Insights | Is China’s virtual idol boom a marketing trend with staying power? – TechNode

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Less than six months after Ayayi first popped up on the Twitter-like social network Weibo in May, she has attracted more than 512,000 followers, many of them millennial female office workers. A hashtag of her name has pulled more than 5.5 million views on lifestyle platform Xiaohongshu. A fashion-forward, white-blonde 20-something with flawless skin, Ayayi is still relatable.
She posts about mundane matters like commuting on the Beijing subway or watching grandpas play chess on the sidewalks. Soon a powerful influencer, she snagged deals to promote upscale brands like Louis Vuitton and Givenchy. Somehow, she even has time to work as the digital manager of Alibaba’s Tmall Super Brand.
Insights is a series of explainers on developing stories in China tech, published in the subscriber-only TechNode Premium newsletter.
But then, Ayayi is not human. She is a virtual idol developed by Shanghai-based Ranmai Technology. She is one of over 20 virtual characters trending on Xiaohongshu, receiving lots of attention from fashion names searching for new channels to engage with consumers. With multiple job titles from NFT artist to fashion brand manager, Ayayi has worked with brands such as Sandro, Bose, and Fila. Ranmai Technology, a startup that develops digital human images and storylines, reportedly has a net worth of RMB 600 million (around $93.9 million).
Xiaohongshu, often referred to as China’s Instagram, already embraced an active KOL (key opinion leader) community as an efficient marketing vehicle for brands to promote their products on the social commerce platform. The company is now taking a virtual turn for its KOL strategies.
Xiaohongshu is among a slew of Chinese tech firms scrambling to capitalize on China’s virtual idols boom of the past two years. Early on, virtual idols caught the attention of tech giants like Alibaba and ByteDance.
But will the current buzz prove to be a high watermark for the industry? Or are the virtual idols here to stay?
Bottom line: Virtual idols remain a niche market targeting only a small group of ACGN (animation, comic, game, and novel) fans, although Chinese companies have been developing digital characters for the past decade. The sector is on the upswing this year thanks to technological developments, the coming-of-age of teenage ACGN fans as independent consumers, and China’s recent crackdown on the fan economy due to scandals involving human idols.
“Because China’s digital landscape is rapidly changing, it’s difficult to predict whether virtual KOLs born in the current ecosystems will be able to keep up with the way the digital ecosystem will evolve. But one thing is certain: major Chinese tech companies are all jumping on the virtual KOL bandwagon.”
— Pablo Mauron, partner and managing director of Digital Luxury Group
Virtual idols are computer-generated animated images. Developers use advanced animation and rendering technologies to produce characters with finely detailed facial expressions and body movements. 
While they resemble real human beings to varying degrees, the virtual figures in the “metaverse” may boast even greater diversity. Different forms fulfill different roles. In addition to hiring virtual idols from the West like the fashionista influencer Noonoouri (created by German designer Joerg Zuber) and the freckled “musical artist” Lil Miquela (the brainchild of little-known Los Angeles media startup Brud), China is creating plenty of its own popular and profitable virtual personas.
Virtual idols are deployed for various lines of business such as brand endorsements, live broadcasts, and even offline marketing campaigns.
Reggie Ba-Pe is the co-founder of Club Media, an entertainment agency that created virtual punk artist Ruby 9100 and a few months ago launched Shanghai-based virtual persona Maie. Ba-Pe reckoned that virtual humans are expensive, production heavy, and time-intensive.
Virtual idols as a marketing tool: As members of China’s Gen Z grow into independent consumers, they are bringing their tastes and wallets with them. And it’s no surprise that the brands are adapting the latest fads to tap consumers.
China’s Gen Zers, the country’s digital natives who show a great appetite for  ACGN content, are the major force driving this boom.
Tech giants are among the most avid advocates of the virtual idol trend, together with companies along related lines such as entertainment companies, brands, and media startups. By building virtual idol IPs or cooperation with existing idols, the tech giants try to enrich their existing e-commerce, gaming, and short video businesses with more interesting content.
Human celebrities and virtual idols do not cannibalize each other, according to Mauron. Ba-Pe of Club Media agrees: “Virtual idols are about as much a threat to human KOLs as Coke Zero is to Diet Coke … Virtual idols are not threats to human ones at all.” 
Still, virtual idols as influencers have pros and cons for marketers.
Pros:
For brands, a less risky choice than real idols:  The volatility of working with humans has been on full display this year after several celebs fell from grace due to scandals ranging from alleged tax evasion and sexual assault to sharing opinions out of step with ruling Party ideology. This leaves virtual idols as less risky choices. 
Full tailoring: The content to be broadcast can be tailored to meet the needs of brands on every level. Idols can achieve things that real people cannot, and their images can be wholly controlled.
Extensive application scenario: The application scenarios for virtual idols are more extensive. Virtual figures are more accessible to fans for one-on-one interaction, usually of the chatbot level of complexity. Moreover, they can be present 24/7 on multiple sites.
Cons:
Legality for business endorsement: Virtual idols’ partnerships with brands work under cooperation agreements similar to endorsements. However, China’s Advertising Law bans endorsers, legal persons or organizations, from endorsing goods or services they have not used or received. 
Relatability: While virtual KOLs sound good on paper, DLG’s Mauron notes that digital personas may not have the same kind of personalities and color as human KOLs, making it harder for consumers to relate to them. “Without that element of relatability, it might also be more difficult to generate conversions with these virtual KOLs,” he said.
The virtual world is not immune to real-world problems. The data-faking issue that’s prevalent in human celebs’ metrics is also applicable to virtual idols. A Deloitte report reminds all organizations that wish to deploy avatars of the need to pay great attention to privacy and ethics issues.
It’s still too early to say whether virtual people will be marketing mainstays or passing fad.  But given the digitization of almost every cultural touchpoint, experts we talked to expect it is here to stay in some form. 
“Clearly, we are moving towards an increasingly digital future, rich with entertainment in these digital worlds. Regardless, if you’re an idol or a fan, the only way to engage with these new digital realms will be via an avatar.” said Ba-Pe.
Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at [email protected]
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