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PE Interview With CIC's Sam Flemming
Tags: Baidu, Bidu, CIC, Dell, Discuz!, Facebook, IWOM, Internet Word of Mouth, Myspace, Netease, QQ, Sam Flemming, Sina, Sohu, Taobao, Tianya, Wordpress, Xcar, Younet,
Simply put, Shanghai-based CIC tracks online conversations, what it calls Internet Word of Mouth (IWOM). Since most virtual interaction in China happens on Internet forums (not technically bulletin board services but still called BBS in China), CIC's research and technology focus is on China's countless BBS, but it also looks at blogs and other community sites. The company works with international brands such as Nike and Pepsi to track IWOM, specifically what is being said about their products and services online, and offers advice on what companies should be doing to join in the conversation.
Pacific Epoch recently spoke with CIC founder and CEO Sam Flemming about his views on IWOM in China, including why BBS continue to flourish here, how the social networking space will develop and how the way Chinese people interact with brands is different from the West.
Pacific Epoch: Do you think BBS will remain a mainstream medium in China for Internet users to connect with each other?
Sam Flemming: I think BBS is going to become the core of social networking in China. I would even say BBS is social networking. It depends on which definition you use for social networking, but if you define it as people connecting with other people and creating a community online, it's here. It's called QQ, it's called Tianya; it's Sina or Sohu's BBS, it's Xcar for automobiles, it's Younet for mobile phones. I think BBS is different than Myspace or Facebook in that BBS are topic-based communities. The communities are organized around topics, whereas with Facebook communities are organized around relationships first, then maybe around topics later. I think in the West viewing the Internet as a social medium is something fairly new. Yes, there have always been message boards but message boards were not mainstream, it was only with blogs that self-expression online became more common. Now social networking sites are making connections more effective and self-expression more mainstream. But in China, BBS has always been mainstream, it has always been a key function of the portals. People have been connecting on BBS in a mainstream way for a long time. Maybe social networking sites like Facebook have more features to enhance the networking experience but people are already connecting with each other online in China.
PE: There are lots of Facebook-type SNS sites in China. What do you think of their future? Will they eventually dominant or will it still be BBS?
Flemming: I may be a bit biased because we focus more on BBS, but from our experience I think people are already connecting with each other online on BBS. One aspect of BBS that is appealing is that it is anonymous. Some social networking sites are moving away from that, requiring real name registration. In Chinese online life there is the self-expression, but there is also self-exploration. People can explore different identifies and ideas, and if it¡¯s done anonymously it's a lot safer. There is a little more freedom. The Chinese SNS sites will be similar to Facebook in that they will be successful if they can capture the university students' attention, which is focused on university internal BBS, and then grow up with them. Also, I think it is interesting that the university BBS has been around in the US for a long time, but has never been mainstream, but in China these have been very popular for awhile.
PE: Do you think BBS will be adding some of the functions of social networking sites, such as profile pages?
Flemming: I think so. QQ and BBS platform provider Discuz! are the players to watch here, because they come at it from different angles. QQ has the community and Discuz! has the platform. If you talk to the guys at Discuz!, my guess is they would say social networking is here and it is BBS. One of my predictions for trends in IWOM this year is that BBS sites will begin calling themselves social networking and adding some of the features. A company like Discuz! is in a great position to do that.
PE: What are the main BBS or communities that you are tracking?
Flemming: We cover wherever people are talking online publicly. If people are expressing themselves online, we try to listen and help clients understand what they are saying. For our clients, topic-based communities like Xcar or Younet and within the portals, if there is, for example, a mobile phone forum, have a higher concentration of relevant information. The Taobao communities are quite important as well in terms of where people are talking about products and services. Taobao is interesting. There is a lot of talk in the US about social commerce. But again, it is already happening in China. A lot of the sales are done within the communities. You have the girls giving advice about which cosmetic products to use and putting up pictures of products. The most informative users are the ones that have shops. At the bottom of every post will be a link to their shop. You don't have many of the consultant bloggers in China, with notable exceptions in the IT industry; stuff is happening in the forums.
PE: Do you see that changing at all? Are blogs becoming more important in this regard?
Flemming: A lot of blogs are still diaries. Again, there are always exceptions. The blog groups on the portals are interesting. You will have an automobile blog group or NBA blog group. In the west there are topical blog aggregators, but the Chinese portals are already doing that in a slightly different form. That is what is interesting¡ªa lot of new business models in the West are already here. Blog networks like Weblogs Inc. have not really taken off here because the largest blog service providers are portals. They are businesses and portals. Whereas in the US you have a service like Wordpress, which is a platform. There is no community; no one is trying to monetize that traffic. Sina, Sohu, Netease¡ªultimately their blogs are a tool to monetize traffic. I think that's where you see a little difference.
PE; Do you see any brands hiring people to do IWOM for them; to pretend that they are users of the products on the BBS?
Flemming: Yes, there are companies that are doing that. But we track a lot of messages, and from our experience, a lot of those generated by agencies on behalf of clients are recognized as being fake. Consumers are very savvy; they can spot the fakes. Before you start listening to someone's opinion, you click on their "about" page and look at previous articles. This is not just ineffective, we see this hurting brands. Once people spot it, they will then write messages about how the message is fake.
PE: If there are very negative messages on BBS, can you guys help the brand manager improve the situation?
Flemming: What is hard for brand managers or PR people in the IWOM space to understand is that you cannot completely control the message anymore. Consumers are going to say what ever they want to say. In the end, if your product sucks, people are going to say that. If you want positive IWOM, you need to have products that are worth talking about and worth talking about in a positive way. Of course, brand managers don't design products, they are given a product to sell or promote. They do need strategies to help them at least be a part of the conversation. That is where we see companies beginning to come up with innovative ways to become part of the conversation. There are, for example, 1.2 million messages written by consumers about notebook computers per quarter, and brands have no voice. So now you have Dell, which set up blogs and has IdeaStorm where they can collect consumer feedback. KFC partners with Baidu Zhidao to set up a nutrition forum. So at least brands can now begin to have a voice. They can respond in a "non-corporate sounding" corporate voice. They can respond more quickly and give an official point of view in an unofficial format. So I think that's one way companies can deal with negative word of mouth.
The second thing, which is more difficult because it is less tactical and more strategic, is just simply listening to consumers online. Understand online culture and what gets people excited. When or if something happens, you know the context and how to best react. Ideally, you should have relationships with bloggers and forum administrators. These are the guys that are already talking about you; they already love you and would love to have a relationship with you. You establish that relationship so that if something happens, you can write a blog post, or get the information out to these guys, who will help disseminate it. Of course, these relationships should be transparent and not paid for, but it is also not necessary to pay because the bloggers or forum administrators want to have this relationship. That kind of stuff is difficult for us to communicate to clients because it is strategic, it is not tactical. I would say in China, there are still a lot of companies that are at that tactical level. However, we have worked with clients like Pepsi and Nike for several years in retainer relationships, so there are certain companies that do have that strategic understanding.
PE: Do you think we will be seeing more bloggers with relationships with PR managers in China?
Flemming: I think over time, yes. One of the challenges is that you still have PR firms who will treat bloggers like traditional media. They will send out a press release, maybe offer a "Hong Bao" (envelope of cash) and expect they will get positive coverage. But bloggers and forum administrators don't play by traditional media rules. They aren't traditional journalists. They are more motivated by being "in the know". The same thing is happening in the US. All the A-list bloggers are complaining about "getting pitched" by PR firms who don't get it. But these are growing pains. You just have to learn to do it in the right way.
PE: Do you think it is beneficial to companies to set up their own forums or communities for their customers?
Flemming: I think there are a couple of challenges with that. Companies build products, like mobile phones and automobiles. Building communities is not their expertise. Building a community is not easy. I think there are many issues companies face when building communities, including credibility and legal issues. Our general recommendation is that it is not always the best solution to set up your own community. This can create a lot of headaches. We see that in the future there will be more strategic relationships developed between companies and online communities. There are already sites in China that have communities around products and brands. There will be more explicit relationships between brands and the sites that host communities around brands.
How active are the BBS?
For example, some automobile models can have up to 50,000 mentions a month in just one forum.
PE: What are some of the most interesting examples of companies participating in the online conversation that you have seen in China?
Flemming: Dell (not a CIC client) and their use of blogs is an example of a brand that got a lot of criticism in the US and China for not ¡°getting it,¡± but they have done a pretty good job of turning things around. People used to say they were just ignoring the conversation but now they are active in online conversations. They have blogs that are actively communicating with consumers and are not just corporate mouth pieces. I think Pepsi, who is a client, has had several successful social media-focused campaigns. They had the Pepsi creative challenge in 2006, which asked consumers to submit their own scripts for a TV commercial staring Pepsi spokesperson Jay Chow. According to our measurements, it was the most talked about campaign online. It was voted the best Pepsi campaign globally. The idea actually already existed on fan forums, where consumers were writing TV commercial scripts for Jay and other pop stars. They rode the wave of consumer culture. That is where the true power of IWOM for marketing lies, in understanding your consumer and their culture. They don't try to create a splash, they ride the wave.
PE: Do you see any difference in the way Chinese consumers interact with brands from what you see in the West?
Flemming: I think there is less anti-commercial sentiment in China than in the West. For example, a lot of youth brands are constantly tracking sentiment around company spokespersons and potential spokespersons. When Coke picked Super Voice Girl winner Li Yuchun in 2006 as its spokesperson, fans wanted Pepsi to pick runner-up Zhou Bichang. Being picked by a brand is a sign of having arrived, of achieving legitimate stardom. There is less of a concept of selling out here. Consumers are more open to participating in campaigns with brands. They don't view the marketing as coming from "The Man" as much. At the same time, I think Chinese consumers perhaps will be more sensitive towards brand-related customer service issues¡ªsuch as being ripped off or cheated. But in terms of accepting brands as being part of the ecosystem of entertainment and content, Chinese people are a lot less skeptical.
PE: What do you mean by more sensitive to customer service issues?
Flemming: Whenever issues come up around brands providing poor customer service there will be statements that the foreign brands are treating Chinese consumers as second-class citizens; how they don't treat Chinese consumers as well as they would treat customers overseas. There is definitely negative sentiment towards Japanese brands. It is certainly something to be aware of when a crisis happens. Companies need to make sure that their policies are in line with what they are doing in other countries. If they aren't, the netizens will find it out and they will report it.
PE: What is best way to solve the crises when they happen?
Flemming: You need to at least acknowledge the consumer voice. Don't necessarily acknowledge the problem, but acknowledge that you are listening. And that goes back to having a voice online, through a blog or some other relationship. IWOM requires that you not only have to deal with problems more quickly than you had to previously, but it requires that you communicate more directly with consumers.
PE: Is it common for Chinese companies to have someone specifically in charge of dealing with IWOM or social media?
Flemming: It is happening step by step. We have two clients in 2008 that are hiring IWOM managers. If you look at the West, the number of these types of positions are rising quickly. In China, it isn't happening en masse yet, but we do see a trend beginning.
PE: Are local brands paying attention to IWOM?
Flemming: At this point, all of our clients are multinationals. But actually local brands are probably better than foreign brands at recognizing the importance of IWOM. However, the local brands may be more tactical and may not have the budgets for a service like ours. In the West, there is a whole industry of companies like CIC. All the big agencies are incorporating IWOM into their campaigns or client relationships.
PE: Are there any competitors to CIC in China?
Flemming: There are companies in the space, but I would say we have a different focus. In the US there may be 50 or 60 companies doing this, but in China it is still a relatively small group.
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