Jenny Chan 陳詠欣
Jan 22, 2015

WeChat coyly takes wraps off news-feed ads

BEIJING - Taking a belated cue from Facebook, WeChat announced on 21 Janaury that it is taking the wraps off long-rumoured advertisements inside 'Moments', the app's equivalent of Facebook's News Feed.

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57.7 per cent of users saw WeChat's first ad in their friend circles; 34.4 per cent did not see any ad. 7.9 per cent of users said they do not scroll through their news feed at all. This still reflects the popularity of the Moments feature among 468 million monthly active users of WeChat.

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Users have been mentally prepared for WeChat in-feed ads. In fact, more than half of the respondents were not surprised about the launch. After all, such ads have already appeared in other social media products like QQ and Sina Weibo.

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Advertising frequency was the most problematic, according to 51.5 per cent of respondents. Ranked second is the inability to complain about bad or unpleasant advertising. Compared to objections about advertising "not being smart/intuitive enough", which needs long-term investment as a solution, the frequency and content of advertising are actually easier problems to solve.

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Data show that 42.5 per cent of users want to be shielded from bad ads, and so demand more interactive advertising that includes the option to hide or report ads via "I'm not interested" buttons. Demands for personalised advertising are in second place (26 per cent). The third pool of people (18.6 per cent) prefer functional benefits from ads, such as virtual red-envelopes (meaning cold, hard cash). This result was a bit unexpected but understandable at the same time.

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Specific preferences are laid out here. 23.8 per cent prefer ads relevant to their personal interests; 23.3 per cent prefer ads for promotional activities; 22.7 per cent prefer ads with coupons or vouchers; 18.5 per cent prefer ads from leading brands; 13.1 per cent prefer ads with O2O elements; 12.7 per cent prefer ads promoting WeChat official accounts

The first advert in WeChat Moments was a test by Tencent itself: a post with six grey blocks containing six stanzas of white text that read almost as a poetic jibe at consumers: "它无孔不入、你无处可藏、不是它可恶、而是它不懂你、我们试图做些改变、广告,也可以是生活的一部分".

(The staccato-manner text roughly translates to, "It is pervasive, you cannot hide. It is not hateful, it just does not understand you. We tried to make some changes. Advertising, can also be a part of life".)

The ads will be labelled as 'promoted' (推广). The first brands to pay for a promoted post within the next couple of days will be BMW, Coke, Cadillac, Oppo, Honma, Vivo, Ford and Omo, according to industry sources.

Campaign Asia-Pacific managed to lay hands on an internal Powerpoint deck targeted at China-based marketers, which introduced the new "WeChat Advertisement System" (微信广告系统介绍). From the 13th slide onward, it touts the value of news-feed advertising.

Minimum investment is said to be between RMB 5 million to RMB 8 million, with the cost per thousand-impressions around RMB 40. If a brand wants to focus on the main cities in China, the CPM rises to RMB 90 for Guangzhou and Shenzhen; and RMB 140 for Beijing and Shanghai. An ad will be pushed to a single user every 48 hours, valid for seven continuous days.

It may be possible to customise the promoted posts for different mobile OSs, connection modes and ages, but prices for these options have not been announced.

Although very similar to what Facebook started (the 'suggested post') in 2012, the move is a risky one for China's hot mobile-messenging app. Weibo, which turned users off when its news-feed interface became overly commercialised with 'sponsored posts', has never quite bounced back.

"Platform monetisation is an inevitable and fairly predictable thing, but it almost always comes at the expense of the user experience," said Etienne Chia, vice president of digital strategy for Asia Pacific at Constituency Management Group (CMG).

Weibo is the perfect example of this, said Chia. "And while it is too early to assume this will be the downfall of WeChat’s dominance in the market, it is only a matter of time before a new platform comes along to challenge this position," he added.

Before that happens, this is a big step in WeChat’s evolution. Since it launched in 2011, the WeChat environment has been mostly ad-free, save for official branded accounts (广告主公众号) that required active subscriptions.

Still, it seems to be the right moment for Tencent to launch such an ad product, as the platform’s quasi-ubiquity and service consolidation has now made it very hard for users to switch to alternatives.

"Indeed, the success of the Moments section was in no small part due to the privacy and intimacy offered by making posts visible only to your friends," Chia added. "As long as Tencent places careful restrictions on the frequency of 'promoted posts', I believe users will eventually get used to these ads, but not by choice."

Jason Hong, planning director at Tencent, also hinted at the launch in a LinkedIn update: "Finally can take the wraps off," he wrote. As this is still in a testing phase, there are many unknowns as to what brands will be able to do with this new ad format, but it is safe to assume that they will be using these ads to drive traffic to their existing WeChat ecosystems for campaign engagement.

According to WeChat, 76.4 per cent of its 468.1 million monthly-active users use the Moments section (called ‘Circle of Friends’ 朋友圈 in Chinese) on a daily basis. Actually, it is not the first time advertisements were envisioned on Moments. Even before the formal move by WeChat, many small businesses have been using the news feed to surreptitiously sell goods.

Some important factors remain unclear, said Victor Lee, founder and CEO at Olifun (an app to find people locate nearby 'happy-hours'), who is no stranger to mobile advertising. Sponsored posts get a lot of impressions due to the visibility of the posts to all the friends on a user's list, but "what are the algorithms that decide the relevancy and of course, timing of the posts?", he asked.

Darko Lin, planning director at FCB Shanghai, is equally interested in the nitty-gritty of factors driving user acceptance of these ads. At the upper right corner of the promoted post (see screenshot above), the word ‘promoted’ expresses an upfront disclaimer of what kind of message a user is looking at, and the 'not interested' (我不感兴趣) button offers an opt-out channel.

"On the one hand, I want to know how WeChat will determine and interpret the responses of 'Not Interested'," Lin said. "Do they see it as 'not interested in this one particular message', 'not interested in this kind of message', or 'I refuse to receive all kinds of advertisements'? On the other hand, no matter what you click, you’re sending your feedback, and it’s a kind of user participation. This participation provides a chance for WeChat to collect more user data and further explore user attitude and behaviour. It might be the key to reduce the negative and interruptive factors to user experience."

Josselin Roulet, digital account director at Constituency Management Group (CMG), is one user who did not like being forced into receiving marketing messages. "Honestly, this seems a little desperate," he said.

While WeChat may set frequency limits to how often users see these ads, "just one will be too many for their liking", Roulet commented. "News feeds have become barely manageable with too much clutter... [like] pictures of friends’ new LV bags. Should Tencent decide to roll out this new ad format to users outside China, it needs to do so carefully."

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