Tapping into the Chinese market can lead to big gains for a company looking to boost revenue and brand awareness abroad.
Beijing’s Hylink Digital Solutions Co. Ltd. set up shop in Santa Monica in late September to help businesses beef up their presence in the People’s Republic as well as aid Chinese companies looking to scale in the United States. The overseas headquarters of the digital ad agency, the Santa Monica office will lead an effort to acquire U.S. ad tech companies along with film, TV, and digital content firms in order to leverage those acquisitions’ assets and intellectual property in China.
Humphrey Ho, managing director of the local outpost, said the firm is also preparing for the launch of its New York office this year along with an initial public offering on the Shanghai Stock Exchange.
“Our mission is to become (the) ‘think China, think Hylink’ agency,” said Ho, who previously oversaw mobile and video advertising efforts for Google in China.
Hylink acts as a one-stop shop for American and Chinese companies with offerings including programmatic advertising, which lets advertisers use software to bid on ads in real time; media buys; and content marketing. Its presence in Santa Monica will provide an easier and more efficient connection to Hylink’s home base for clients such as General Motors Co., Procter & Gamble Co., and Estee Lauder Cos. Inc., he said.
“A lot of the decisions of American companies are made here in America,” Ho said. “I can’t expect an American executive to fly to China 10 times a year like I do.”
The decision to open the Santa Monica office was also a strategic move to target Chinese brands looking to gain market share in the United States.
“We have a lot of Chinese brands looking to compete and fill the void that the Koreans and Japanese have left behind from consumer goods to services,” he said. “And their first point of entry is always going to be San Francisco or Seattle or Los Angeles, (and) we’re here for them.”
Ho said Hylink is already working with some ad tech companies in the United States that it hopes to acquire after the firm goes public. The focus is on companies that specialize in video search and programmatic. Those are areas that Ho said would give Hylink a competitive edge in China while also maximizing the firm’s value add for American companies.
“Their technology is needed in China,” he said. “It’s unlikely Chinese companies will be able to compete with them so long as we’re able to bring them into the market using our name.”
Chinese roots
Hylink’s operational structure works differently than many American competitors. While work on some campaigns is split between the Santa Monica and Beijing offices, there are situations when all of the work is done in China and the Santa Monica staff’s only job is to facilitate client services.
Ira Kalb, an associate professor of clinical marketing at USC’s Marshall School of Business, said this setup could hinder the Santa Monica office, particularly in comparison with agencies such as Deutsch LA and TBWAChiatDay, which essentially operate independently from their New York headquarters.
“It doesn’t surprise me that they’re not really independent because that’s sort of the Chinese way – it’s directed from central authority,” Kalb said of Hylink. “That’s going to be one of their challenges. In marketing, you have to listen to the customer rather than get directions from a boss that’s located far away.”
But that “boss” has some clout. Hylink regards itself as the largest ad agency in China that’s not controlled by the government.
Su Tong, Hylink’s chief executive, founded the agency in 1994. The firm initially worked on newspaper and television campaigns, but transitioned into a full-service digital agency in 2004. The company has 2,200 employees across 15 offices worldwide, including 20 in Santa Monica, and claims to generate more than $1.2 billion in annual revenue.
Some of its clients include Chinese media giants Baidu Inc.; Alibaba Group Holding Ltd.; Tencent Holdings Ltd.; and Sina Corp., which operates Weibo, a Chinese social media service akin to Twitter. All of these companies have invested in Hylink in advance of its planned IPO.
Kalb said Hylink has the advantage of understanding the Chinese consumer in a way that many local agencies might not, but he noted the opposite could be true in terms of American consumers.
“Americans are notoriously bad at doing their homework, so (Hylink has) the upper hand on understanding Chinese culture,” Kalb said.
