Mobile advertising is 80 percent of ad revenues for China’s Tencent
In the first quarter of 2016, mobile advertising accounted for about 80 percent of total advertising revenues for Tencent, China’s largest internet company by revenue and user base. This is an impressive win for the company’s mobile ROI, and Tencent has achieved this success by sourcing free content from its mobile users and offering numerous advertising options for brands.
How does it do it?
Tencent’s mobile advertising revenues come from a wide range of digital content and social services, including video and music streaming, in-house news and content production, social content sharing and instant messaging services. The company’s mobile-only advertising offerings are driving additional revenue and increasing the company’s total advertising revenue growth.
Though brand display advertising is still the major format on its mobile apps, Tencent’s mobile social apps have created some new ad formats that are only available on mobile, especially on WeChat (Weixin in Chinese), which is currently the most popular messaging app in China. Further, Tencent’s social apps have integrated with the company’s in-house self-service advertising system, Guangdiantong (GTD), which makes its advertising offerings more accessible to enterprises.
In addition to WeChat, Tencent’s social apps include Mobile QQ, the mobile version of Tencent’s flagship instant messaging service QQ, and Mobile QZone, the mobile version of QZone, a Facebook-like social sharing service. These apps had 658 million and 588 million monthly active mobile users respectively in the first quarter of this year.
Launching mobile ads in its apps
WeChat launched its Official Account system in 2012, allowing every organization or individual user to publish multimedia articles and letting other WeChat users subscribe to them. It began selling in-article ads through the GDT ad system in early 2014. Before long, Mobile QQ added a similar content publishing platform.
Apart from directing readers to an external web page, the in-article ads enable one-click subscriptions to other official accounts, downloads of apps or downloads of e-coupons. The e-coupon system built in WeChat allows merchants to create loyalty programs and consumers to collect and redeem e-coupons without leaving the app.
The WeChat Official Account platform was an immediate success — there have been more than 10 million official accounts, according to Business Insider. Content creators range from media companies, enterprises and professional writers to average users. Media or other organizations with more than 20,000 subscribers and original content publishers with more than 10,000 subscribers are allowed to join the advertising program.
WeChat’s Official Account platform had paid out a total of more than $150 million in advertising revenue as of late 2015, according to Harvard Business School, though the revenue-sharing ratio between the platform and contributors hasn’t been disclosed.
Attracting more content creators
To better assist creators and encourage content production, the system has launched an in-article tipping feature, according to Technode. Payments are supported by the WeChat Payment mobile payment service. This option has brought a total of more than $3 million to content creators on WeChat as of March 2016, according to Tencent.
It sounds like a great model, and as such, it has attracted a number of competitors, including Weibo, the leading Twitter-like social platform; UC Web, the mobile browser and search service of Alibaba Group; and Toutiao, a news aggregation app.
The latest option in mobile ads
According to Technode, WeChat began selling in-stream ads on Moments, the social content-sharing platform within the messaging app, in early 2015 and integrated the self-service ad system GDT in February 2016.
This option works similar to in-stream advertising on most other social sharing platforms, and it has proven itself to be a well-received format with Chinese advertisers. The same offering on QZone, launched in 2012, has become the major driving force for Tencent’s social advertising in the past couple of years.
Theoretically, the ad services on the Official Account publishing and social sharing platforms such as WeChat and Mobile QQ can have much higher profit margins than the older display advertising on Tencent’s digital content services such as music, video and news platforms. Though digital content from third parties or produced in-house bear considerable costs, all the content created or shared on social platforms is contributed by individual users or organizations for free.