Why Tencent is slow to monetise WeChat
Tencent's monetisation strategy runs counter to traditional business norms. The tech giant prefers to take it slow, and protect its user experience.
THE US$22 billion Chinese technology giant Tencent is sitting on an advertising goldmine. Just 18 per cent of its total revenue in fiscal year 2016 came from online advertising, and industry analysts believe that the company's WeChat social media app in particular is under-monetised.
Compare this with Facebook's model: advertising makes up 98 per cent of its total revenue. So why hasn't Tencent yet made the most of its advertising potential?
To answer this, we need to understand its monetisation strategy - and its philosophy on user experience. And to do that, we must go back to the company's start. Co-founded in 1998 by Ma Huateng (or Pony Ma) and four friends, Tencent launched its first product - a free PC-based instant messaging (IM) service called OICQ, later renamed QQ - in 1999.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
‘Competition for talent’ a poor excuse to keep key executives’ pay under wraps
OCBC should put its properties into a Reit and distribute the trust’s units to shareholders
Why a stronger US dollar is dangerous
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access