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Outlook for Advertising on WeChat

WeChat advertisement has drawn immediate attention from advertisers and consumers alike as the most popular message app in China slowly turns itself into an advertising platform.

There are mainly two types of paid advertising inventory on WeChat. Last year in July, WeChat launched an ad service whereby companies’ official accounts with more than 100,000 followers can host ads from other companies who pay a fee. The fees are shared between Tencent and the host companies.

On this type of ads, there is a slot of 600 * 172 on the bottom of a published article in the official account, where the advertiser can either put a pure banner or a banner with three lines of words, including a one-line title and a two-line description. It is the premium ads inventory for Tencent and any advertiser needs to be pre-proved in order to do marketing through it. BorderX Lab is the first and currently the only company outside China, who has direct access to this type of WeChat inventory.

In Jan 2015, WeChat made a big move, testing ads in its “moments” feature, which is similar to Facebook’s news feed. The very first batch of advertisers is three companies, BMW, Coco-Cola and a Chinese domestic cell phone maker Vivo. The release of this type of ads created a huge buzz in China since it was rumored that WeChat was doing audience targeting: rich people were shown BMW ads and people who saw BMW ads would click the “like” button or retweeted this ads to show off whereas people who didn’t see the BMW ads or saw Coco-cola ads would claim himself a grass root. It is said that each advertiser needs to spend up to 9 million RMB, or 1.5 million USD per day for the Moments ads.

From the user perspective, most people do not want brands to interfere on their intimate turf. They prioritize interactions with family and friends. WeChat’s success owns partially to its commitment to user experience and thus they are proceeding cautiously with monetization. WeChat user sees at most one ad per day on his moments, most of the time no ads at all since the “Moments ads” was introduced.

Besides official account and moment paid ads inventory, there are ways of doing advertising on WeChat free of charge, such as doing content marketing with an official account or posting a marketing message on Moments. Brands are quite limited in how often they can reach out to their fans though.

Consumers generally shun ads. But Tencent has long been smart with monetization. How long can Tencent’s users remain forgiving souls? It remains to be seen whether Tencent’s WeChat could one day become major advertising platforms like Facebook and Google. The social influence of WeChat now is hard to ignore.

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