WILL WECHAT CONQUER THE DIGITAL AD INDUSTRY?

There is no doubt that Facebook and Google are the biggest players in the digital ad industry, with SnapChat on the rise. Facebook and Google are predicted to earn $106 billion from advertising in 2017, which accounts for nearly half of the digital ad spending worldwide.

So how can WeChat threaten the duopoly in the digital ad industry? First of all, WeChat needs international success, and, with 889 million (approaching 1 billion), monthly active users, they are already an interesting advertising channel for many international brands.

Rely upon international success

Tencent (developers of WeChat) is aiming for international success and has penetrated the US, European, and African markets. However, WeChat Pay might be the key factor for international success. The Silicon Valley company Citcon is partnering up with Tencent to introduce WeChat Pay (and Alipay) to the North American market.

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WeChat Pay doesn't bring any significant income for Tencent, but it adds value to the WeChat ecosystem.

However, WeChat’s biggest income comes from games and advertising. Advertising on WeChat has become increasingly advanced and sophisticated compared to a few years ago.

The new feature on WeChat ads is targeting Chinese travellers, allowing international brands to advertise directly to Chinese consumers located in a country outside of mainland China.

Big data and user base attracts advertisers

Google dominates search, and Facebook - display. What they both have in common is big data about their users which makes it possible for advertisers to reach specific audiences based on their preferences and behavior.

Nevertheless, WeChat should impress many international brands. Tencent possesses immense data about their 889 million users both online and offline. WeChat knows what you click on and what you look at online, while offline, they know where you go, what you buy and eat.

Not only can international brands advertise on WeChat, they can also make use of their e-commerce platform without setting up their own retail store in China.   

Mobile advertising on the rise

According to eMarketer, worldwide digital ad spending would increase by 20.3% and reach $194.60 billion in 2016. This makes up 35.3% of the total media ad spending. It’s also predicted that spending will reach $335 billion and account 46% of total media ad investment in 2020. In 2016, mobile ad spending would account for more than half of digital ad investment and 20% of total ad spending.

In China, (2015) 22,3% of total media ad spending came from mobile advertising, which is significantly higher than any other markets. In 2017, the percentage is projected to be 37,4% and 47,8% in 2019.

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Globally, ad spending will reach $674.24 billion by 2020. North America will still remain the top advertising market in the world, followed by Asia-Pacific.  

WeChat has a long way to go before they are on the same level as Facebook and Google. But the potential is there for WeChat to take an impactful share of the digital advertising market if they manage to succeed internationally.

 

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