Jenny Chan 陳詠欣
Oct 2, 2018

Tencent consolidates ad ops into a new business line

The move, under an overall reorganisation, signifies an intention to generate more revenue from advertising properties.

Tencent headquarters in Shenzhen
Tencent headquarters in Shenzhen

Tencent reorganised its existing business groups from seven to six during its 20th anniversary last week. The move marks the company's third restructuring.

Three business groups—the Social Network Group (SNG), Mobile Internet Group (MIG) and Online Media Group (OMG)—will be reorganised into two newly formed ones: the Platform & Content Group (PCG) and Cloud & Smart Industries Group (CSIG).

Meanwhile, the Corporate & Development Group (CDG), Interactive Entertainment Group (IEG), Technology Engineering Group (TEG) and Weixin Group (WXG) will continue. 

For the first time, Tencent will consolidate its advertising operations into a new business line, Advertising and Marketing Services (AMS). The advertising sales department previously under OMG will be merged with the social and performance advertising department under CDG to form AMS, which will exist within CDG and be led by Davis Lin, Tencent’s current strategy chief. AMS was established, stated the Shenzhen-based firm, to respond to the needs of clients in the marketing industry who have been expecting an internal integration for some time. 

The tech giant has plans for its revenue from advertising to eventually account for 30% to 40% of its total revenue, but to be kept under 50% to strike a balance with user experience, a senior executive told Chinese media this June. Last year, as WeChat neared a billion users, Tencent's revenue from all its advertising properties reached only 17% of its total. The "integrated resources in social, video, news and information and other rich media will bring greater value to advertisers," according to Tencent's announcement last Friday.

Other details of the reorganisation:

  • Under PCG, Tencent will develop its social and utility platforms including QQ, Qzone, YingYongBao (Tencent's app store), and Tencent Browser, and also manage the ecosystem around content activities including Tencent News, Tencent Video, WeiShi, KuaiBao, Penguin eSports, Tencent Anime, Tencent Pictures and Penguin Pictures.
  • CSIG will offer enterprise-facing services such as Tencent Cloud, Smart Retail, Security, Tencent Map and Youtu.

In the same announcement, Martin Lau, president of Tencent, said the company needs to stay clear-headed, keep alert and look ahead in order to lead the company into the next era, which Tencent termed as the "industrial internet era".

"We must take the attitude of resetting our scorecard to zero, staying humble and proactively seeking out emerging opportunities brought by new and old industries transitioning to online," Lau said.

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