Tmall advertising – A step by step guide

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Tmall has a massive display ads system divided into 16 Tmall advertising formats. Optimizing the spending on Tmall is one key operational tactic to increase revenue in China’s largest marketplace. 

In this article, we will introduce:

  • The major Tmall advertising formats
  • How to create a strategy for each type of Tmall advertising
  • What is a good ROI for Tmall advertising
  • How to create a Tmall advertising spending plan in 3 simple steps
  • How to find out how your competitors’ ads are performing  

What are the different Tmall advertising channels?

Zhitongche 直通车

Website: https://subway.simba.tmall.hk/

Zhitongche is the key-word search ad on Tmall. The ads will show up if a user searched for the paid keyword. The ads will rank according to the bidding amount.

Zhitongche is one of the most cost-efficient ads to target consumers with specific purchase intent. This ad format can help you get a desirable search ranking. Top-selling flagship stores usually allocate 25% to 40% of their budget on Zhitongche. It also works well for brands with limited organic search traffic, commodity, and flagship brand with many fake resellers. 

Most of the Zhitongche campaign is cost-per-click based. This means you won’t be charged unless users click on the ads.

Zhitongche targeting option

Targeting option Zhitongche offers include:

  • Retargeting users who have visited or take an action in your Tmall store
  • User’s search and purchasing behavior 
  • User demographics 
  • User groups with special interest (a specific holiday, specific type of interest)    
  • Flexible spending schedule/bidding rate based on time of the day
  • Campaign creatives for each product

Note you won’t be able to upload your user database to the Tmall backend. However you could create look-a-like audience based on an existing user group. 

How to select keywords for Zhitongche? 

Always bid on the brand name, since this is usually the keyword with the highest sales conversion. For other keywords, you can monitor the competitor’s product search keywords to get inspiration. 

The 3rd party tool SYCM 生意参谋 offers the opinion to monitor a competitor’s product’s top-performing keyword.

For example, this is Pandora’s hero product, with monthly sales of 2.5 million RMB (290k USD).  

Here we can find the top keywords that are driving traffic to this product. For example, “CK ring” and “DW ring” are among the top 10 keywords that brought search traffic for this product. And “ring high-end elegant” and “dw ring” are among the top keywords that have the highest sales conversion. 

You can monitor closely similar products from a competitor’s stores to create test campaigns. Note it’s best to cross-check the competitors that are close to your brand’s sales volume. Top sellers on Tmall may have a much higher marketing budget for bidding on the hot keywords. It’s important to balance out the keyword relevance and cost.  

For product selection, usually, it’s best to allocate most of the keyword search budget to the top 3 hero products. Sales of a flagship store usually concentrate on the top hero product, which is also the key product that could drive traffic to your store. 

品销宝 Pinxiaobao

Website: https://branding.taobao.com/

Pinxiaobao is another keyword search ad, with the highest search ranking. It’s only available for Tmall flagship stores. Thus the best Tmall advertising channel to standout against fake sellers and distributors.

Pinxiaobao ROI could be extremely high. With some brands, we reached an ROI of 14 during the Double 12 sales festival. 

Pinxiaobao only let brands target keyword containing their brand name. Depending on the search volume of your brand, the cost to purchase this keyword is different. For example, the keyword “Chomel”, a Singapore jewelry brand, costs around 1,200 RMB per day, the daily search volume of “Chomel” is around 6,000 per day. For larger brands, the keyword will be more expensive. 

Tmall also offers a whole-year deal to purchase 100% appearance of your brand’s name with a discount. The brand can launch a couple of test campaign to decide if it makes sense to purchase the yearly deal. 

超级推荐 Super recommendation

Website: https://tuijian.taobao.com/

超级推荐 Super Recommendation ad is the core advertising product Taobao promotes. It’s an algorithm driven system that pushes potential relevant products to users based on their in-app actions. 

According to the podcast Fengtouquan, Taobao’s content-driven traffic (user browsing the App without a clear purchasing goal) has increased to 50%, compared to the traditional key-word-search traffic. And Super Recommendation is the key advertising product that targeting those consumers who don’t have a clear purchasing intention.  

The ad placements are spread around different parts of Taobao. 

You should have a different ads strategy for each ad placement. 

Super Recommendation on the Taobao homepage

The most visible ad placement is on the homepage, appearing after the first scroll. 

This is Taobao’s main newsfeed. Some users spend a lot of time scrolling through the feed for window shopping. Users who browse through the product recomendation fee usually have small purchasing intent and a stronger need for entertainment. 

The cost for “add to cart” from the homepage Super Recommendation is cheaper since users like to add products to their cart while browsing. But the conversion from cart to check out is usually a lot lower compared to key-word search ads. 

On the product recommendation feed, your ad will appear alongside other products in all kinds of categories. Lots of users are seeing your brand for the first time. Thus the goal is not for users to buy your product, it’s to encourage users to click on your ad, enter your store, and start browsing other products in your store.  

This will increase the traffic within your store thus ultimately increase the store ranking and sales. 

The product you push forward under Super Recommendation should not be just the hero product. You should test a different style of product to find the product that maximizes the click-through rate. For the brand with a generic hero product, they can try pushing a more unique style in order to stand out. 

Super Recommendation on the order status page

The Super Recommendation that appears after order status, especially on the payment confirmation page, follows a different strategy.

Here users just made a purchase of another product, and their purchasing intention is stronger. For this ad placement, it’s best to push the product with the highest conversion rate. A lot of times this is also not the hero product.

Companies with lower brand awareness could spend a larger proportion of their budget on Super Recommendation ads to increase the traffic to their store. A larger brand can use the newsfeed to increase marketing touchpoints with users and target sales conversions. 

智钻 Zhizuan

Website: https://zuanshi.taobao.com/

Zhizuan is the banner ad that appears on the Taobao homepage. It is the most expensive ad format on Taobao. The Zhizuan ads usually appear on a holiday promotion landing page. They are visible, bigger, and a lot more expensive. 

Medium-size brands can choose to invest in Zhizuan during the Tmall promotion periods. For example, MISSOMA spent around 16% of their budget on Zhizuan during Double 12, while spending less than 1% during regular sales periods. 

Tmall ususally reward free promotion space for KA brands such as Pandora (NO.1 in Jewelry) and Bauerfeind (No.1 in knee support). It’s possible some top-ranking brands don’t need to spend as much on Zhizuan. 

聚划算 Juhuasuan 

Juhuasuan is a flash-sale channel. The ad placement is on top of Taobao’s home screen. It’s one of the largest traffic pool within Taobao. 

Many brands will compete to signup for 1 ad placement in Juhuasuan. The Taobao team will choose the brand with the best potential to bring the largest GMV for the placement. Thus brands usually will need to offer a deep discount in order to be selected. Thus participating in Juhuasuan flash sales is not always profitable for brands. 

Why do most brands still participate? 

  • Brands could use Juhuasuan as a channel to promote their hero product and increase sales. One of the major Tmall tactics is to create a hero product, which is typically a product with a low margin, lower price point, but is the key traffic driver for the whole store. Kinda like the top ranking page on your website, or the “IT” product. 
  • Juhuasuan is also a channel for inventory clearance
  • Generate traffic for other products within the store that have a higher profit margin 
  • Generate traffic for a retargeting campaign  
  • Kick-off a new store or re-activate an underperforming store 

For brands, monitoring the medium-term impact of Juhuasuan flash sales and calculating the overall profit and loss will help to define the right long-term strategy. 

淘宝客 Taobao Affiliate Marketing 

Website: https://ad.alimama.com/

Taobao Affiliate Marketing enables setting up commissions reward for individual users or 3rd party platforms that promote the brand. It’s the best tool to use to drive traffic from outside of the Taobao ecosystem. 

For example, this is the platform used to create 淘口令 for influencers. Tmall will automatically calculate the commission and share it with the influencer. It also enables brands to generate shopping cart links on Douyin/TikTok 

The minimal commission from the store is 3%.

The platform also has category-specific events that the brand could signup for in order to push the brand among group-buy leaders.

Brands with higher margins, and require trust to make a purchase usually do well with affiliate marketing. For example, skincare, health supplement, and mother & baby product usually spend a larger amount of marketing budget on Taobao Affiliate Marketing. 

How to create a Tmall advertising strategy in 3 simple steps? 

Tmall’s advertising system is very complicated. It has 16 advertising channels and probably will add more in the future. Each advertising channel has a separate top-up system. This means once you top-up the budget in one channel, you cannot move it to another channel. 

At the same time, the strategy during a sales holiday will be very different compared to on a regular day. So is the strategy for each industry and each sales level. 

How to build a budget allocation plan without all-in on test campaigns on every channel?  

You could follow the 3 simple steps:

  1. Analyze the spending plan of the top-performing stores, and close competitors in your industry
  2. Create test campaigns based on these results
  3. Optimize and create your own spending plan

The simplest way to create an initial plan is to look at how your competitors are spending their budget.

The Tmall App store has many 3rd party tools for monitoring competitor’s performance. The tool that we use at WalktheChat is called SYCM (生意参谋). It offers a competitor listening service that enables you to monitor the marketing spending and performance of 5 stores and 10 products for a fee of 1,188RMB per year.

You can find the list of the top 100 best ranking Taobao/Tmall stores (either by traffic or by sales transaction) in your industry using this link: https://sycm.taobao.com/mc/mq/market_rank

For example, Pandora was the NO.1 performing jewellery store on Taobao/Tmall during the Double 12 campaign.  

With the competitor listening tool, we could graph Pandora’s spending distribution during December 13th (regular period) and December 12th (a promotion holiday Double 12). Note the data given is an index, not the actual spending budget.

Pandora’s spending index during a sales holiday of Double 12 was up by 44% compared to a non-sales day. The advertising channel that has the strongest surge was Juhuasuan (聚划算), the flash-sale channel. 

Now you can check the strategy of your direct competitor that has a similar sales target.

MISSOMA is a premium jewelry brand that just opened its Tmall store in July 2020. They achieved 2 million RMB sales result during the 2nd month of launching on Tmall, mainly by investing in WeChat and Little Red Book influencers. They are a good account to benchmark against if you are operating a new jewelry Tmall store.

According to SYCM, here is their spending index:

MISSOMA spends most of the paid traffic on key-word search ads and product recommendations. It shifted 16% of its budget towards 智钻 Zhizuan (homepage ads) during the sales promotion period.

This strategy can help you decide how to properly allocate budget between all the Tmall advertising channels.

The major drawback of this strategy is we can only look back on past data. Brands should clearly understand the ranking of each Tmall promotion in order to better allocate budget throughout the year. The easiest way to see the competitor’s future spending plan is to acquire this information from Dingding group. The Tmall operation team usually creates groups of brands from the same industry and all the brands are required to share their promotion budget in a shared file.

What is a good ROI for Tmall ads? 

The main purpose of Tmall ads is to generate sales. Thus the return on investment of Tmall ads should be positive, taking into account the cost of goods and operation costs.

Each advertising channels enable to benchmark ROI with other stores. For example, you can check the average ROI of similar stores keyword search advertising (Zhitongchen) on the Qianniu (千牛) App.

ROI can vary widely between stores. For instance, ROI in the jewellery category varies between 1 to 14, depending on the stores, during Q4 2020.

When an ad campaign is performing well, Taobao’s algorithm will allocate additional traffic to reward good sales performance. There is a clear correlation between the ROI of the ads and the additional “free” traffic from Taobao.

In the example below, when the ROI of advertising was above 8, Taobao pushed around 10k organic daily impressions to the brand products. But when ROI fell around 1, Taobao only allocated 2k of daily free impressions.

Conclusion

The right Tmall advertising strategy can help a brand to gain traction. Brands can benchmark the strategy of competitors in order to create a quick budget allocation, then adjust and optimize different advertising formats over time.

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