William Ding, founder of Chinese internet portal NetEase, is probably unmoved by Forbes' recent announcement that he is no longer China's richest man. At number six on Forbes' rich list, he can still lay claim to a personal net worth of US$668 million.
In NetEase, Ding has created one of the country's most profitable companies, with margins topping 50 per cent and a share price topping those of rivals Sina and Sohu.
Although China's big three internet portals are all pursuing similar strategies, NetEase has been especially successful in the lucrative online gaming market, which brings in most of its income. Online advertising brings in just 20 per cent of revenue, about half that of the other major portals in China.
Sina and Sohu, however, are seen as leading NetEase in developing a comprehensive range of channels and services. NetEase's success in gaming, which has made it a prime target for advertisers targeting the under 25s, threatens to pigeonhole Ding's portal as a specialist youth site. Consequently, NetEase, which eschewed younger talents in its recent ad campaign to duck the youth tag, has been reviewing its content to attract a wider audience, planning a shake-up of its property site after revamping its automotive channel and launching a new business channel at the end of last year.
"We are improving and expanding our content offering to attract more mature users, so we will be able to attract advertising dollars from higher-priced products," explains CEO Ted Sun.
How well NetEase does this will determine its ability to compete with other portals as the internet develops into a mature medium in China.
"If they don't do it, they will end up as a niche brand in the long run," says Jean Lin, CEO of interactive specialist, wwwins.
Despite trailing rivals in ad revenue, or maybe because of it, NetEase has proved to be more flexible with different ad formats, such as its recent folding ad for Cadbury, which Sina and Sohu could not accommodate.
Sun says car ads are up since the upgrade of NetEase's auto site, but overall revenue from these channels remain small.
NetEase is playing the long game, focusing on gaming as its main source of income in the foreseeable future while building its user base in a country where less than 10 per cent of people are online. "After revamping the website, we still need to attract the viewer before attracting the advertisers," Sun says. "It's a long-term project."