Speaking Sensis

It was interesting to observe the Digital Gurus panel conversation about the role that mobile advertising and social media will play in the foreseeable future at Monday’s Digital Marketing & Media Summit in Melbourne, and to compare this to what’s been said recently at similar forums in Sydney and published in marketing journals. It seems Melbourne’s marketing community is still treading with quite a bit of caution, perhaps waiting to see what others are going to do before going for broke and full integrating mobile and social media into their digital strategies…

A couple of the panellists observed that rightly or wrongly, mobile is still viewed as a bit of a ‘bolt-on’ to traditional marketing strategies. Sensis’ Cheryl Vize and a representative from Google agreed that we’re only just starting to see what mobile can achieve in terms of its ability to target consumers by personal profile and location. A major travel provider said they still a way off viewing mobile as a viable means for booking travel. This is interesting considering research such as the Sensis e-business Report based released in August revealed that 31% of male mobile users and 26% of female mobile users are accessing the internet on their mobiles and 41% use it to look for information on products and services and 25% have used it for banking. So it seems (and Google made this point) that mobile has a growing role to play where functionality and utility meet the consumer. Sure there’s a role for brand campaigns on mobile, but there’s also a massive opportunity to make services available via the most convenient and personal medium around. Perhaps major service providers just need convincing that device functionality can offer their consumers an optimal user experience…hopefully their digital agencies were listening!

On the social media front, key players in the travel and health insurance industry are realistic in their views that consumers don’t want to be their ‘friends’, but there’s a growing trend towards communities of people wanting to talk about travel and healthcare/insurance matters…so by monitoring this activity, and perhaps even setting up the infrastructure for discussion forums etc, brands can benefit by learning from their comments in order to better understand their consumers’ wants and needs.

What about smaller businesses wanting to reach their consumers via their channels? Cheryl said she sees Sensis’ role into the future as collaborating with them to help them understand how all of the different advertising channels, including emerging channels like social media and mobile, can help them and guide them through the maze of options.

As everyone kept coming back to over the course of the day, it’s not about jumping on the latest trend for the sake of it. Any marketing strategy needs to start with an understanding of who your consumers are and where they are looking.

Sometimes the numbers just talk for themselves. Take Yellow Pages® Mobile usage data…

As you all become devoted (hopefully) readers of the Crunch! column, you’ll begin to notice that my articles all take on roughly the same formula.

Obviously, there’ll be stats… a no-brainer considering this column is meant to be about stats.

But those stats will be surrounded by witty (hopefully) witticisms and insightful (hopefully) insights as well.

There’s a simple reason for that. To the vast majority of the world (i.e. the majority of people who aren’t bone fide pen-holder-carrying geeks), staring at a bunch of numbers is like watching grass grow.

But, every now and then, you come across a set of stats that just talk for themselves – no frilly additions necessary.

Here’s an example.

1.    In October, the Yellow Pages® Mobile audience hit half a million unique visitors for the first time¹.

2.    All up, it’s taken Yellow Pages® Mobile a touch over 18 months to reach half a million unique visitors¹. By comparison, it took Yellow Pages® Online more than five years to reach that mark².

Still think mobile marketing’s sitting on the runway?

Think again.

1.  Omniture. July to October 2009
2.  RedSheriff 2004/2005 data

The AIMIA Digital Summit in Sydney last week included presentations from the likes of BBC, Facebook, Viocorp and Microsoft, research presentations from the Internet Advertising Bureau, Nielsen Online and Research International and case studies from Aussie, Witchery Holdings and Tourism Queensland. To sum up some of the key themes that emerged over the two days… online usage is flattening out but continuing to grow and mobile internet usage is on the up. Companies like Aussie and Witchery Holdings now attribute a significant proportion of their revenue to online retailing.

But, 97% of Australian retail sales are still occurring offline. This highlights the importance of local search services like Yellow Pages, which provide the link between online purchase research and the bricks and mortar supplier.

Jonathon Stinton from Research International explained that with so many channels at the disposal of the consumer and the advertiser, it’s getting harder and harder to determine what the key influencers are over a purchase decision. He calls this the “Twilight Zone of information”. So what are influencers as far as we can tell? Consumers are strongly relying on the web to research retail buying decisions and social media is having a minor but growing impact on this phase of the purchase cycle. With the phenomenal rise in social media traffic, brands want a piece of the action and are exploring ways to tap into this and develop relationships with consumers.

So what should an advertising and media company take away from this? We need to be focused on providing choice to both buyers and sellers – and hence our multichannel strategy. With digital such a major part of many Australians’ search repertoire, Sensis needs to provide the most relevant online and mobile local search experiences possible to bring buyers and sellers together. Speaking on the closing panel, Sensis’ GM of Digital Development Cheryl Vize said this is why Sensis is so proud of innovations like the Yellow iPhone app and why we’re absolutely determined to keep “raising the digital bar”.

One thing seems clearer than ever: there may be no crystal ball, but it’s never been as important as it is now for a business to get the magnifying glass out and really examine the DNA of its target market and what media they are consuming where, when and for what purpose in order to determine how to get the best cut-through.

Crunch! is a new column looking at the numbers behind advertising and local search. In today’s Crunch!… Defining what a click is. That’s easy. Defining what a click isn’t. That’s harder… but much more important.

In the 12 years I’ve been working in online media, there’s one thing that’s always befuddled me.

It’s the fact that online marketers cite measurement as the biggest barrier to advertising on what is touted as the world’s most measurable medium.

Go figure!

To highlight this, a 2007 McKinsey Quarterly report* found that over 50% of Internet advertisers saw “insufficient metrics to measure impact” as a barrier to using or considering digital advertising.

And there’ve been similar surveys, with similar results, in Australia.

So, what’s going on here? How the hell can measuring such a measurable medium raise so much angst?

I’ve long thought there’s two reasons.

The first is confusion about how we’re measuring – in other words the different public measurement services and their methodologies. For quite a while now, there’s been concern in Australia about the accuracy of online statistics. Naturally, when there’s a lack of faith in the source, there’s going to be a lack of faith in the data as well.

The second is a lack of clarity around what we’re measuring. Just think about the simple issue of online traffic as an example. Over the years, we’ve been stumped by a blinding array of different metrics – hits, page views, sessions, visits, unique users and unique visitors just to start with.

These metrics all mean slightly different things but, despite that, they’re often quoted interchangeably: a recipe for much pulling-of-hair and gnashing-of-teeth if I ever saw one.

This metric malaise is a really big problem, and I wanted to touch on it today with a focus on one particular metric – the humble click.

WHAT’S A CLICK?

The other day, an interesting question was raised at a customer panel session I attended.

On the surface, the question – “what (in advertising terms) is a click?” – would seem pretty straightforward.

Put simply, it’s when a person clicks from a feeder – like a search engine or banner ad – to a particular advertiser’s web site. It’s the action that gives rise to pricing terms like ‘cost per click’ and ‘pay per click’.

Okay, no biggie there.

CLICKS AIN’T LEADS

But the question becomes a lot murkier when you think about what a click isn’t. In particular, whether a click and a lead are the same thing.

Now, this might seem like nit-picking, but it’s a really important question – especially for the numerically-obsessed, like me. It gets to the heart of how you understand, measure and evaluate the contribution of different media to your business.

To start with, let’s think about this in a traditional media context.

Let’s say you send out a DM piece to 1,000 potential customers. As a result, 100 people take a moment to read it and 10 are so enamoured with what you’ve said that they give you a call.

What have you got there? 1,000 leads? 100 leads? 10 leads?

If you’re a media outlet trying to justify your existence, you might say 100. You might even say 1,000 if you’re feeling particularly hairy-chested (and/or deluded).

But if you’re a manager trying to get a handle on your sales pipeline, the answer is unequivocal… 10.

A lead isn’t a passing ship; it’s a real potential customer who has called, emailed, visited or contacted you in some way expressing a real interest.

A lead is a real sales opportunity that – most critically – you have a real chance to close.

Don’t get me wrong. The fact that 100 people read your DM piece (or clicked through to your web site) is great. They now know you and have you in the back of their minds. They’ve interacted with your brand.

But those people don’t qualify as ‘leads’ until they take that next step and get in touch with you.

BRINGING CONVERSION INTO THE MIX

Clearly, you can’t properly equate clicks to leads (which take the form of calls, visits, emails and other forms of enquiry) in the way some try to do these days.

To properly measure the leads generated by online advertising, you need to bring another ratio into play – conversion.

Conversion measures how many people actually took that next step of contacting you.

Most research suggests that online conversion rates are quite low – in the low single digits. That means the actual leads stemming from your online advertising may only be a relatively small fraction of the number of clicks.

THE BOTTOM LINE

So, what’s the bottom line here?

Firstly, comparing clicks with leads ain’t comparing apples with apples. If you want to compare clicks generated by one form of advertising with calls or visits generated by another, you need to think about the conversion as well. How many people actually visited your site and then contacted you?

Secondly, think about how well your web site converts browsers to buyers. Optimising online lead-generation campaigns means not just getting lots of people to your site, but having a site that efficiently converts them to leads as well.

And finally, if someone comes to you offering a mountain of ‘leads’, ask them precisely what they mean by the word ‘leads’.

How many of them will be real leads – enquiries from potential customers that you have a chance to close?

You might just find they’re leading you up the garden path.

* How companies are marketing online: A McKinsey Global Survey. September 2007

Sensis’ Michelle Sherwood talks to small and medium sized businesses about how to get the most bang for their advertising buck.

Sensis’ General Manager of Marketing, Michelle Sherwood presented to a room of more than 900 small and medium sized businesses at the Small Business BIG Marketing event on Thursday 27 August.

Held at Central Pier in the Docklands, the event was a part of Small Business Victoria’s month long small business festival Energise Enterprise 09, of which Yellow Pages® is a platinum sponsor.

Michelle’s presentation, ‘Making your advertising work for you’ gave the businesses in the room practical insights and advice about effectively marketing and advertising.

Michelle Sherwood on the dais

“With consumer confidence on the increase, it’s more important than ever for your business to be seen by customers when they’re looking to buy.

“Our job at Yellow Pages® is to bring buyers and sellers together, whether that be through print, online or mobile directories, search and mapping websites or telephone information services,” she said.

The Yellow Pages® and White Pages® face to face sales representatives were also out in force, with small business owners flocking to the stands to find out how Yellow Pages and White Pages can help to grow their business.

Luke and Deepak at the Yellow Pages® stand

Visit www.yellowadvertising.com.au or www.whywhitepages.com.au for more information.

Some great commentary was generated by the recent Sensis® e-Business Report. As a small sample of the many discussions occurring in both main and social media, here’s a couple of articles published over the last day or so.

Peter Switzer… “Don’t get left behind online”

Claire Heaney of the Herald Sun… “Businesses flocking to technology“

This year Sensis is sponsoring a series of lunches for members of the Sydney Chamber of Commerce. After two of these lunches, it’s really pleasing to get feedback from this diverse audience that we’ve shared a few things about consumers, small businesses and advertising that they didn’t already know…and actually wanted to know!

I mean, let’s face it, how many times have you turned up to a seminar or lunch only to walk away thinking, I’ve just been robbed of two precious hours in my life and I should demand a refund! I’m not saying Sensis hasn’t been guilty of this in the past… we’ve had our moments like any large business given the opportunity to put someone on the soapbox. But we’re starting to use opportunities like this to – and don’t gag here – help people.  So we asked the Chamber what their members wanted to know to about digital marketing.

And as the chicken and beef mains made their way around the room, our head of Yellow Pages® Digital, Sandeep Baruah, explained that the future of digital marketing in business will see a range of new applications at the disposal of the marketer. The question is what opportunities do they really present to increase brand equity and a company’s bottom line?

For some business, just knowing where to start is daunting in itself.

Sandeep unlocked some of the mystery around digital marketing tools such as:

• Social networking sites
• Search engine marketing
• Search engine optimisation
• Content syndication
• Mobile internet and
• Mobile codes

And he gave the audience a realistic check-list to help them make decisions about their digital marketing strategies:

• Who are my customers and where are they looking?
• What media are they accessing that influences their buying decisions?
• Which of these channels can I use to engage my customers?
• How can I use new technology to integrate campaigns and content across different media?
• Finally, what return am I actually going to see from this investment and how will I measure it?

Answering these questions will help any business go a long way to ensuring that they’re not simply swallowing the hype around new ways of reaching consumers, or putting all of their eggs in one basket.

According to Gerry Sutton, Sensis’ Chief Operating Officer, the Yellow Pages® and White Pages® directories are winning for buyers, sellers, investors and the Australian community.

WA:    Gerry, thanks for your time. You must have been busy since taking over the Yellow Pages® and White Pages® in May.

GS:    You bet. We’re right in the middle of the Yellow Pages® metro sales campaign, and the White Pages® has just kicked off its new campaign. So I’ve been all over Australia… meeting our people and our customers.

WA:    What are your initial observations about the Yellow Pages® and White Pages®?

GS:    Well, as you know, I’ve been very close to these businesses for a long time now. So I can’t give you a true ‘outsiders’ view. But I would say there are three things that have always struck me about our directories.

First up, this is a significant business. Yellow Pages® and White Pages® earns about $1.75bn in revenue and meets the needs of millions of buyers and almost 600,000 advertisers. The bulk of those advertiser customers are Australian small and medium businesses.

Secondly, it’s a real people business. Most advertising connects brands and markets. We’re bringing real people – buyers and sellers – together. Two people at a time. We’re about generating phone calls and store visits from people who are ready to buy right now.

And the way we work with our customers. It’s all person to person. Managing this business is about working with thousands of people to meet the very specific needs of millions… every day.

Thirdly, it’s a very sophisticated business. Yellow Pages® advertisers now reach out to potential buyers not only through the print directories, but an extensive online, voice and mobile network that includes brands like Yellow Pages® Online, Yellow Pages® Mobile, 1234 and Whereis®. And, now, Yellow Pages® listings can also be searched for through third party sites like Bing Maps, Google Maps and Yahoo! OneSearch, which is Yahoo!’s mobile search application.

There are few other media businesses that have broken down the barriers in the way Yellow Pages® has.

WA:    Gerry, you’ve talked about a back to basics approach. What do you mean?

GS:    As I’ve said, this is a real people business. We’ll grow by constantly getting better at meeting our customers’ needs. For us that means more information more easily for buyers and more customers for our advertisers. Do that well and we’ll grow satisfaction, usage, advertiser uptake and, ultimately revenue. It’s that simple.

I’m a big fan of customer satisfaction metrics. They’re no-holds-barred feedback on whether you’re doing the right thing by the customer. And it’s been gratifying to see both buyer and seller satisfaction rise strongly in recent times.

We’ve achieved that by really focussing our attention on customer needs. From the info-rich ad program, which helps advertisers produce more effective advertising, to metered ads, which help them understand ad performance. We’ve launched new services like Yellow™ in the car in nine markets as well as White Pages® Mobile. We’ve added new content products to Yellow Pages® Online and White Pages® Online. These content products help buyers by giving them more information and advertisers by giving them a stronger presence.

And, you know what? These content products have taken off. Take the White Pages® Online Package product for advertisers. Advertiser uptake has gone way beyond our expectations. This one product is almost solely responsible for White Pages® Online revenue tripling in two years.

That’s what I mean by back to basics. Deliver what the customer wants. Do that well and everything else will pretty much look after itself.

WA:    What about usage – particularly print? It’s a pretty hotly debated topic in the industry.

GS:     The Yellow Pages® print directories are valued highly by many Australians. According to Roy Morgan, almost 7m Australians use them every month¹. About 4m of these print directory users are also daily Internet users². These are people who use the Internet all the time, and yet they still see value in using the print directory. After all, it can often be quicker to find and compare businesses in print. At the other end of the scale, about a third of Australian households don’t have Internet access, according to the ABS³. For them, print directories could be their only access to information on local people and businesses.

In saying all this, however, there’s two really important points I need to make.

Firstly, I think the advertising community needs to get beyond this print vs online discussion. We live in a multi-channel world now and the whole print vs online debate is pretty dated.

So we’re really focussed on the usage the combined network delivers our customers. As I’ve said, unique usage of Yellow Pages® print is almost 7m a month⁴. At the same time, usage of our digital network is about 4.8m a month⁵. And unique usage of the third party sites we have arrangements with is about 4.5m a month⁶.

And Yellow Pages® advertiser listings can be searched for through all these services.

Secondly, usage maybe the word on the industry’s lips, but it isn’t, on its own, the main game.

Our customers are interested in winning business – emails, phone calls, store visits and so on. So conversion becomes really important. How many of those users contacted me and how many of them buy? How many leads is my advertising generating for me?

We know from years of research that about 90% of buyers using the Yellow Pages® directory go on to contact a business and about 72% of them buy⁷.

There’s few, if any advertising businesses that can deliver the volume of users and high conversion – in short, the numbers of leads – that Yellow Pages® can.

But now we’re getting more granular with this. As I said, we’ve introduced the info rich advertising program to help our customers create more effective ads. This helps them convert more users into callers.

And we’ve introduced metered ads so our customers can get a really strong sense of not just usage but of the actual calls they’re receiving.

In the end, these numbers – unique usage across all the directories, sites and services, conversion, number of calls – all matter to our customers. Not how’s print doing against online.

WA:    So, Gerry, where do you see the future for directories?

GS:    That’s a good question. I couldn’t begin to answer it completely in a short interview. But here’s a few thoughts.

Directories advertising is traditionally about significant events in a person’s life… weddings, buying a house or car and so on, or unplanned events such as a breakdown of some sort.

And that’s still the major driver of usage. But I think that with the integration of directories content, maps and mobiles into local search, we’ve been able to create a more day to day whenever, wherever you are proposition. Something you use to find your way around every day.

That’s why I think local search and directories is such an exploding market. If you look at usage across all local search sites, it’s grown massively over the last few years.

And I think we can get much better at using our directories to make life easier every day. We can make the whole cross-channel experience much more seamless, with print, online, voice and mobile all talking to each other in different ways.

And we can add sat nav, point of sale scanning and so on.

It won’t matter where you are or what you’re doing, you’ll only ever be a few clicks away from whatever you need.

I guess the other thing I’d add is a comment about digital TV. As you know, I’ve been involved in the digital TV industry for many years. And I’m really interested in seeing how local search and digital TV come together.

But that’s a few years away yet.

WA:    Thanks a lot Gerry.

1: Roy Morgan, Single Source Australia. Average monthly unique users, Yellow Pages® print. April 2008 to March 2009. Base: Austalians 14+
2: ibid
3: Australian Bureau of Statistics, Household Use of Information Technology, Australia, 2007-08
4: Roy Morgan, Single Source Australia. Average monthly unique users, Yellow Pages® print. April 2008 to March 2009. Base: Austalians 14+
5: ibid.
6: ibid.
7: Percentage of serches conducted using the Yellow Pages® Directory that resulted in a business or supplier being contacted. Independent research of people aged 18-64, conducted by TNS in Sydney, Melbourne, Brisbane, Adelaeide and Perth, January – March 2007 and July – December 2007.

Thomas Arthur, Sensis GM, Digital Marketing Services talks about the changing face of digital display advertising and how mobile advertising is now making its presence felt.

WA:    Hi Thomas. Before we talk mobiles, I wanted to focus on the digital display market if I could. Where do you think it’s headed?

TA:    Thanks Wayne. The digital display ad market continues to grow strongly, despite the downturn. Just as importantly, the fundamentals that underpin that financial growth are really healthy. Usage of our online network grew by 13% to 9.6m unique users¹. It’s the largest online display advertising network in Australia and it includes Sensis sites, Telstra sites and a growing portfolio of third party sites like Village, Weatherzone, IGA Worldwide, Swellnet and Bub Hub.

And customer growth has been strong. Marketers really see the importance of digital media now. Growth has been particularly strong in the new areas: in-game, video and, of course mobile, which has really hit the mainstream.

So I think digital display has got a really strong future. I personally think there is a lot of headroom for growth over the coming few years.

WA:    What do you mean by mobiles hitting the mainstream?

TA:    Let me give you a couple of stats. Usage of Sensis’ mobile sites – like Yellow Pages® Mobile, Whereis® Mobile, Sensis® Mobile and Citysearch® Mobile doubled in the last 12 months². And the number of campaigns we executed for mobile advertisers also doubled. Clearly, both mobile usage and advertising are growing at a rate of knots.

Later this week, we’ll be releasing the 14th Sensis® eBusiness Report. Based on some of the preliminary numbers I’ve seen, it looks like there’ll be an exciting mobile story in there.

WA:    So what’s the attraction of mobile marketing?

TA:    It’s an entirely new proposition for both the audience and marketers.

Network speed is now fast enough to view video and other forms of rich media, and the simple charging mechanisms mean that even paid content can be accessed easily.

And, through their mobiles, consumers can access the Internet from just about anywhere. If usage growth is anything to go by, consumers really value that.

Proximity is a powerful advantage for advertisers as well. Mobiles are the first personal medium we’ve ever had. You don’t need to be in front of a TV or a billboard. Mobile advertising reaches people wherever they are.

This gets really powerful when you start to consider the possibilities of location-based advertising. You can stream ads that are contextual to where a person is located at that moment. You might send a coupon for a store when an opted-in buyer is just around the corner. Or a video of a house for sale when they’re nearby during inspection times.

As a result, the mobile audience is really active. People who view display advertising on mobiles are ten to twenty times more likely to take further action, like contacting you or downloading content, than online. So that makes mobiles a real conversion engine for marketers – far more so than just about any other channel.

But there’s more to mobile advertising than display. Mobiles are also proving a boon for local search users – people searching for nearby businesses and places. It’s easy for them to track what’s around them and navigate their way there.

WA:    What about targeting? Are you able to target consumers more effectively through mobiles?

TA:    Absolutely. In fact, one of the real benefits of being a Telstra subsidiary is that we can utilise Telstra mobile segmentation data to really personalise the content we stream. This is a real plus for both users and advertisers, because it ensures more relevant advertising.

WA:    How has the emergence of smart phones impacted mobile marketing?

TA:    Oh, it’s been huge. Smart phone users have already shown themselves to be heavy adopters of online content. Already, well over 10% of all Sensis’ mobile traffic is coming from iPhones.

WA:    So what will be the big things in mobile advertising in the coming year?

TA:    A few things spring to mind. We expect consumer usage and advertiser activity to continue growing strongly. Location-based advertising, which I’ve already mentioned, will really grow, as will video advertising now that we have the bandwidth to enable it.

We’ll see a lot more integration between online and mobile. This will be an important step because mobiles can deliver acquisition capabilities much better than online. So mobile adds acquisition to the brand building strengths of online.

Mobile payments will become more widespread.

And, underpinning all of this, we should see real progress on common mobile advertising standards through the work Sensis and others in the industry are doing together.

WA:    That’s great Thomas. Thanks a lot.

1: Roy Morgan, Single Source Australia. Average monthly unique users, MediaSmart network. March qtr 2009 vs 2008
2: Omniture: Average monthly visits, May to June 2009 vs 2008.

Sensis China CEO, Robert Rath, talks about China’s online consumers and offers some tips for Australian businesses looking to do business in the world’s fastest growing economy.

WA:    G’day Robert. How’s the weather in Beijing?

RR:    A lot warmer than Melbourne I suspect. As normal for this time of the year, it’s in the mid-30s today.

WA:    I wish I hadn’t asked. Robert, it’s been another strong year for Sensis in China. What are the things you remember most about the year?

RR:    I’d have to say our investment in PCPop and Norstar was the most notable event. These companies are associated with sites that are number one in Chinese online auto (Autohome.com.cn and CHE168.com) and number two in Chinese online IT and consumer electronics (PCPop.com and IT168.com). This is a great addition to Soufun, which is the world’s largest real estate site.

What’s really exciting is that all these sites are still in the early growth stage of their life cycles. It feels like a start-up over here… albeit one with proven success and a lot of strength behind it.

Beyond that, I’d say achieving our Soufun 100 cities target, and just the growth in our team over here. We’re really operating as a tight-knit team now and we’re working very closely with Telstra and Sensis in Australia.

WA:    Any down sides?

RR:    The world is going through an economic downturn. Chinese commerce has been impacted like everyone else. But you need to put the Chinese experience into perspective. While the rest of the world has experienced flat or negative GDP growth, China’s ‘low point’ was about 6%. Nevertheless, the government has invested aggressively – and very wisely, I think – in key infrastructure right across the country. As a result, China definitely seems to be turning the corner. It was great to see that some of our key markets, like auto and real estate, were specific targets for government consumer incentives and investment.

WA:    Robert, you recently delivered a speech about the Chinese online consumer. Can you share some thoughts about how Chinese and Australian online consumers differ?

RR:    The first and most obvious difference is scale. It’s amazing to think that every one of Soufun’s 100 cities has more than a million residents. Beijing, where I live, has almost as many residents as the whole of Australia.

China is now the largest online audience in the world with 338m users as of June this year¹. The amazing thing is that only 25%  of the Chinese population are online². Even in the developed cities such as Shanghai and Beijing, the penetration is still only 60% or so. So that’s a big difference. At the same time, Chinese consumers spend over 40% of their leisure time online³. That’s ahead of even of Korea and Japan and more than any other country.

WA:    Why is that?

RR:    Part and parcel of China’s economic growth is an enormous amount of social change. One change that’s relevant to us is that millions of people – particularly young adults – are moving to the major urban centres. In the cities, they’re finding huge opportunity. The end result is we’re seeing a rapidly growing, young middle class emerging in China.

But moving to a new city has its challenges too. Young people need to connect with each other, find new friends, find products and services, find their way around and so on. And they need to do all this in a city that’s unfamiliar to them.

So they’re turning to digital media for just about everything – instant messaging, chat, news, games, shopping and even things like translation. In preparing for the speech you mentioned, I spoke to one of our employees who recently moved to Beijing from Hunan province. Between work and home, he uses the web about five hours a day. He watches TV for only an hour.

WA:    Are you finding that Chinese consumers use the web in different ways to Australian consumers?

RR:    Definitely. One of the really big things I’ve noticed is the enormous amount of social activity on our partner sites. And, remember, these aren’t social networks. They’re sites that help people wanting to buy good and services. On the auto sites, for example, over 20% of visitors spend time on discussion forums. They use these forums to talk about their favourite cars, compare deals and specs and even to organise social events like driving days. Now, the major manufacturers are working to build clubs on our sites as well. This interaction makes for a really vibrant experience – like special interest social networks. It’s an exciting dynamic to be a part of.

WA:    What about mobile, Robert? Are people surfing their phones?

RR:    It’s astonishing to think that there are about 700 million mobile phone users in China. To put that into perspective, the number of mobile phone users in China today is roughly the same as the entire population of Western Europe. And of those using their mobiles, over 150 million use them to connect with the internet⁴. They connect online to chat to friends and download music and games. Although, unlike Australia, where 3G has been in place for three years now, it has just launched in China and is still not used by the majority of consumers.

WA:    Thanks Robert. Just one more question, if I could. You’ve been working in China for almost two years now. What advice would you have for Australian businesses looking to trade with China?

RR:    To me, four things really matter. Firstly, invest to be number one or two. More than most other markets, it’s hard to really make an impact and drive growth without that. Secondly, go local. Sensis and Telstra have a lot of expertise to contribute to our Chinese colleagues. But it’s vital we let our local people get on with the job. They know the markets, the people and the culture. The management within our partner companies are the ones who built and are running these businesses.

Thirdly, connect at all levels of the organisation. Build strong relationships and intimate knowledge at all levels. It’s vital in this market. And, finally, you’ve got to enter China with the right attitude. Ask yourself “how can I support China’s growth”, not “how can China support my growth.”

WA:    Thanks a lot Robert.

1: CNNIC, 24th Statistical Report on Internet Development in China

2: Sensis analysis of CNNIC, 24th Statistical Report on Internet Development in China

3: TNS “Digital World, Digital Life” as cited in press release, December 19, 2008

4: CNNIC, 24th Statistical Report on Internet Development in China