According to Tencent’s Q2 2017 financial reporting, its income from social media advertising increased 61% YoY to 6 billon RMB, mainly from ads on WeChat Moments and WeChat Official Accounts. WeChat first launched ads on its Moments platform on 25th Jan 2015, with BMW, Vivo and Coca Cola all placing ads there. It was a big topic on Chinese social media at that time because many users believed that the algorithms which determined which ads they saw were based on their online behaviour and their WeChat connections. In response, some of the users who saw BMW ads on their WeChat Moments reposted these ads to show that WeChat categorised them as wealthy individuals or as persons with higher social status. It was a successful PR exercise to start with and attracted many other brands from various industries, such as Porsche, Lancôme, Nike, KFC, Disney Hong Kong and Australia Tourism. At the beginning, the WeChat Moments ads (WM ads) only supported the display of text messages with several pictures. Now, two and a half years later, what is the state of things in September 2017?
Today, the WM ad format has dramatically evolved from its earlier and admittedly somewhat primitive incarnations to become more interactive between advertisers and users. It also looks much more sophisticated with better HTML5 visual effects and more informative thanks to a larger display area. In addition to this, with better Location Based Service (LBS) technology, WM ads also able to better geo-target users and provide advertising for local businesses. With the ecosystem: WeChat Pay, WeChat Sport, WeChat Wallet and WeChat Voucher, advertisers now have the ability to better track advertising ROI in a closed loop which makes it unique to other social media advertising platforms like Facebook / Twitter or search engine advertising platforms like those provided by Google and Baidu.
Seven of the Most Recent WeChat Moments Ads
Below are seven examples of the latest WM ad formats that allow advertisers to be have more room and functionality and to create ads that are attractive, innovative and encourage more interactions between users and between users and advertisers. It is this interactive functionality that arguably forms the basis for a successful social media Ad. Porsche showed how fancy a WM ad can be. Four lipstick brands used WM ads to boost their brand awareness and sales during different festivals and occasions. SanYuan yoghourt stimulated its brand value with WeChat Sport with a WM ad designed to boost interaction, reposting and ad spread. Wang Steak, a premium restaurant launched a mini movie WM ad as an extension of a currently popular TV show episode, and thereby managed to expand their consumer base and target younger generation consumers.
- New car models from Porsche: This ad contains an auto play video, full screen size HTML5 display page and uses mobile’s gyroscope motion sensors to show different views of the cars. This new ‘card’ format in WeChat allows 10 times loading speed than other online video formats.
- 2016 Christmas: Yves Saint Laurent Le Nu Rouge Pur Couture Star Clash Limited Edition. This lipstick was already a very hot topic and product before the WM ad and it was almost sold out The WM ad targeted female users whose WeChat Moments already contained tags for cosmetics, fashion and beauty products, and relied on big data analytics of what WeChat Official Accounts these women followed and what topics they talked about in their Moments. The ad was first sent to some KOL for cosmetics to create higher brand referral and for reposting, so as to maximize the Christmas retail vibe among users. At the end, the ad’s “like” rate was 163% higher than the average cosmetic WM ad and hundreds of limited editions gift set were sold within 5 minutes of the ad’s launch. The WM ad also successfully increased sales of other YSL’s products lines apart from the featured lipstick products.
- 2017 Valentine’s Day Lancôme Customized Lipstick. In this WM ad, Lancôme set as one of its target segments, male users in certain districts to remind them that Valentine’s Day was approaching and to suggest that their lady friends would very much appreciate a unique gift, such as a Lancôme lipstick with an engraved personal message
- 2017 Women’s Day Dior Rouge Lipstick. Dior has a strong track record of exploiting festivals to broadcast WM ads targeting educated and professional women in 1st tier cities to buy new lipstick products. Dior promoted its #888 color lipstick on the 8th March as a ‘Goddess Day’ gift and created Dior’s own ‘Red Lip Festival’ on September 9 to promote its classic #999 color lipstick. Dior managed to stimulate discussion and interaction between WeChat friends under its WM ad and generated high brand awareness.
- 2017 Cannes Film Festival L’Oréal Limited Edition Lipstick Gift Pack. In Mandarin Chinese, the number 520 reads like and means ‘I Love You’. So on May 20th 2017, as one of the official sponsors of the Cannes Film Festival, L’Oréal launched new lipstick products and gave away 52,000 gift packs for free in its WM ad by @L’Oréal below the WM ad for interaction. Because WeChat friends could see each other’s interaction within the WM ad, it increased the chatter among users as well. The WM ad contained a countdown page and a direct link for placing orders. Even after all the specially discounted gift packs had been sold within the first hour, L’Oreal still managed to sell another 1000 lipstick products at the RRP.
- SanYuan yoghourt + WeChat Sport: SanYuan launched its new yoghourt and a ‘21 Days Sports and Diet’ campaign as a WM ad. It targeted younger users and showed the key to have a healthy lifestyle is to challenge the users themselves. It used WeChat Sports to stimulate its brand value by counting users’ steps and encouraging competition between friends to see who can achieve the most steps. The WM ad reached 9 million users and caused 266,000 separate user interactions.
- Wang Steak, a premium restaurant launched a mini movie WM ad as an extension of a current popular TV show in order to expand the company’s consumer base and to target younger-generation users. The ad was about the significance women attach to the day they go to the marriage registry office and suggested to male users that a set meal at Wang Steak would be a perfect way to end such an auspicious Upon being broadcast, the set dinner was booked 20 times without any discount on WeChat and the ad itself was played 400,000 times.
The purchase function enabled by WeChat Pay within WM ads successfully shorten the user-merchant conversion path and caters to the typical mobile purchase behavior of new consumers: first users are seduced by an attractive ad broadcast at just the right time (festival or trend), short time decision making (limited edition count down or the user’s want-it-now mindset), and quick and easy payment method to complete the transaction (only few clicks or fingerprint on WeChat Pay). Not to mention the social function of WeChat in terms of generating online chatter and engagement with the ad, including reposts, comments, likes or share vouchers. All these functions and its 963 million MAU (Q2 2017) made WeChat Advertisement a unicorn in the mobile advertisement space. However, with MAU growth slowing and users’ passion with WeChat Moments cooling off, WM ads are facing some critical challenges, whether they care to admit it or not.
Challenges for WeChat Moments Advertisements
From the advertiser’s price perspective, WM ad only uses CPM (Cost per Impression), while Facebook, Twitter and Google use both CPM and CPC (Cost per Clicks). Twitter also allows app promoters to use CPI (Cost per Installation). In general, CPM is more suitable for those companies seeking to increase brand awareness while CPC is more cost effective for those wishing to increase interaction and engagement between users and brands. This means that even though WM ad charges on a CPM basis for various data-points like cities, districts, age, gender, education, iOS/Android, and consumer behaviour, it is still not completely accurate in its targeting so that sometimes it also advertises to non-targeted groups. On the other hand, CPC and CPI require more advanced technology on the platform in order to be able to analyse user behaviour, as well as location-based technologies (LBS) in order to target the right consumers thereby generating more revenue. Google AdWords and Facebook Local Awareness Ads both offer LBS-based ads, however they do not (yet) incorporate easy payment solutions such as WeChat pay to close the loop, so that advertisers can easily track the whole ad-purchase behavior in order to quickly calculate ROI.
While the number of WeChat users continues to grow, it is also true that some users are using the platform less and less or opting out of the WeChat Moments functionality. User behavior with regard to WeChat Moments seems to have evolved somewhat over time. At the beginning, users found the novelty and lure of WeChat Moments so addictive that they would post every meal they had, every place they travelled to, every book they read, photos and videos of their loved ones, babies, pets and plants etc. Similar to Facebook’s timeline, users also post complaints about the weather, or sleeplessness, or repost articles and news they find interesting, voting request for their projects or pets or babies. One of the reason users tended to be very open to share every bit of their lives on WeChat Moments was because it was a closed community from the outset, meaning a user’s WeChat contacts are generally his or her real-life friends or relatives. However, the 2017 WeChat User & Business Ecosystem Report by Penguin Intelligence shows that 80% of users have used WeChat as a business or work-related networking tool and 57.5% of users in the Tier-1 cities said they use WeChat as one of their communication tools at work. As a result, the audiences of users’ WeChat Moments are no longer just limited to persons they know well, it might include their bosses, work colleges, suppliers, distributors, someone users might not want to share their whole lives with. For this reason, users have become increasingly guarded over time about what they choose share, with many choosing to close their moments for good because they do not want relative strangers or people they do not know well to go through their past posts on WeCHat Moments. Also, there are an increasing number of users who are selling or promoting business via WeChat Moments, which makes it even less interesting to some users.
In order to stem the outflow of active users of its Moments, WeChat introduced a setting allowing users to either limit viewable posts to the last 3 days or last 6 months (as well as allowing their contacts to continue seeing all their previous posts). This setting was to a limited extent successful in slowing the exodus and bringing back some users to Moments. Yet, because a new WM ad always shows up fifth place in a user’s unread Moments feed, as long as a user’s WeChat friends keep posting items to their own Moments, WM ads will keep showing up and earning CP. But if users refresh their Moments too frequently and there are not four or more unread feeds, there is a high chance that users will not see a new WM ad. This rule also has implications for advertisers in terms of the timing of their WM ads, since it will not be the same time for every users, can be 3am or 9pm, depends on when users are going to have 4 new feeds, so like the time-sensitive ad such as lunch promotion ad nee to be caution.
In the recent iOS v6.5.13 update, WeChat introduced the new ‘Infrequent Contacts’ privacy setting, which has three options to filter contacts whereby users can choose between different options such as ‘Delete’ or ‘Don’t Share Moments’ or ‘Hide User’s Moments’. WeChat more than likely hopes that this function will help users to streamline their contacts somewhat, thereby making them more comfortable and willing to make more frequent use of Moments. The 2017 WeChat User & Business Ecosystem Report by Penguin Intelligence shows that 45% of users have more 200 contacts and 13.5% of users have in excess of 500 contacts. These number already exceed Dunbar’s number of 150, which is the number of stable relationships humans are able to comfortably maintain.
Tencent QQ and Sina Weibo all faced similar challenges in the past, with users amassing too many contacts and eventually leaving the platforms due to privacy concerns surrounding access to the user information shared on these apps. Maintaining users’ level of activity and interest on Moments and keeping organic traffic are the main challenges for WM and WM ad. Users do not hate ads but ads that are irrelevant to them are perceived as a nuisance and will eventually result in less interest in and use of the platform. Thus for WeChat, how to be more precise in targeting users is the key to sustaining the platform’s attractiveness, whereas for advertisers, creating ads that are innovative, trendy, featuring attractive content and that encourage engagement is the key to achieving higher ad-sales conversion rates.