Tencent to integrate Weibo and Qzone to leverage online advertising

The integration will comprise a unified user database, combined resource information, advertising and media inventory as well as a single social-media-management platform for brands. The process is expected to be complete in April, when Tencent will also roll out new ad units and packages that take advantage of the new system.

“A brand will be able to update its Qzone fan page and push its message out via Weibo simultaneously and from one platform,” Harrison Xing, general manager, Weibo Department, told Campaign Asia-Pacific during an interview in Beijing. “Brands can choose to broadcast their message to one database or two.”

Also present during the interview was Lau Seng Yee, senior executive vice-president and president of online media services; Dowson Tong, senior vice-president, internet services division, and Liu Yao, deputy general manager, media product division and advertising division.

The new platform, Tencent promised, will give brands and advertisers better reach and a deeper understanding of their audience. “The integrated platform will allow brands to both build loyalty and intimacy with users very efficiently,” Liu said.

Another advantage Tencent touted is the deeper understanding brands can gain of their weibo followers based on those users' Qzone profiles. This will allow advertisers to “tag-mentise” users (to segment via ‘tags’ or categories) across both platforms, Liu said.

In its 2011 fourth quarter and annual results announcement, Tencent reported 552 million active users on Qzone and 373 million registered users on Weibo – making Tencent China’s largest microblog in terms of user accounts.

However, it remains unclear how many unique users Tencent will have after the two platforms are integrated. During the interview, Tencent was reluctant to release this new number or specify the degree of overlap among users of the two platforms. Tong admitted to a “major overlap”, as the popularity of both platforms was founded on Tencent’s instant-messaging platform, QQ. A report by Credit Suisse released in May 2011 estimated that 92 per cent of Tencent Weibo users were on Qzone as well.

Another factor that will impact the number of users on the integrated platform is the government requirement for real-name registration of social-media users. Pseudonymous usernames are also popular for users across the two platforms.

Although Tencent declined to speculate about user drop-out rates following the government’s push for real-name registration, Charles Chao, chief executive officer of Tencent competitor Sina, estimated that 10 to 20 per cent of new users may drop out of the real-name registration process, and 40 to 45 per cent of those who try will fail verification.

Speaking at the Q42011 financial results announcement in February, Chao revealed that Sina Weibo, which used to have as many as 20 million new registrations a month, has seen new registrations fall to about 3 million since Sina started enforcing real-name registration on 1 January. Sina estimates that 60 per cent of its 250 million users will have registered by the deadline tomorrow. The dropout rate, however, could be a good thing for brands as it will likely reduce the number of “zombie” or fraudulent accounts, which tend to create fake trends and artificially elevate promotions, Bill Bishop, former head of MarketWatch internet business, observed on his blog, DigiCha.

The move to integration on Tencent’s part is indicative of the company’s intention to focus on the needs of brands and advertisers. “Before this change, Tencent has never viewed its business from a B2B angle," said Lau. "Our focus has always been our users. Now however, we’re focusing more on our advertising partners.”

Despite this, Lau declined to speak specifically about the monetisation potential of the new platform.

Brands and advertisers can expect free support and services, including user profile insight for the first year or so, Liu said. “We will only consider monetising these services in the second year.”

This year, Tencent plans to “significantly expand” its online advertising business by leveraging its traffic base and user social graph. “On top of display and search advertising, we aim to capitalise on new opportunities such as online video and performance-based advertising,” said Tencent in its annual results announcement.

Last year, Tencent’s revenues from online advertising grew 45 per cent to US$316 million, representing 7 per cent of its total annual revenue of US$4.52 billion. Overall, Tencent’s gross profit for 2011 was US$2.95 billion.