Success in the online ad world

Microsoft's MSN took a bold step on the mainland with a daring marketing strategy The Chinese government closely monitors internet use on the mainland, making it a daunting undertaking for a company to enter the digital advertising market, especially an international company. However, Microsoft's MSN division did that three years ago. Charles Chen Xiao, sales director, Microsoft Online Service Group, China and vice-president, Shanghai MSN Network Communications Technology, says Microsoft is one of a few multinationals doing well. Part of the secret to its success is building a localised team. Mr Chen said: 'We offer four kinds of service: portal, Messenger - which is the biggest advertising format - Hotmail and Search engine. While competition is strong, we have been growing step by step over the past three years when we launched our products on the mainland.' He said that while the government oversaw the internet, the Messenger function was not 'so seriously regulated as it's a casual talk tool'. Online advertising was a 'very small part [of the advertising industry], less than 2 per cent', he said. 'But it's a healthy business for investment, and companies can grow their percentage. We've seen 20 to 30 per cent growth of just the internet since our time in China.' The company targets white-collar workers because they are 'information workers'. It conducted a survey series that was a joint venture between MSN and iResearch in November 2006. It was conducted in three phases over one year and focused on white-collar workers' consumption, lifestyle and work status. It found that 46 per cent of white-collar internet consumers used MSN, a higher percentage than other consumers. Taking this information, MSN plans to develop products and services to target this key customer base. The company's trendsetting marketing strategy is using the CPM (cost per thousand impressions) ad-selling model. The firm is the first in China to use this approach. 'In online advertising, the CPM model refers to advertising bought on the basis of impression, commonly understood as a standard according to which advertisers pay for exposure of their message to a specific audience in a certain time,' said Mr Chen. 'It is a scientific way of charging for online advertising by CPM units, as this model can accurately report the number of unique visitors to a webpage. He said that if the unit price of a banner was HK$1 per CPM then 1,000 impressions would engender a HK$1 cost. If 1 million people viewed the ad, the cost was HK$1,000. If an advertiser paid for 5,000 CPM, his ad was exposed to 5 million people online. It is a way of telling customers how many hits are generated from their ads. 'Plus, we have the data to back up the information for our customers,' he said. MSN uses other examples of precision marketing through online platforms. 'The recently published Microsoft Direct Response (MSDR) is an advertising programme designed specifically for advertisers who hold response and return on investment as the key measurements for campaign success. The principle of MSDR is to make use of correlation and participation to activate consumers' consumption activities and to make sure that ads appear in the best place to maximise the campaign achievement. 'Microsoft recommends that advertisers update their ads regularly to keep creative freshness, and to get more responses,' said Mr Chen. 'MSDR provides advertisers with support, analysis and suggestions to help them obtain the best responses to ads and ensure that the campaign budget is spent in the most effective way.' Mr Chen detailed an example of how MSN was able to help a client grow through an advertising campaign. Haikang Insurance and MSN recently jointly founded Haikang-MSN Money College, offering urban white-collar workers and middle class people an integrated financing community. In less than two months, more than 40,000 students signed up, with students from Beijing, Shanghai and Guangzhou accounting for 47 per cent. Haikang Insurance, a formerly little known name, quickly became popular among urban white-collar workers. 'This co-operation across industries shows the expansion of MSN (China) as a business platform, and its multiple approaches to establish direct communication between its partners and white-collar workers.' Mr Chen said that in the first year the company only had 57 customers, but by the end of the third year this figure had grown to more than 600. The company plans to build an integrated social network to enhance the experience of its advertisers. 'We can get better and can still learn from local companies in the advertising industry. We enjoy the competition and, if we try our best, we can continue to succeed.'