Is There a Market for Affiliate Marketing in China?

I had three very interesting phone calls last week from completely different people asking me about affiliate marketing in China. One, a US based investor asking my opinion about the potential of affiliate marketing in China, another, a Chinese branding company looking to do business with us and the last a New York based Chinese Affiliate Network focused on US product sales in China.

I asked a few questions to get a better understanding of the marketplace and their understanding of it.

Chinese Affiliate Network: ChinadGateway

I was really intrigued when these guys called me because they were looking for US based companies wanting to advertise to a Chinese market on a performance base. However when I asked how affiliate marketing worked in China, they said Chinese affiliate marketers generally worked on a CPM basis only. They do not work on a rev share or CPA model. When I asked why, they said Chinese internet marketers wouldn’t take the risk because Chinese buyers don’t generally look at unknown brands or products. Chinese online buyers want only recognized brands of products that are not manufactured in China. I saw two big problems with their model in targeting US advertisers.

  • US based advertisers would likely not take the risk of doing a CPM model if site traffic is unlikely to buy. Why would an advertiser buy on impressions that are not going to convert?
  • So many products in the US are made in China, so unless you have a recognized brand and it’s made somewhere else, like Italy, Canada or on home turf, you’re also not likely to convert. This just leads to very expensive ad buyers that will likely produce a negative return.

A conversation with a friend from a Chinese branding company added another issue to the mix:

  • Everything in the major metropolitan cities where people CAN afford to buy stuff is within arm’s reach. There is nothing you can’t get immediately going downstairs into the shops in your office building or walking across the street. If it’s a need, they already have it. If it’s a want, the only want they would have from US based retailers is something they can’t already get in person.
US Based Investor

Strange that this man called me after I had spoken to two Chinese owned companies looking to leverage the US Marketplace and asked what the potential was in the Chinese marketplace for affiliate marketing. After filling him in on my calls and my thoughts on the potential road blocks listed above, he too agreed that unless he could create a marketplace where Chinese buyers could easily purchase high quality products by international brands made in first world countries, the likelihood of success with traditional affiliate marketing was limited.

BUT, there lies an interesting opportunity here as well. If a niche affiliate network focused on only top level brands made in “first world” countries, would the world jump at the chance to market them? I think so. The challenge would be accommodating different performance models that are acceptable within the countries marketing the products while making them mutually beneficial and profitable to the sellers.

Maybe it’s not for those countries to change their models but for us to find ways to accommodate how they do business while making it profitable for us as well. Mutual win-win.

At the moment there is no “affiliate network” that does such a thing that I’m aware of. However ExactView (founders of Buy.at) has a model that is closest to this and might benefit from keeping these cultural differences and new market potentials on close watch. Who knows, maybe it’s time for a new Global Performance Network that will focus solely on filling this void.

Leave a comment



Miguel

4 years ago

Interesting read. Thanks for the information, I was looking for sites that offered affiliate marketing programs in China but if they only use a CPM model then there might not be a market. Anyways, this is a good start for my research on affiliate marketing programs in China. Thank you.

Sarah Bundy

4 years ago

My pleasure, Miguel. If you find out any more you’d like to share, feel free to hit me up and we can chat about global / asian affiliate marketing opportunities sarah (at) allinclusivemarketing.com

Umut

3 years ago

hey sarah,

good read . i wanted to ask you if there are any good affiliate programms for furniture? thanks in advance 😉

best wishes

umut

Ryan

3 years ago

Great post Sarah. It was a small world moment when I searched for affiliate marketing information and found your domain. We had spoken about 2-3 years ago during my first job.

Phoebe

3 years ago

Thanks for your insights, Sarah! I’m from China, but I’m doing online marketing including affiliate marketing in New York. I personally think affiliate marketing would work in China through blogs and social media as Chinese people tend to trust friends and follow opinion leaders for purchase decision making. CPM does discourage retailers as conversion is always the most important KPI for online performance measurement. Also, marketplace dominant e-commerce environment also prevents brands from spending the money. In China, few brands have their own e-commerce websites. Majority sell through marketplaces such as tmall.com, JD.com. Conversion also tends to be lower than on marketplaces than brand’s website.

Sarah Bundy

2 years ago

Pheobe, thank you for the great insight and feedback on the Chinese market. I’ve heard that marketplaces is the way to go – it would be interesting to do a market survey or comparison of different monetization models over a time-lapsed period of time. How likely do you see the marketplace model evolving in the NA market as the main driver on consumer transactions over the next 5-10 years?

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