September 20, 2014
When designing this second article on the Wechat opportunity in China, I sat down with Thomas Graziani, founder of WalktheChat, a Wechat-focused agency in Beijing and Shanghai. We discussed about the monetization of Wechat adds.
A few months ago, WeChat rolled out their ad plan for public accounts. You can display ads on your public account and get some revenue if users click (like an ad banner on your website). But how much can you earn exactly?
Only for the great
First of all, the WeChat ad scheme is not for everyone: you can only opt-in to display ads if your public WeChat account has more than 100,000 followers. And with the competition for WeChat followers getting more and more intense, getting such a number of qualified users (who will actually read your content) is not a small challenge.
150,000 users… 20 RMB a day
Here are the main metrics:
– Click-rate on WeChat ads is so far extremely low: around 0.4%.
– As a general rule of thumb, you can consider that reading rate on a popular subscription account is around 10% (50% for service accounts).
– WeChat give less than 0,3 RMB per click to the public account owner
So if your WeChat account account has, like in the example bellow, 150,000 users, this leaves you with 150,000*10%*0.004*0.3= ~20 RMB per day.
Enough to buy yourself a beer in a moderately-priced bar in popular areas.
Why so low?
This test was done using text ads from WeChat. However, WeChat is now introducing new features such as banner ads and APP ads.
WeChat indeed stands out as being a purely mobile platform with a very high rate of usage (users are considered wealthier, more educated than on most other Chinese social networks, and they spend a tremendous amount of time on the network). The ability to advertise from APPs which could then be downloaded in just a click therefore appears as a key opportunity for the future in order to make the scheme more profitable.
How important are ads for WeChat?
WeChat doesn’t really rely heavily on ads today in order to generate revenue. As of the 30th of June, ads represented only 10% of the total revenue of the company, and these were mainly coming from massive campaigns (for instance during the FIFA World Cup) rather than from the ad scheme initiated on public accounts.
In essence, ads are not really in the DNA of WeChat: it is today more a service company than an advertising platform. It takes marketing in a much broader sense than simply showing your brand name: companies on WeChat are invited to actually provide service to the user in order to provide a smooth user experience.
However, with continuing pressure to expand and to catch up with its main competitor in China, Alibaba, WeChat has been trying to diversify both its offer and its sources of revenue. Ads on public accounts are only one more element added to their arsenal.
WeChat ads scheme is still immature and can’t be relied on today in order to generate significant revenues for public accounts, even the most popular ones.
However, as the platform tries to drive more traffic to public pages and gives more visibility to ads (banner ads and APP ads) this paradigm may shift in the future.
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