INTERVIEW: Renren may be small, but not sitting on its laurels

In an exclusive interview with Campaign Asia-Pacific Chiang talked about how in fact, the competition is not Tencent or Sina, but every single PC or mobile platform that is fighting for the user's limited time and attention.

"Heading into 2013, Renren's social-networking services remain our core foundation and we are devoted to continuously improving user experience, particularly in mobile," he said.

The first way Chiang plans to differentiate Renren is to stick to its practice of real-name registrations, which the company required even before real-name registration was passed into law. 

"That law in fact ensured our survival," he said. "A spammer or a zombie fan or a fake account will look so obvious on Renren compared to Sina Weibo," he said.

A typical Renren news feed has sponsored ads at the top, much like Facebook. "This is advertising that looks like content, but what's different is that our enterprise pages for brands are much more customisable, with virtual currency for users to decorate their homepages," he said.

Notably, Renren users can now publish a voice status update online or comment on friends' content via voice. Chiang believes Renren is the first social networking site to offer such a feature globally.

"In China the competition is so fierce that we need to force ourselves to do more innovations like this," he said. "We came up with this because we realised generating content on mobile is not as easy as on the PC, as typing on mobile is slow, so that's where voice comes into play. We've seen UGC [user-generated content] creations and user engagement increasing after we launched this".

The second stategy of differentiation for Renren is its active pursuit of becoming mobile-centric. Two months ago, an internal restructuring of Renren's PC and mobile departments took place to streamline products and resources for the benefit of the end-user experience. "We found out if a user gets annoyed on the mobile, they won't bother going to the PC platform," he said.

Previously known as a largely on-campus social network founded in 2005, Renren recognises that its strength is in focusing on college students and entry-level young executives, which is a pool still rising in numbers, Chiang noted.

The number of activated users on Renren.com increased from approximately 147 million as of December 2011 to 178 million as of December 2012. Monthly unique log-ins hiked from 38 million to 56 million in the same period.

Tencent has drawn more than 300 million users since introducing WeChat/WeiXin two years ago. The fact that Tencent's mobile messenging app has spiked in popularity among white-collared users has Renren worried, but it has struck back with two recent launches of "standalone mobile applications that are not under the Renren brand umbrella".

Bobo is a sound app that records and modifies users’ voices to make them sound like cartoon characters, for instance. Meimei is a photo app that detects human faces in images and then improves the lighting and complexion.

Chiang explains that Bobo and Meimei are intentionally made light. "From our observations, we found that independent mobile apps like Instagram, Foursquare, grow very fast since they address user needs with a laser-like focus," he said. "Users don't like very complicated products. If we move all our PC services to the mobile platform, that will be too heavy and is not possible."

So there exists an opportunity to acquire users via these standalone apps. "Users can use Renren or other [competing] social-media accounts to log in, so we are still leveraging the Renren user database," he said. "Then we will see what happens in order to monetise in the future while waiting for advertisers to catch up to mobile marketing."

In the big picture, Renren is not fretting about PC-based advertising cannabilising mobile ads at the moment. China still a little bit behind the West in terms of mobile marketing, but is catching up quickly.

Currently, less than 1 per cent of adspend is on mobile in China, according to Greg Stuart, global CEO of the Mobile Marketing Association. "Based on our scientific analysis, 7 per cent is the ideal percentage of mobile adspend based on effectiveness, pricing, and reach," he told Campaign Asia-Pacific.

Brands like McDonald's, Nike, Coca-Cola, and KFC have been very aggressive in mobile marketing in China. McDonald's even placed half of its digital budget into mobile. But other advertisers have been slow to the game.

"An impression created on mobile is much more valuable than one on PC, and this will be driving up mobile-based CPC and CTR rates up to ten times higher than PC-based ones," Chiang said. "In fact, they are underpriced now; the pricing is low relative to the value you are getting out of mobile marketing." Thus, all the more advertisers should utilise mobile marketing before the law of diminishing returns set in, he added.

Renren's online advertising revenues in 2012 were US$53.8 million, representing a decrease of 9.7 per cent from 2011. When asked about Renren's sequence of monetisation, Chiang lined up mobile gaming first, then mobile commerce, and lastly mobile advertising.

"Among our business lines, games and Nuomi [Renren's social commerce service] continue to show encouraging trends while brand advertising still faces challenges," according to Hui Huang, Renren's chief financial officer.

Indeed, online game revenues were US$90.2 million in 2012, a 113.2 per cent increase from 2011, driven by its in-house developed cross-platform games. Nuomi recorded US$16.1 million of net revenues for 2012, a 149.6 per cent increase from 2011.

Going into the new year with more clarity in strategy and focus, it looks as if Renren may be content to be the smaller player, but is certain on making investments to transit into a stronger mobile-centric company.