Tencent: WeChat Is More Than A Product, It’s ‘An Ecosystem’

What do advertisers outside of China need to know about Tencent?

For one, it’s got much more going on than just WeChat – the Tencent app with the most name recognition outside of China. Second, WeChat is more than just a social platform: It’s embedded into the fabric of Chinese life.

“Global brands have heard about WeChat, of course, but their perception of it is not very detailed, and some are not necessarily aware that Tencent is the mother company,” said Steven Chang, Tencent’s corporate VP in charge of online media marketing solutions and the company’s advertising business.

But advertisers that want to reach China’s 800 million internet-connected citizens – 98% of whom are on mobile – need to bone up on the offerings. The scale is staggering.

Tencent Video (think Netflix) has 137 million daily active users. Tencent Music (think iTunes) owns the top four music streaming apps in China and is about to go public on the New York Stock Exchange with a possible valuation of around $1.23 billion. QQ (think Messenger) has more than 803 million monthly active users.

More than 1 billion people use WeChat (think Facebook, Amazon, PayPal, Uber and tens of other apps rolled into one) every month.

“WeChat is more than just a simple product,” Chang said. “WeChat is an ecosystem.”

AdExchanger caught up with Chang to talk WeChat ads, DMPs, walled gardens and why Tencent approaches monetization with extreme discretion.

AdExchanger: What do you think of the comparisons people often make between WeChat and Facebook?

STEVEN CHANG: Most of the brands we work with know that WeChat is not an exact equivalent of Facebook. In fact, WeChat is much more powerful, at least in the China context. We have a payment system, social capabilities, the Mini program [sub-apps within WeChat] and many other applications. We’re also expanding into the B2B side with WeChat enterprise accounts.

What are your priorities right now?

One of the biggest initiatives for Tencent this year is smart retail and integrating the WeChat ecosystem into retailing functions.

We’ll also be paying more attention to the B2B area in the future. We’re working to provide our tools, our technology and our data whenever possible for different industries. As our CEO, Pony Ma, has said, we want to be the digital assistant to different industries. You will start to hear more not just about our advertising and marketing solutions, but about business solutions, as well.

How does Tencent use data to drive marketing?

I’ve been working in China for 23 years – I’m from Hong Kong – and I can say that anything related to applying data to marketing only started here around four or five years ago, but it’s been developing quickly.

The data we work with is primarily in two areas and what we do depends on the client’s needs. One is providing insights, which are underused in China as it relates to marketing, and the second is about refining the audience for more precise targeting to increase ROI.

There has also been a big development over the last few years working with clients on DMP development, and we’ve created a private DMP possibility with a few clients.

How does the Tencent DMP work?

We started out with our [third-party] general DMP about four years ago. At that time in China, data management platforms were something very new, although the concept had been in the Western world for some time. We manage our data and use it to provide clients with a target audience.

We started the private DMP about two years ago, and our first client was Cadbury Milk Powder. With a private DMP, we need a brand that will trust us and send us their CRM data, which we drill into and refine. There is very high security, and we only do this with a few clients at the moment.

You mentioned that marketing data is still underused in China. Why is that?

In China, there are big platforms like us that have lots of data, but, in general, there are not enough good professional data analysts. The attention is there from brands and agencies. The challenge is actually being able to get the most out of the data. That is the part that needs to be developed.

WeChat is very concerned with the user experience. Brands are only allowed to post four times a month into a user’s main messaging feed. But how do you ensure that advertisers are getting visibility through WeChat?

We have a lot of different ways to safeguard the user experience. There are strict rules, for example, on how many pre-roll advertisements we can accept on our video platform, and rules on WeChat for the frequency of ad exposure.

We do a lot of beta tests to find out what we should and shouldn’t do to get the balance right.

What is the process for innovating new ad formats?

We’re a technology company, so we are open in terms of new types of advertising formats that allow better engagement or a better viewing experience.

Using WeChat as an example, we started running ads there around three and a half years ago. We began with simple banners, eventually moved to video without sound and then to an almost TV commercial-like format, which is called WeChat Moments. Now, we have something called A/B Actions which allows users to make a choice and then see a different advertising message. It’s been an evolution.

But everything we do, we’ve done very carefully. These formats came out one at a time so we could test how the user reacts before we develop further.

Does WeChat consider itself to be a walled garden?

User experience, user security and data security are our top concerns. That’s why when I talk about how we use marketing data, there are certain limits to what we are able to provide. We are working to meet the marketer’s needs, but, for the moment, our partners – agencies and clients – seem pretty understanding about what we do, and how and why we need to do it.

This interview has been edited for length and clarity.

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