Alipay, China’s largest third party payment app are taking the E-hongbao trend to the next level. E-hongbaos, or electronic ‘red envelopes’ have become a growing phenomenon in China. The 21st century version of the traditional envelope with money inside, which is typically presented at important festivals and occasions in the Chinese calendar, is now veering off into a whole new direction..

E-hongbaos are a digitally formatted “envelope” which when opened within a payment, service app such as Alipay or WeChat, will transfer either a fixed sum or a random allocation to a users account. Around large Chinese festivals this trend has been increasing on WeChat and Alipay, both giving away millions of RMB in free ‘prizes’ for users to share the hongbaos on their platform.

Alipay, have now developed a new AR ‘game’ as part of the platform, launched after the success of ‘Pokemon Go’ in China. We expect Augmented Reality such as this to be a huge craze this year as Alipay lead the charge in commercial AR.

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How does it work?

Users will utilize geo-location and mapping based software on their smart phones to locate ‘hongbaos’ on a street map, they then travel to the location and can open the envelope to access prizes, exclusive content or monetary rewards. They see the hongbao as part of the physical environment via the camera on their phone and interact with it in this way.

It is akin to ‘’Pokemon Go’’ but rather than fictional creatures being captured, real financial incentives and prizes can be won by engaging with the app.

It goes without saying that for marketing and branding such incentives will become key.


Peer to peer / commercial engagement

Through the app, users can scan with their smartphone cameras to hide the digital red envelopes, and then send clues to their friends to help them find them.

They also can engage with official sponsored ‘advertisements’ with the reward being the opening of an envelope based on revealing its location. To promote the virtual game, Alipay has allocated 200 million yuan ($29.1 million) to encourage users who adopt the function in free ‘hongbaos’ up for grabs.

Is this effective in China?

Chinese netziens are strongly influenced by new technological developments and have certainly proved to be avid consumers over the last five years, Chinese users are in-fact the most engaged digital consumers in the world, spending an average of two hours per day online.

The addition of AR hongbaos is likely to be a huge hit amongst netziens who remain very receptive to new developments, especially the re-launching of a very traditional aspect of Chinese culture that is perfectly tailored for the modern, consumer age.

The game is designed to recreate the fun of childhood games involving searching for hidden objects and add a human touch, said company executive Guan Hua.


Online to Offline

It’s a big step towards the mass commercialisation of AR in China. It also presents huge opportunities for Online to offline marketing and vice versa. O2O is a big trend now, one can imagine that shortly digital marketing campaigns will include additional budgets for physically driving consumers to shopping destinations as part of their strategy.

The incentive of Hongbaos in pre-determined locations is certainly a step in this direction. With the Chinese so obsessed with mobile engagement and ‘on the go’ in their daily lives, this type of connectivity between online and offline activity is set to be a huge success. It also further indicates the entrenchment of digital in this market, particularly mobile which is where the future is; without content optimized for mobile brands, businesses and services will not be able to penetrate this market.

How can it be utilized?

1)      Increasing Footfall

It is a case of literally driving traffic with hongbaos placed in specific locations, this can be shopping area’s, stores, or even embedded within physical billboards. It opens  up a whole new way of engaging consumers who are online with offline promotions in their daily lives.

2)      Increasing traffic and engagement online

Traffic can be driven also online with the hongbao revealed after certain digital activity is completed. For example the sharing of a post, or the tagging of a friend. It acts as another way of engaging with users online and taps into the strong culture of desiring exclusive offers and promotions, these typically have been made accessible online to encourage user participation.

3)      Used as a branding tool

More than 20 brands including Coca-Cola, KFC and Uniqlo have teamed up with the tech giants to hide digital red envelopes with 30 million yuan worth of cash and coupons across their stores.

4)    Way of exploring physical environments

It doesn’t just to have to be about money, inside a ‘hongbao’ can be exclusive information or content, for example guides to an area for tourists and visitors can be presented in this way. It can also encourage physical exercise as an incentive to follow routes set out by the placing of Hongbaos.. it would not be surprising if fitness or travel based APPS jump on the bandwagon with such technology.

Ultimately AR represents a huge potential revenue stream for an app such as Alipay if they can establish a monopoly. Imagine if companies or locations where to pay for the placing of Hongbaos to increase footfall or in exchange offer benefits and services to Alipay users. The potential to monetize a large base of active consumers is there, with over 250 million users on Alipay. It used to be about bringing users online, now it is about engaging with them online to increase offline activity as an extra string to string to your ‘digital bow’.

This is how far the market has come!

AR-enabled red packets are the latest endeavor by Alipay who have turned an age-old holiday tradition into a wildly popular phenomenon, helping them tap into the digital wallets of millions of Chinese in a fun an innovative way.

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