WeChat Advertising to Take off in 2015?

WeChat, which now boasts 1.12 billion registered users, yesterday unveiled the long-awaited advertising program for Moments, its content sharing platform. Like the ads on Facebook’s News Feed, ads shown in the Moments timeline will be marked as ‘sponsored’. Users can opt out of ads by certain advertisers.

An ad will be shown as a post by the advertiser’s WeChat Public Account, with users able to “like” or comment on it. Not all users will see the same ads, but that the more likes or comments an ad receives from your WeChat friends, the more likely you’ll be to see it. An ad with no likes or comments within six hours will be removed; otherwise it will be able to circulate from one user’s timeline to another for seven days.

There isn’t a self-service system in place yet that the whole process will be conducted by WeChat staff. WeChat promises to provide performance analyses after each campaign.

The ad system charges RMB40-140 (around US$6-23) per thousand impressions, depending on the tier of city advertisers are targeting (Beijing and Shanghai costing RMB140, for instance). Currently only 50 brands with more than RMB10 million in ad budget have been allowed to join the program.

WeChat’s Moments has reached an average of 3 billion items of content shared per day. Though unlike Facebook, where users see the feed timeline first when logging on, WeChat has found a higher percentage of users share or consume content on Moments than message their WeChat contacts.

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WeChat launched an advertising system for Public Accounts last year that places ads, external links, Subscribe buttons and a one-click Download button for mobile apps at the bottom of articles published by Public Accounts. As with other advertising systems on social platforms, WeChat’s is able to target specific demographics such as gender, age, and location.

The auction-based system, with price and quality of the ads being the criteria for evaluation of bids, charges on a cost-per-click or cost-per-view basis.

More than 7000 Public Accounts have joined the program, and average click rate thus far is 2%.

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WeChat has built an ecosystem based on its Public Accounts, now numbering 8.52 million. Apart from communicating with subscribers and sending them multi-media messages, Public Account owners can develop sophisticated features via WeChat’s APIs. Some have enabled subscribers to book hotels or purchase goods entirely through their WeChat Public Account.

While mobile commerce doesn’t seem set to take off anytime soon, it is expected advertising will be WeChat’s next major revenue source, after mobile gaming. The question is how big it will be. If the 50 brands participating in the Moments timeline ad program each spend RMB10 million within the year, the total (about US$80m) will be greater than the revenue generated by Weibo in 2012 (US$69m) when the microblogging site was at its peak and began monetization through advertising.

Editing by Mike Cormack (@bucketoftongues)