(Source: https://pltfrm.com.cn)
Introduction
As China’s digital ad market surges past $250 billion in 2025—fueled by 15%+ YoY growth in mobile and retail media—overseas brands face a pivotal moment. With economic headwinds slowing overall expansion to 6-7%, winners are reallocating aggressively toward AI-optimized, lower-tier city strategies and private traffic ecosystems. This guide unpacks the five dominant trends reshaping budgets, backed by real data and actionable reallocations to boost ROI amid tariff pressures and consumer shifts.
1. Mobile and Short Video Platforms Claim 65%+ of Total Spend
1.1 Douyin and Kuaishou Surge to 35% Market Share Douyin (TikTok’s China sibling) and Kuaishou now capture over a third of internet ad revenue, up from 28% in 2023, driven by seamless e-commerce integrations like live streaming and shoppable feeds. Overseas brands should shift 40-50% of budgets here for explosive reach, using AI tools to localize creatives for regional dialects and trends. This allocation yields 2-4× higher engagement in Tier 2-4 cities compared to traditional search ads.
1.2 Mobile-First Optimization Becomes Non-Negotiable With mobile accounting for 80% of digital spend and projected to hit $150 billion by year-end, brands must prioritize vertical video formats and in-app bidding. Test oCPM models on Pinduoduo for budget-conscious segments, reducing CPI by 30% while tapping 50 million new annual users in lower tiers.
2. Retail Media Dominates E-Commerce Budgets at 44% Global Share
2.1 PDD and Alibaba Lead with 35%+ E-Com Channel Growth Retail media on platforms like Pinduoduo (PDD) commands 35% of e-commerce ads, with PDD’s revenue hitting $22.4 billion—15.7% of the total market—thanks to lower-tier targeting. Overseas brands can allocate 50-60% of e-com budgets to sponsored search and product ads, leveraging first-party data for 3× ROAS uplift during peaks like 618.
2.2 Programmatic and AI Bidding Accelerate Efficiency Programmatic now drives 77% of revenue, growing 23.6% YoY; integrate Baidu’s Ernie for dynamic pricing to cut waste by 25%. This trend favors agile brands testing cross-platform bundles, ensuring compliance with PIPL while scaling to high-LTV segments.
3. Lower-Tier Cities Absorb 70% of Incremental Budget Growth
3.1 Tier 3-6 Markets Fuel 50 Million New Buyers Annually These regions add 70% of growth, with higher loyalty (LTV 2× Tier 1) and lower competition; KFC’s 60% store expansion here mirrors ad shifts. Reallocate 30-40% of urban budgets to Kuaishou group-buys and localized WeChat Moments, boosting conversion by 80% via family-oriented narratives.
3.2 Hyper-Local Creative Variants for Regional Relevance Produce 50-100 AI-generated variants per campaign, triggered by weather or festivals, to match slang and landmarks—lifting CTR 150% in counties. Use clean rooms for compliant data merging, turning these markets into loyalty strongholds.
4. AI and Immersive Tech Drive 20-30% Budget Reallocation
4.1 Generative AI Cuts Production Costs by 60% While Boosting Personalization With AI reshaping 53% of entertainment/leisure ads, tools like Douyin’s Creative Center enable 1,000+ variants in hours. Overseas brands should dedicate 15-25% to AI testing, focusing on AR try-ons for beauty/fashion to achieve 4-6× engagement lifts.
4.2 Immersive Experiences Like Micro-Dramas for Brand Building 90% of branded short dramas are custom-produced, blending storytelling with shoppable links; allocate 10-15% for Xiaohongshu co-creations, where rate cards rose 20%. This sustains post-peak revenue, with 46% Double 11 growth from Gen Z.
5. Sector-Specific Surges: Entertainment and Telecom Lead at 45-53% Growth
5.1 Product Launch Budgets Rise to 35% of Total Spend Telecom (45% YoY) and transportation (32.5%) prioritize innovation ads; overseas EV brands like BYD upped spend 84% for quick wins. Mirror this by earmarking 30% for launch campaigns on Tmall, using data sentiment for timely pivots.
5.2 Balanced Brand vs. Performance Split for Resilience With 50.5% consumer optimism, shift to 40/60 brand/performance; WeChat private domains deliver 5-12× LTV. Monitor via lift tests to refine, ensuring 6.8% market growth translates to sustained profitability.
Case Study: Korean Beauty Brand – 420% ROAS in Lower-Tier Expansion A leading Korean skincare brand partnered with PLTFRM in Q1 2025 amid slowing urban growth. We reallocated 55% of budget to Douyin/Kuaishou short videos and PDD retail media, using AI for 200 localized variants targeting Tier 3-5 cities. Paired with Xiaohongshu micro-dramas, this drove 420% ROAS, added 120,000 WeChat members, and captured 15% category share in underserved regions—all while navigating 12.1% market headwinds.
PLTFRM is an international brand consulting agency that works with companies such as Red, TikTok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries’ exports in China account for 97% of the total exports in Asia. Contact us, and we will help you find the best China e-commerce platform for you. Search PLTFRM for a free consultation!
