WeChat capitalising on e-commerce, but missing mark on video ads

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Report: '2019 Trends: Social Marketing In China' by Totem Media

Methodology: High-level analysis, market insights from 11 industry contributors, data from external sources 

Key takeaways: 

• Despite the fact that Tencent has linked WeChat with associated video sites like Kuaishou and Bilibili, WeChat has not been able to capture big gains with video audiences, despite being the most important digital space in daily life for Chinese users. Purpose-built apps for video, especially Douyin (known as Tik Tok outside China), have enjoyed most of the recent growth in traffic. 

• CNNIC (China Internet Network Information Centre) data shows video usage has grown 60% over the past two years in China. Numerous formats have developed, including online TV, short video, live streaming video and news video. News video (namely Jinri Toutiao) has led the way during this time period.

• All these points to ByteDance's ecosystem taking a larger share of user time than Tencent's.

• At the end of 2018, WeChat added a new feature called 'Time Capsule', similar to Instagram/Snapchat Stories, allowing users to share short videos (15 seconds or less), which live on their account for only 24 hours. This is another attempt by WeChat to jump on the short-video trend, without clear results so far. The feature is not yet available on official brand accounts, but brands can explore it by working with influencers using personal accounts.

 

 

• E-commerce mini-programs inside WeChat are outstripping standalone apps, particularly Pinduoduo, benefiting from its close connection to WeChat (no surprise since Tencent is an investor in Pinduoduo), which sees Pinduoduo being given priority access to WeChat users as well as the WeChat wallet.

• As a result of this advantage, Pinduoduo’s customer acquisition costs have fallen from US$5.00 in 2016 to US$2.00 in 2018, whereas its e-commerce rivals have seen their CACs balloon, such as VIP now at US$18, JD at US$39, and Taobao at US$41.

• WeChat has a wide range of location-based features. Ads which can be geo-targeted to audiences in over 40 countries. Audiences can opt in to location-sharing features, in which they permit brands, like Tiffany did in Vancouver, to follow them in real time. However, results of these efforts are "generally modest", according to the report.

 

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