Pay-To-Play: Why Marketing Spend in China Is Skyrocketing 🚀
In China marketing isn't just an investment, it's oxygen!
The spending gap
Let’s start with the numbers. According to Jun Cao, Vice President Asia for Analytic Partners, across most FMCG categories in China it is common to see marketing-spend-to-sales ratios run higher than most other markets. Jun adds, “in fact they can get as high as 45% in China whilst in the US a similar sector will typically run less than 10%.” That’s not a rounding error, it’s a different reality.
For global CMOs used to trimming media budgets in pursuit of efficiency, this ratio looks unsustainable. But in China, it’s the cost of entry. Cut spend, and growth evaporates almost instantly.
Growth follows the money
Analytic Partners’ ROI Genome® data shows that marketing drives between 25% and 75% of e-commerce sales in China, depending on the platform and category. On impulse-driven platforms such as Douyin, that figure can reach a staggering 85%.
In other words, stop investing in marketing and you don’t just slow down - you stall. Brands that pause paid activity see sales collapse almost overnight.
That’s because, unlike in many Western markets, China’s e-commerce ecosystem is powered almost entirely by paid visibility. There’s no “organic” discovery at scale. Whether it’s search, social commerce, or live stream shopping, your reach and ranking depend on how much you pay to play.
The platform paradox
So yes, China is expensive, but not for the reasons most think. The real story is how e-commerce platforms have engineered a pay-to-play environment that forces continuous reinvestment.
Globally, less than 30% of FMCG sales happen online. In China, the figure sits between 30% and 50%, and in some categories, it climbs beyond 70%. That digital dominance makes marketing spend unavoidable: the platforms control the shelf space, the search results, and the attention economy.
But here’s the catch, much of this spend doesn’t pay back. According to Analytic Partners, 80% of brands in China are overspending on performance media. Channels like Douyin’s Qianchuan may drive traffic and transactions, but they’re often barely break-even once costs are tallied.
When performance eats profit
The arms race for visibility creates a familiar trap. As e-commerce grows, performance media spend scales up to sustain it. But because that spend is so short-term in impact - and so dependent on continuous reinvestment - profitability erodes.
Many marketers have found themselves in a paradoxical situation: spend more to sustain sales, but make less with each incremental yuan. The result is a “hamster wheel economy” where brand teams are running faster just to stay in place.
Towards balance
There’s a shift underway, though. Smart marketers in China are starting to rebalance brand and performance. They’re recognising that, in a market this saturated, sustainable growth requires more than tactical spending.
The emerging trend is a holistic measurement approach, one that integrates brand and performance media to optimise for both short-term sales and long-term brand health. Marketing Mix Modelling (MMM) is making a comeback, as CMOs seek to prove which activities truly drive incremental growth, and which merely chase their own tails.
The CMO takeaway
For APAC marketers, China’s pay-to-play dynamics are a preview of what’s coming everywhere. As digital platforms tighten control over visibility, the line between “media investment” and “sales tax” blurs.
The lesson is not to spend less, but to spend smarter. Understand where marketing is genuinely driving incremental sales versus where it’s simply sustaining share of voice. Use data, and tools like MMM, to resist the gravitational pull of performance-only strategies.
Because in China, as in many fast-growth markets, marketing spend and growth are inseparable. But only the marketers who measure effectively will turn that spend from a cost of entry into a competitive advantage.
Meet our China team
If you’d like to understand how your brand can grow profitably in China’s pay-to-play environment, meet our Chinese-speaking modelling experts based in Shanghai. They’ve helped some of the world’s biggest FMCG and beauty brands optimise investment and unlock sustainable growth through advanced marketing mix modelling.
The hamster wheel framing nails it. That 80% overspending stat on performance media is wild but not surprising if youve worked with brands trying to crack China. I ran into this exact dynamic with a beauty brand last year where Douyin drove traffic but the incrementality was basically zero. The pivot to MMM makes sense tho, especially when proving whats actually moving the needel vs just maintaining baseline.