China’s Tencent taps US for advertising to boost WeChat revenue growth

October 3, 2017
Industry News
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Yujing Liu

Tencent is lagging behind rivals Alibaba and Baidu in the domestic digital advertising market, according to eMarketer

Tencent Holdings, the company behind China’s behemoth WeChat app, is expanding to the US – not to add overseas users but to find advertisers – as it looks beyond the competitive domestic digital advertising market for growth.
 

The Shenzhen-headquartered tech giant will allow US brands to directly market to Chinese consumers and tourists on its platforms, including the widely popular social media app WeChat and messaging service QQ, opening a new advertising bureau based in the US two weeks ago.

This signals the latest attempt by Tencent, which lags behind Baidu and Alibaba in the domestic digital advertising market, to capitalise on WeChat and move away from its reliance on online games to generate profits.

“For the first time, we are making it possible for US brands to directly reach this audience through sophisticated targeting,” Poshu Yeung, the company’s vice-president of international business, said in a statement.

Speaking at a conference in New York last week, Benny Ho, senior director of Tencent’s international business, said the company aims to attract US firms wanting to build brand awareness and increase sales among consumers in mainland China and those who travel to the US to shop.

“Globally, Chinese consumers on average spend about US$2,000 for every trip abroad,” Ho said. “However, in the US it is above US$12,000 and roughly half of that is shopping.”

With more than 960 million monthly active users covering 93 per cent of first-tier city residents, WeChat is arguably the most popular social media app in China. It has grown into a mega app, offering functions as diverse as gaming and mobile payments to travel bookings and taxi hailing.

Tencent has seen rapid growth in its ad business in recent quarters, with online advertising revenue surging 55 per cent year on year in the second quarter and 47 per cent in the first quarter.

But it doesn’t make anywhere near as much money from WeChat ads as it does from gaming. Revenue from its value added services, which include online games, stood at 37 billion yuan (US$5.5 billion) in the second quarter of this year, while advertising revenue from social media apps including WeChat was only 6 billion yuan.Continue Reading

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