Wanghong economy

The wanghong economy refers to the Chinese digital economy based on influencer marketing through social media platforms. Wanghong (Chinese: 网红; pinyin: wǎnghóng; lit. 'internet fame') is the Chinese term for internet celebrity. Chinese wanghong celebrities attract the attention of internet users, which can translate into profit through e-commerce and online advertising.

According to CBN Data, a commercial data company affiliated with Alibaba, the Chinese internet celebrity economy was estimated to be worth ¥58 billion RMB (US$8.4 billion) in 2016, more than China's total movie box office revenue in 2015.

Business model

Online retail

Wanghong celebrities utilize social media platforms to market their self-branded products to their followers through Chinese customer-to-customer (C2C) websites like Taobao. These celebrities endorse their products by sharing pictures or videos of themselves showcasing their merchandise or offering makeup and fashion tips. Chinese e-commerce internet celebrities act as key opinion leaders (KOLs), often referred to in English as "influencers," within online retail. As influencers, wanghong can influence their followers' fashion and lifestyle choices. To emulate their favorite wanghong, followers become dedicated consumers.

In this business model, consumers are crucial in driving products and helping brands flourish. Through social media, they can influence the success or failure of online stores, products, and brands. These consumers are known as prosumers or "professional customers." Emerging forms of consumption gradually detach from rigid social stratification, becoming shaped by fashion trends and experts who curate good taste and stylish outfits.

Zhang Dayi (张大奕) is recognized as one of China's most prominent wanghong, according to BBC News, boasting 4.9 million followers on Sina Weibo as of 2016. Zhang operates an online shop on Taobao, through which he reportedly earned ¥300 million RMB (US$46 million) per year, compared to the US$21 million earned by Fan Bingbing (范冰冰), a leading Chinese actress.

In 2015, Alibaba's Singles' Day sales reached a record $14.3 billion, primarily generated by its online retail platform, Taobao; five of Taobao's top ten best-performing shops belonged to wanghong.

Social media advertising

The foundation of social media advertising is content, which is central to the wanghong economy. Wanghong utilize free original information to capture netizens' attention and sway their habits. These internet celebrities have disrupted the monopoly of traditional media. They possess thousands of followers and can significantly influence purchasing behavior.

Products in the wanghong economy are usually advertised in two ways:

Paying internet celebrities to advertise products: When internet celebrities gain sufficient followers, some companies may reach out to them for advertising. For example, in 2016, placing an advertising video in Papi Jiang's (papi 酱) internet video program cost 22 million yuan. Some manufacturers create new brands centered around internet celebrities. The manufacturers provide the product and depend on the influencer to promote these products to their fans. For instance, Zhang Dayi (张大奕), a well-known fashion internet celebrity on Sina Weibo, reports that her brand's annual sales exceed 1 million pounds.

Styling official company accounts as influencer accounts: For example, Bowu (博物) Magazine has 6.2 million followers, Gugong Taobao (故宫淘宝) has 670,000 followers, and Haier (a consumer electronics company) has 580,000 followers. These company accounts will post advertisements, but also focus on attracting new followers. They will communicate with their followers and create topics to encourage discussion. An example above is Bowu Magazine, which is a nature and science magazine. To imitate an internet celebrity, the magazine identified as different species for netizens from a first-person perspective, attracting the attention of users. This method was a success, and the number of followers of Bowu Magazine increased dramatically from 800,000 in January 2015 to 6.2 million in March 2017. At the same time, the circulation grew from tens of thousands to 220,000 in 2015.[11]

Different wanghong celebrities have varying styles, as do their fans and followers. This makes it easy to differentiate the needs and characteristics of distinct groups. Companies can then choose target audiences for their products. To satisfy the needs of targeted customers, internet celebrities can enhance the accuracy of their advertisements. This approach differs from that of traditional celebrities because followers may feel that influencers are closer and more accessible, allowing more followers to be converted into buyers.

Live advertising

'Live+E-mall+Wanghong' is a new advertising model in the wanghong economy. This model creates a platform for followers to interact with Wanghong. Advertisements can be embedded into the program's content, making them less conspicuous to viewers. For instance, in 2016, Baicaowei (百草味), a snack company, increased sales fivefold during the 618 shopping festival compared to the previous year after collaborating with a prominent wanghong named Shenman (沈曼), who is from YY, one of the largest livestreaming platforms in China.

Digital marketing

Digital marketing plays a role in various aspects of creating and developing a wanghong.

Companies leverage internet celebrities to attract attention and create content. Internet celebrities possess talents and skills in areas such as beauty, fashion, food, lifestyle, humor, education, and music. They cultivate a fan base that follows the words and actions of these wanghong. With the commercial value of internet fame now recognized, the production of new internet celebrities has emerged. Professional internet celebrity "packaging" companies have been established to manage both potential and existing wanghong. These specialized companies can convert the fans of celebrities into consumers.

Today, internet celebrities are more like a brand or a production. Good marketing can make internet celebrities, and allow companies to increase profits.

Digital marketing strategy

A digital marketing strategy involving a wanghong can be divided into the following steps. In the creation phase, the company identifies an internet celebrity, considering the characteristics of potential candidates and their target audience. The next step is to increase awareness and influence. Internet celebrities should accumulate a large number of fans during this phase. The ultimate goal of the wanghong economy is to convert internet celebrity awareness into revenue. Therefore, the more loyal fans an internet celebrity has, the greater the income they may generate. Once the internet celebrities have developed a fan base, the marketing strategy focuses on maintaining their public image to prevent any loss of fans.

Digital marketing methods

The media of digital marketing can primarily be divided into social networks, video websites, search engines, news portals, and e-commerce platforms. For social networking sites like Facebook, Twitter, Instagram, and Weibo, an internet celebrity can collaborate with the site to promote their content to their target audience. In terms of search engines like Google, Bing, and Baidu, internet celebrities can place advertisements to appear in related searches or achieve higher rankings in search results. Video websites like YouTube and e-commerce platforms like Taobao also serve as significant avenues for marketing internet celebrities. The advertising revenue from video platforms and sales from online stores are the primary means through which internet celebrities earn money. They can invest in promoting their videos or shops on a website's homepage to attract more viewers.

Moreover, the Internet celebrity is a type of self-media. They are a high-quality communication channel. They can spread messages not only to their fans, but fans are also carry messages on. If an internet celebrity company manages multiple wanghong, the different wanghong can recommend each other's content to their fans. This method is an efficient and low-cost marketing method.

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