Marketing in China: Alibaba's and Tencent's Mobile Payment Strategies Retarget Based on What You Have Bought - eMarketer
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Marketing in China: Alibaba's and Tencent's Mobile Payment Strategies Retarget Based on What You Have Bought

August 24, 2016 | Retail & Ecommerce | Media Buying


T.R. Harrington
CEO
Darwin Marketing

T.R. Harrington, CEO of search and social media agency Darwin Marketing in Shanghai, talked to eMarketer’s David Green about Alibaba’s and Tencent’s mobile payment strategies and how they are retargeting consumers.

eMarketer: What’s so special about mobile payment platforms in China, and how are they driving the uptake of online-to-offline (O2O) activity?

T.R. Harrington: WeChat payment is actively promoting O2O services. So if you open up your WeChat wallet, it’s like, ‘Would you like to get a taxi? Would you like to order some food?’ It’s a very virtuous cycle to have these vertically integrated together. You don’t have those kinds of vertical integrations outside of China.

There’s also no question that [Alibaba and Tencent’s] acquisition strategy, especially in the last two or three years, has all been about driving their payment platforms. [Ride-hailing app] Didi Kuaidi was purely based on [turning up] the volume on AliPay and WeChat Pay. [The same is true with] Alibaba getting into [group buying sites] Dianping and then Meituan[.com].

They had a very common theme and investment strategy, which is driving mobile payment transactions. So now that they have all of those different things integrated, when you open up your mobile payments for anything, it’s like ‘Oh, pay right now, but by the way, here are some offers for you.’ So that’s why I say it’s a very virtuous cycle.

“There is no question ... [Alibaba] easily have the highest, the most productive advertising platform globally because they can retarget based on what you’ve bought.”

eMarketer: What’s behind the rush to drive mobile payments?

Harrington: The rush to vertically integrate and make these acquisitions was about driving payment data. And in particular because Alibaba has such a long history of payment data, they already knew how valuable it was in terms of advertising targeting. There is no question from my perspective working with Google, working with Baidu, and now working with Alibaba, that they easily have the highest, the most productive advertising platform globally because they can retarget based on what you’ve bought.

And while search intent is massively valuable and very good for driving high engagement and high conversion, there is no better predictor of what you will buy than what you’ve bought before. Alibaba has more data on that than any company in the world. More than Amazon, and I would say a much more mature and sophisticated platform to target users.

Tencent now has quite a bit of [ecommerce site] JD.com’s transaction data in addition to all of their O2O—they get it. They understand at the end of the day that data—transaction data—especially if it can be tied back to users, is the most valuable way to do ad targeting.

“What makes Apple Pay powerful outside of China is the fact that they have so many iPhones and so many iTunes accounts and therefore so many different wallets. ... But in China there’s no room.”

So they are aggressive in trying to build that as quickly as possible. But I still think Tencent has a long way to go to get to anywhere close to what Alibaba is doing, let alone just say what Facebook is doing. Facebook’s mobile ad targeting right now is phenomenal. But they don’t have transaction data. So they can’t do it at the same level that Alibaba does it at this point.

eMarketer: Do other mobile payment platforms, especially Apple Pay, which launched in China in February 2016, have any chance of competing against AliPay and WeChat Pay?

Harrington: I just don’t think that they have much of a shot, in all honesty. I think the other two guys are already way too big. And they have these vertically integrated platforms.

What makes Apple Pay powerful outside of China is the fact that they have so many iPhones and so many iTunes accounts and therefore so many different wallets. So it makes a lot of sense for them to use this pre-existing payment gateway and to apply it to other places so they can make money just by being a payment gateway. But in China there’s no room.

iTunes in China is at best an unstable platform. Apple is doing everything in its power now to try to find a way to curry favor with the government, the investment in Didi and all the other stuff, because they recognize [the need for government support].

But I don’t think that there is room. I don’t think people need a third payment channel. So Apple outside of China, great opportunity. Inside of China it’s very hard. Samsung? No way—it’s just a waste of time and money.

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