The 10th annual report by brand and digital agency Totem, in partnership with Campaign Asia-Pacific, provides a comprehensive analysis of China's marketing and media trends as businesses navigate the challenges and opportunities ahead. This latest report draws on the insights of marketing leaders from 95 brands, predominantly global companies with a significant presence in the Chinese market.
Chris Baker, the founder of Totem, emphasised a notable sentiment shift among brands: “Despite the widespread negative sentiment, there is a small but growing chorus of optimism that suggests things may have already hit bottom and the economy (and consumer spending) is poised to rebound into 2025 and 2026.” This cautious optimism is critical, given the report's findings that reflect a broader trend of economic caution within China.
The survey indicates a notable transition from a previously robust growth environment to one characterised by increased vigilance and reduced marketing budgets—a trend first observed in 2024. As brands grapple with shifting market conditions, a staggering 48% of respondents plan to cut marketing budgets for 2025, marking the highest percentage of anticipated reductions since 2019. This intensifies concerns among marketers, as the overall marketing landscape is defined by a move from aggressive promotional strategies to a more restrained approach.
Chinese marketing success remains heavily intertwined with the realm of social commerce, reflecting evolving consumer behaviours. Winning brands are capitalising on social platforms through a blend of influencers, livestreaming promotions, and tailored social mini-programmes. This strategic focus on social engagement not only drives sales but also builds brand loyalty in a competitive environment that continues to favour performance-driven marketing methods.
The report highlights a significant rift between brand and performance marketing, as most companies increasingly centre their efforts on conversion rates and immediate sales performance—even at the potential cost of long-term brand equity. Such a strategy is underpinned by the necessity for companies to retain a loyal customer base that values trust and reliability, amid aggressive discounting strategies prevalent in the market.
Consumer attitudes reflect a worrying trend; one-third of brands surveyed express the belief that the Chinese consumer economy is currently in recession, while only 14% hold a positive view of the economic climate. The outlook for the upcoming year appears more problematised, with 83% of marketers indicating a neutral to negative sentiment, though there is a slight decrease in the number of outright pessimistic respondents.
In response to these daunting economic landscapes, a significant proportion of surveyed brands—58%—report reallocating resources away from China and into other Asian markets, a trend catalysed by the fallout from the Covid-19 pandemic.
Looking towards 2025, the report identifies priority areas for marketing focus, predominantly on sales, brand awareness, and cultivating customer loyalty—critical elements as businesses navigate through a tightening financial environment. Interestingly, while overall budgets are set for reductions, there is an anticipated increase in digital and social media marketing budgets, with 45% of brands predicting boosts in digital investment and 51% for social media.
As brands prepare for a turbulent 2025, agencies and vendors are particularly vulnerable, with planned budget cuts expected to be three times more significant than in 2024, as performance marketing initiatives remain more resilient against funding reductions. Social media platforms like Red (Xiaohongshu), Douyin, and WeChat are floored as essential channels, with Red notably leading in terms of positive return on investment reported by brands.
In summary, Totem's latest report underscores a critical juncture for brand marketers in China. As businesses recalibrate their strategies amid economic uncertainty, the emphasis on social commerce and performance marketing will likely shape the trajectory of brand engagement well into 2025 and beyond. The landscape remains dynamic, with the potential for future growth hinged on moving beyond the current challenges to harness evolving consumer behaviours.
Source: Noah Wire Services