2 works with brands to garner greater return on investment in digital initiatives. Advisory work includes Digital Roadmaps, Social Media Strategy, and Site Optimization engagements.

MEM B E R S H I P For membership info and inquiries: membership@L2ThinkTank.com

Beauty Fashion & Leather Goods Watches & Jewelry

A THINK TANK for DIGITAL INNOVATION

51 East 12th Street, 2nd Floor New York, NY 10003 W: L2ThinkTank.com E: info@L2ThinkTank.com