WeChat's new ad service allows registered companies to place ads on other corporate WeChat pages. Will this solution help the messaging service evolve into a major ad platform in the Asia-Pacific region?
WeChat, one of the major messaging apps in the Asia-Pacific region (APAC), is testing a new advertising service to help brands reach more of their target consumers.
The feature will allow companies with verified WeChat accounts to place ads on other companies' official pages that have more than 100,000 followers. An ad will appear as a text link at the bottom of company pages, as shown in the highlighted area in the image below. The link will then direct consumers to the actual advertising page.
In order to help brands better target their ads, the new service has a dashboard feature, where advertisers can specify their target demographic with certain criteria, including gender, age, location, and personal interests. Based on the given information, WeChat will automatically pair ads and corporate pages that will host the ads.
Any revenue earned from the new capability will be split between WeChat's parent company Tencent and the host companies.
In China, WeChat already provides brands major opportunities to build one-to-one relationships with their consumers on mobile. And the new ad solution, according to industry participants, will further enhance WeChat's targeting capabilities.
Charlie Wang, digital director of Mindshare Beijing, a WPP company, says that by tapping into the data collected across Tencent's ecosystem, WeChat can offer brands an accurate view of their consumers.
"With the latest trends in programmatic, it's a good move by Tencent to focus on targeting, in order to move to audience buying," he notes.
The new service may not be as effective as it could be from an ad format perspective, however, as text link ads displayed at the bottom of corporate pages hardly get noticed. "Without banners or videos, text link ads may not be able to attract attention or drive awareness," Wang says. "But this ad format is in line with Tencent's strategy of ‘not over-commercializing' WeChat."
Elisa Harca, regional director of Asia at Red Ant, a digital retail experience and technology company, agrees that WeChat's new ad service will help brands develop more return-on-investment (ROI) models within the platform.
"It will allow for more robust planning around audience acquisition and retention," she notes.
Previously, although brands could use WeChat to acquire users, the service was less targeted and transparent, Harca explains. But now, brands can use the dashboard capabilities for "niche targeting."
"Also, while real-time bidding is becoming the norm, brands with decent budgets now have a choice when it comes to selecting a highly accurate, targeted demand-side platform system," Harca adds.
This isn't WeChat's first upgrade to its services. Prior to the launch of the new ad service, the platform added other features in addition to instant messaging, including audio, imagery, social, and consumer relationship management (CRM) tools. All of them have presented mobile marketing opportunities for brands to promote their products and services.
It's obvious that WeChat is looking to expand its ad business. But looking forward, can the messaging service evolve into a major advertising platform, and further pose a threat to the likes of Facebook, Twitter, and Google in the Asia-Pacific region?
"I highly doubt it," says Wang. "I see WeChat as more of a data collection platform to get highly personal consumer information that can be fed into advertising products of other Tencent platforms."
WeChat can hardly serve as a mass-marketing channel like Facebook or Twitter, according to Wang, because some features may limit the app's marketing capability. For example, branded content doesn't automatically appear on WeChat. Instead, consumers are required to follow the company or service to see their branded content.
It's interesting to note that Tencent has not yet developed any ad products for "Moments," a feature where a WeChat user's posts can only be seen by select close friends. Since interactivity in this intimate circle is higher than on other Tencent platforms, industry veterans say "Moments" has lots of potential for social campaigns.
"While I can monitor ad impressions or clicks from Tencent's back-end system, the most important platform, 'Moments,' still remains locked," Wang says.
"If Tencent introduces an ad product within this platform, it will be a turning point for WeChat to really compete with the mass social platforms [like Facebook and Twitter]," he adds.
Homepage image via Shutterstock.
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Yuyu Chen is an Editorial Intern at ClickZ. Her work has appeared in Local East Village, New York Daily News and Brooklyn Chamber of Commerce website. Yuyu received her M.A. in Business and Economic Reporting from New York University in May, 2013.
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