Short-video apps have raised the attention of social commerce and e-commerce players around the world, due to its relevance as a marketing channel and the obvious impact on sales. Even though short-video apps seem like a recent trend, its been present in China since 2016 with strong players such as Douyin and Kuaishou (Chinese TikTok and Kwai). By the end of 2020, there were 873.4 million short-form video platform users in China, and Kuaishou, the largest live-broadcasting platform in the world said their GMV in the first 11 months of 2020 increased nearly 8 times year-on-year to 332.68 billion yuan ($51.44 billion). These results are one of the reasons why Latin American players are now considering short-video apps as an exciting and impactful tool to elevate their social commerce strategies.
The most recent Spring Festival (also known as Chinese New Year), once again showed the relevance and most importantly the opportunity of short-video apps for brand positioning, growth, and sales. In this new blog post, our Asia Team did a deep dive into the short-video trend in China to subtract insightful learnings for Latin American players looking to take advantage of this new marketing channel to unlock growth.
This massive event caught the public’s attention of marketers and social commerce leaders due to the role of Douyin and Kuaishou (Chinese TikTok and Kwai) as the exclusive interactive partners of the 2021 and 2020 Spring Festival Gala, respectively. The Spring Festival Gala, with its over 1 billion viewers, has been a battlefield for Chinese major Internet giants.
Spring Festival Gala: commonly abbreviated in Chinese as “Chunwan”, it is broadcast annually on the eve of Chinese New Year on its flagship CCTV-1 and the Gala has the largest audience of any entertainment show in the world. Last year, 1.23 billion viewers watched the Gala.
Short-Video Apps taking over cultural events
With its massive audience, the Spring Festival Gala has become a desired marketing asset for brands in China. 6 years ago, WeChat (China’s most popular messaging app) sponsored the event, the campaign helped WeChat grow its user base from 8M to over 300M.
One year ago, Kuaishou became the exclusive interactive partner of the Gala. During the live broadcast, Kuaishou handed out five rounds of virtual “red envelopes,” a monetary gift which is given during holidays or special occasions, totaling 1 billion yuan ($144 million) record. The marketing campaign supposed to be a blockbuster. However, the Covid-19 pandemic disrupted the original plan.
Approaching the Spring Festival, a 2020 Chinese comedy film Lost in Russia canceled its theatrical outing due to the pandemic. ByteDance (owner of Douyin) took the opportunity to buy the film’s copyright for 630 million yuan ($90.72 million). On the first day of the lunar year, the film debuted online for free across ByteDance’s video platforms, including Douyin and Watermelon Video, thanks to this strategic move Douyin became the hot topic on Chinese social media and cooled down Kuaishou’s red envelopes project.
LEVERAGING THE EXPERIENCE OF CHINESE SHORT-VIDEO APPS
The two leaders of the industry, Douyin, and Kuaishou have been competing for online traffic for years.
In early 2016, Kuaishou had a sudden and meteoric rise. The app had been quietly accumulating a following base since its launch in 2011, focusing on half-organic, half-algorithm-driven growth and ignoring traditional media and influencer marketing altogether. The strategy worked, and as of 2018, they registered a user base of over 700 million people, 100 million of whom visit the platform daily.
Kuaishou thrived in the sinking market, the term refers to small Chinese cities (third-tier and below) and rural areas, comprising a total of about 930 million people, two-thirds of the Chinese population, and had no rival in rural areas. This particular example reflects an important opportunity for Latin America, where the emerging-middle-class is showing an impressive digital adoption rate and is hungry for better digital products built for them.
It was when Kuaishou seemed invincible that a new force rose. Douyin, launched in 2016, attracted young people in large cities with trendy content and took southern China by storm. Even though the competition got intense, we learned that the differences enabled the creation of different ecosystems.
- The difference in the underlying values and starting points between the two products (“real” for Kuaishou and “good” for Douyin)
- The difference in the logic of the content distribution algorithm (emphasizing inclusiveness and fairness vs. emphasizing content quality)
- The difference in the product (double row optional vs single row immersive)
These different ecosystems impacted the content prioritization, the creation exercise, user mindset and sense of belonging, user growth rate, service provider ecology, and monetization path for the two platforms.
Douyin achieved a rapid catch-up in 2018. Kuaishou, dragged down by the image of “tuwei” (used negatively, saying that someone is “tuwei” is the equivalent of calling them a redneck). However, reformed in late 2019, Kuaishou made great progress on public relations — positioned itself as a video app giving voice to China’s “silent majority”.
When Kuaishou marked its ninth anniversary in June 2020, its promotional video for the platform didn’t feature well-known celebrities or young influencers. Instead, Kuaishou invited Huang Chunsheng, a 50-year-old user living in a small northern city, to be its face.
“Don’t pass by ordinary people with indifference,” said Huang Chunsheng, wearing a suit and standing against a backdrop of videos uploaded by Kuaishou users. “There are people dancing in the mountains, and those singing in vegetable plots (…). Technology has offered the opportunity for the silent majority to break up their silence, and help ordinary people become unordinary. This is the power of seeing them,” he said.
Short-Video and More
Fighting to be the new social media – “Instagram of China”
Short-video apps mainly replace the three functions: “camera”, “album” and “share”. It corresponds to the underlying demands of “shooting”, “watching” and “connecting”. The logic is the same with “Google it” = “search” and “WhatsApp = address book + phone book”. Under the great active user volume, Douyin and Kuaishou are extending to more basic applications to keep their users.
Douyin introduced Jianying in May 2015, because Kuaishou’s APP, Kuaiying, became the favorite clipping software for Douyin’s users. Actually, whether it’s Jianying or Kuaiying, both of them have replaced the mobile phone’s original editing software. The use of these platforms is evolving so fast that ordinary users will use Douyin/Kuaishou to record and share videos. Short-video apps can not only become a “new way of entertainment”, but also a “new way of connection”.
Has there been such a change in history? Instagram challenging traditional social media platforms can be a lesson. Douyin and Kuaishou are actually competing for the position of “Instagram of China”. In this way, China is bound to create a super connection platform based on smartphones.
Short-video Apps Elevating Their E-commerce Presence
Popular live streaming and short-video apps became significant marketing channels in 2020, generating billions in sales by connecting viewers to existing e-commerce sites, or their own.
Chinese consumers are shopping more through live streaming and video apps — a new trend that’s grabbing a slice of the massive market traditionally dominated by e-commerce giant Alibaba. Kuaishou, the largest live-broadcasting platform in the world, said their GMV in the first 11 months of 2020 increased nearly 8 times year-on-year to 332.68 billion yuan ($51.44 billion). Douyin saw e-commerce transactions tripled compared to last year to 500 billion yuan in GMV, according to a report from the Chinese tech news site LatePost.
Short-video Apps in Latin America
The arrival of this trend into Latin America has not been a surprise. Brazil recently became the new battlefield between the Chinese Douin and Kuaishou, whose global version is called Kwai. The rapid evolution of the digital ecosystem in this country caught the attention of the Chinese players.
Tik Tok entered this market after Instagram and Facebook arrived and dominated. However, the company quickly attract the attention of digital users, and just in a few months, the app became the most downloaded in the country with over 18 million active users. Kwai is experiencing a similar journey after their launch in the market, the company achieved over 7 million daily active users, and it’s among the four most downloaded in the country.
While Chinese players are taking over the short-video app category, other existing players are redesigning their presence in the market to face this new context and competition. Instagram recently launched its new short-video feature under the name of “Reels”, which aims to compete with TikTok and Kwai in Brazil and other countries in the region.
The expansion of short-video apps around the region is around the corner. The presence of major players such as TikTok, Kwai, and Instagram, with its recent launch, in Brazil is the confirmation of what is next. Especially if we consider the opportunity behind the untapped markets, as early 2021 Mexico had over 90M internet users, while Argentina and Colombia are close with over 30M each.
With the internet penetration of these markets along with the current appetite of relevant segments, Tiktok has 19M users in Mexico, the arrival of Chinese players is imminent. This new scenario opens two questions; how existing social media players will face new competition and how traditional retail companies will leverage the arrival of this new trend to expand their brand presence, impact its growth and convert millions in sales.
- CICC Focus “Short video: Focus on Kuaishou’s Commercialization Speed”
- AI Media Consulting “Research Report on China’s Short Video Leaders in 2020”
- New Wi-Fi Connection “Short Video War Season 2”
- Mantis Finance “Short Video Battle Enters the Second Half, Value Creation Becomes the Match Point”
- LatePost “When Kwai is Not Only Simba”
- CNN Business “Kuaishou, TikTok’s rival in China, could be the biggest IPO since the pandemic began”
- China Marketing Insights “Douyin Has Replaced Pinduoduo as Sponsor of This Year’s Spring Festival Gala”
- Ub.Triviumchina “The rise of rural influencers: Understanding the popularity of China’s tuwei KOLs”
- Pandaily “Kuaishou: The Anti-Douyin/TikTok?”
- domeet webmaster “Is the birth of Douyin Kuaishou the only way for China’s Internet development?”
- Yahoo Finance “The new monster tech IPO is a video app giving voice to China’s ‘silent majority’”
- CNBC “Watch out, Alibaba. Chinese video apps are quickly becoming e-commerce players too”