City University of Hong Kong MKT 5644 E-MARKETING Case analysis: Daqi case

Student: TSE TSUN LING FEBUS STUDENT NO: 52316004 Professor: Dr. Stella Li

Daqi.com, an online marketing service provider with social media aggregation platform that is based in China, where both legal and business regulations are not adequately mature. These high level of ambiguity between legal and business has produced some uncertainty for Daqi while executing its expansion plan, which could possibly induce additional operating cost (installation of control system), legal dispute in copyrighting, unexpected censorship/control crisis from the Chinese government, and damage on brand image. In addition, continuously rising of competition is another area of concern for Daqi; webs such as quikoo.com and bolaa.com have rapidly adapting the trend of UGC aggregating content similar to Daqis operation. In terms of competition in WOMM sectors, several online (Hylink advertising and Allyes) and traditional (Ogilvy& Mather) marketing firms provided various competing WOMM deals. Internet in China is definitely an attractive business opportunity; beside the fact that China has surpassed U.S. becoming a country with largest number of Internet users in the world, it is believed that the population of Internet users would still grow in a rapid rate. Moreover, usage times of China Internet users were also a very attractive statistic to various e businesses where Chinas Internet users spent an average of 19 hours online/week. The online advertising in china market was expected to grow by 52% to $1.4 billion and reach 5 billion progressively by 37% annually. In 2008, almost half (47%) of the Chinese Internet users participate in some sort of User- Generated Content, and there was a significant growth of reliance on UGC in consumer purchase decision. Daqi was definitely having a unique advantage in the growing trend of China Internet market, as it is the only company in China offered excellent content portal along

with a substantial user base for WOMM; where result of the WOMM campaign can be posted on to Daqi web simultaneously as an advertising channel. To be successful in the WOMM business, Daqi has also customized its service for each WOMM client with recruitment of unique group of WOMM participants to test products and give feedbacks. Since online music (downloading & listening to online music) was among the top Internet activities in China, Daqi saw a lot of opportunity in music related content with respect to WOMM campaigns. Although creating an online music platform might help Daqi to become one of the leading Internet portals in China; however, recent explication of court case on copyright laws, and the continuous refinement and amendment of those copyright laws have created a high level of uncertainty for Daqi to decide whether if it should expand its business into providing a music platform. The user base of Daqi could possibly expand by offering newly added music-related content; in which revenue from WOMM campaign and site advertisements can both be benefited. The idea of providing a music article content section with direct music purchase linkage obviously can avoid a lot of legal issues; however, the current unquenchable music piracy activities in China made it questionable that whether internet user would be interested in purchasing legal music from a website. In terms of the alternative concept: creating a public network for users to exchange ideas and content about music would possibly impose the risk of being afflicted with legal dispute in copyright as well as its subsequent cost. Of course Daqi could find a way to restricted users freedom from contributing copyrighted music content to reduce the risk of leading into ligation; however it might depress users interest in this newly developed music platform which indeed this could also arouse some

negative effect on Daqi brand image and its user base. Daqi should seriously consider abandoning the plan of developing the online music platform due to its excessively high opportunity cost of possible lawsuit. Internet users in China spent approximately 38% of their time on reading online news content. Given the fact that not only outreaching the time spending on online music activity; it could also generate growth in both WOMM campaign and advertising impressions in numbers, Daqi saw a high potential opportunity in developing a platform for news. As might be expected, this attractive sector would have a few strong existing competitors; they are such as Sina and Sohu, which have already owning a high portion of the marketing shares on online news and generating a respectable revenue stream through advertising. As number of Internet users in China increase and also there is only a small scale of mainstream channel to distribute news online, if Daqi is capable of providing a high quality news site, it is believed that there should still be room for Daqi to make a steak of it. Given that the opportunity cost of expanding news-related UGC on Daqi database such as potential lawsuit and site supervision is too high, Daqi should highly consider to expand it news related sector with the concept of partnership with existing large new sites. Not only this method would ensure the quality of content but it could also minimize risk of legal problems. Some could say that this method might not significantly generate site traffic to Daqi as those news content can be found on the other sites; however, expanding to the news sector can strengthen Daqi site to become a one-stop solution for users since Daqi is a social aggregation platform where people can look for different information and contents. In addition, a previous successful case Yahoo has proven that the partnership method had a positive effect on it site traffic.

REFERENCES:

Robert C, P., Rick, A., & Tony, Z. (2011). HCL Technologies. Boston: Harvard Business Publishing.