What Are Luxury Brands Really Up To With Their Ads in WeChat Moments?

Luxury brands are known for spending carefully and keeping technology at arm's length. So why have they paid heavily to advertise in Moments?

Not long ago, the cosmetics brand Make Up For Ever ran a post in Moments: "What kind of egg are you?" Tap "View details," and a 90-second animated video flashes across the phone screen to a fast beat. Bad skin turns your face into an ugly "egg" — a tea egg, a century egg... The fix: just use a certain foundation.

This is, of course, a Moments ad. Make Up For Ever belongs to the luxury group LVMH, and a few months ago Dior also ran a perfume ad in Moments. Add Piaget, Jaeger-LeCoultre, Cartier, Longchamp... Big-budget advertising may be standard practice for cosmetics, but luxury has always been known for caution. Why so bold this time?

The full answer may touch every part of how luxury brands promote themselves. But start with one small point: have you noticed that the products starring in these Moments ads are all ones the luxury brands hope will carry their lines?

When it comes to advertising, luxury brands want to control every detail

If you looked only at e-commerce, you might conclude that luxury brands would rather ignore the internet. Amazon, China's JD.com and a number of niche fashion e-commerce sites have all courted luxury brands without success. Celine's creative director has said more than once that the brand will "never go online," and Hermès' CEO has said that most Hermès goods sold online are fakes...

In China, luxury brands even shun web ads. The only place you will see ads for luxury watches, jewelry and hotels is on the Chinese-language sites of long-established foreign media, such as the Wall Street Journal's Chinese edition and FT Chinese.

With print media in decline worldwide, and the iPad, once a platform luxury favored, now stalling, where should luxury advertise next?

Michel Gutsatz, a professor at KEDGE Business School in Marseille, France, says the core reason luxury is so wary of digital is "control": if brands cannot control a website's environment or every detail, they stay well away.

"Luxury is fairly traditional and has always been torn about digital. They believe advertising must put quality above everything — so how could a web banner convey the feel of our brand?" said Ke Guangxin, head of digital marketing at Mindshare China.

In his view, luxury's unexpected love for Moments ads comes first from the fact that the people who work in the industry are heavy WeChat users themselves. They feel the platform's power firsthand, and that is what sets it apart from every channel they have bought before. After BMW and Coca-Cola ran their ads in January this year, Ke received many inquiries from clients who had been impressed by Moments ads.

WeChat had clearly thought hard about how to commercialize.

Moments ads first appeared in January 2015. According to some reports, WeChat began a concentrated push to win its first batch of premium clients in November 2014, and judging by what has appeared so far, luxury clients may have been among them.

Ke believes WeChat's first clients, BMW and Coca-Cola, were a key move: "If BMW is advertising there, can I still say WeChat isn't upscale enough? If Coca-Cola is advertising there, can I still worry it doesn't reach enough people?"

WeChat set out to convince luxury brands that they would have a fairly high degree of control on the platform: each user sees at most one Moments ad every 48 hours; ad copy must be concise and pass review; and ads can be targeted at users fairly precisely...

WeChat can give advertisers all kinds of data: how many users an ad reached, what share of them opened or shared it, and, if the ad includes features such as payment, how many people went on to buy. WeChat gives brands a chance to "see their consumers."

WeChat Moments ads are a form of "feed advertising." Facebook, Twitter and Sina Weibo all launched this business long ago, but Weibo never managed to win over luxury brands.

Instagram, which has risen fast in fashion circles abroad, unveiled its ads in the second half of 2015. The company has said it decides which users get which kinds of ads based on their data on Instagram and Facebook.

Instagram picked its first partners carefully: Adidas, Burberry, General Electric, Lexus, Michael Kors and others. To win more luxury clients, Instagram recently hired Eva Chen, former editor-in-chief of the fashion shopping magazine Lucky, as its head of fashion partnerships.

In China, the closest thing to Facebook and Instagram may be WeChat Moments.

What does it take to get an ad into Moments?

On the surface, buying an ad looks simple. On the official WeChat Moments Ads website, anyone can read a short introduction, client case studies and other information. The process is broken into five steps: application, preparation, plan review, plan execution and performance tracking.

In May this year, Piaget, the watch and jewelry brand owned by the Richemont Group, ran a Moments ad. The company told us that its own in-house digital department handled the whole process, from creative to placement. In fact, many multinationals have set up departments in China devoted to digital media; the old arrangement, in which the PR or advertising department handled this work on the side, is no longer enough.

The digital department hires an outside ad production company, and the two sides agree on the creative, settling on images, video, music, H5 pages, copy and so on. The ad is then placed through a channel. Sometimes an agency handles the placement too: it has to keep the brand visible day to day and, when something big comes along, produce and place a major plan, which the industry calls a campaign.

"We recommend Moments ads to clients too, but most of them don't have the budget and feel it's out of their league," said a person who works at a digital media ad agency in Shanghai.

So how much does a WeChat Moments ad cost? The official "WeChat Moments Ads Cooperation Application Form" has a field labeled "planned spending," which suggests that different plans may cost different amounts.

According to industry talk, the base price is 5 million yuan, with more charged depending on factors such as the audience reached, up to 10 million yuan at the top end.

Another figure has clients paying 40 yuan per thousand clicks on a WeChat Moments ad, rising to 140 yuan per thousand clicks if the ad is targeted at first-tier cities such as Beijing, Shanghai and Guangzhou.

Daning Jinmao Residence, a high-end housing development that recently ran a Moments ad, disclosed that its target audience was 2 million people, and that targeting core cities, key cities and "other cities" cost 150 yuan, 100 yuan and 50 yuan per thousand impressions respectively.

WeChat has never officially confirmed or denied any of these figures. We emailed questions to WeChat but received no reply.

In fact, WeChat still can't quite tell whether you're rich

As soon as Moments ads went live, the jokes started: "The greatest distance in the world is when you get a BMW in your Moments and I get a Coca-Cola."

The more active you are in Moments, and the more your friends comment on ads, the more likely you are to see ads again. If you rarely use Moments, you are less likely to see them.

Many people know that Moments ads are targeted using "big data." Can WeChat work out a user's gender, city, age and interests — and above all... income? Do luxury brands use these to decide who sees their ads?

All the data Tencent has gathered, even user data from companies Tencent has invested in, could be put to use by WeChat. Yan Fangjun, CEO and chairman of AdChina, told us that Tencent draws first on WeChat's own data, then on QQ and other sources, and can now link a user's accounts on different platforms to a single person and analyze that person's behavior and habits.

Does this person keep in close touch with friends? Prefer travel or movies? Often make payments? When a message goes out, along which chains of relationships will it spread through the vast sea of Moments?

Gender is the easiest to target: while women get ads for Dior perfume and Longchamp handbags, men may get whisky and Mini cars. Take Cartier: the people who received its ad were probably somewhat more often women than men, a little older, living in first- or second-tier cities, and fond of travel, fashion and shopping (though the data can of course be off).

But can WeChat tell whether someone is "very rich"?

Yan said what WeChat still cannot pin down is "spending power" — so users worried about being looked down on because they never got the BMW ad can relax a little.

Tencent, he explained, has so far gathered relatively little payment data. That sets it apart from Alibaba, whose Alipay lets it map a user's spending power far more fully. An account that spends 300,000 to 500,000 yuan a year on shopping clearly belongs to the "high-spending group" that luxury brands want to go after.

Not just image, but sales too

Mei Xiaoqun, vice president of marketing at BMW (China) Automotive Trading Co., Ltd., told QDaily earlier that BMW's January ad was "mainly meant to spread the brand's most basic ideas, not to push a particular model to particular people."

Overnight, 46 million people saw the ad, and BMW's official WeChat account gained 200,000 followers. Yet the ad page did not show a single car.

Jewelry and watch companies, and cosmetics companies above all, think differently from BMW. They would never spend millions in one go just to spread a brand idea. They also need sales.

In the Cartier ad, Zhang Zhen wears the brand's newest watch of the year. Tap through, and Cartier offers a "limited pre-sale": users leave their personal details, choose a city and a store, pay 888 yuan through WeChat Pay to reserve the watch, then complete the purchase in the store.

Cartier wanted to show off its image, drive sales, and get customers into a physical store for one more brand experience... It put a great deal of thought into this Moments ad.

Dior put its perfume front and center, Longchamp promoted its new autumn-winter handbags, and Sephora reminded you to put on a face mask first thing in the morning...

Clearly, behind these big-budget campaigns that scare off smaller brands lie careful calculations by the brand teams.

Luxury brands have brought to China the skill with Facebook and Twitter they have shown in Europe and the US. They keep websites at arm's length but have warmly embraced WeChat. How long will the enthusiasm last?

Wang Liang, founder of the high-end lifestyle services company YHOUSE, considered Moments ads not long ago to promote a company event. In his talks with WeChat, he learned that it may lower the bar for Moments ads in future, for example by letting advertisers target a single city for less money.

Kenneth Tan, head of digital at Mediacom, also told us that WeChat Moments ads no longer cost upward of 5 million yuan and have become more flexible and affordable, though brands without real financial muscle still can't get in.

WeChat did not respond to our request to confirm this.

Wang Liang believes luxury will not stay the main client for Moments ads. In his view, WeChat Moments is a mass-market space, "like a billboard in People's Square," which does not fit luxury's habit of marketing to small, exclusive circles. In fact, luxury clients have small ad budgets but many demands, and they spend shrewdly — far less lavishly than outsiders imagine.

"For WeChat, luxury brands are just there early on to lend their name and build buzz, to draw attention and raise the tone. To make money, it will still rely on big spenders such as cars and real estate, and on more mass-market consumer goods," Wang Liang said.

By mid-September, the ads in Moments had grown more varied: smartphones, travel websites, more affordable cosmetics... As ads multiplied, Moments advertising, once a talking point, has become routine, and the jokes and comments under the ads have dwindled. Luxury brands may have noticed the cooling. The core question they face has never really changed: where can they reach the consumers they want most effectively?