WeChat launches new ad format to destroy KOL black market
According to eMarketer, Tencent’s digital advertising revenue will reach $11.0 billion by 2018, almost triple from this year. How is Tencent going to do that?
Starting in late 2014, Tencent embarked on a slow but steady journey to open up its advertising platform for brands
August 2014 - Introducing banner advertising at the end of articles
January 2015 - first WeChat Moment Ads were introduced
December 2015 - introduced video ads for WeChat Moments
January 2016 - WeChat Moment ads are manageable directly from backend
May 2016 - Introducing coupons for WeChat Moment ads
August 2016 - Local-hosted moment ads (原生广告) were introduced
September 2016 - WeChat Moment ads for local businesses were introduced
It’s clear WeChat advertising is getting more sophisticated in terms of targeting and format... and the latest innovation was released just this week!
Last week, Tencent introduced a new format of advertising: Two-way-pick Banner Advertising （互选广告).
Here is what it looks like:
Essentially what it is a slightly bigger WeChat banner that brands advertisers can hand pick the specific official account.
It’s a banner at the end of the WeChat article, before “Read More” button
It comes with a banner picture area, brand name, logo picture and a learn more button
The Learn More button takes users to a H5 page that users can interact with.
So, what makes this new type of ads special? Is it just a bigger version of the Subscription Ads banner? Not really, what make these ads different is the way they are booked and billed. Read on...
The current minimal starting price for these new ads is 500,000 RMB. Likely to go down once officially launched.
It’s a performance based price setting:
It's an agreement between 1 account and 1 advertiser. The Official Account can assign a price to the banner and promise the view rate. The price would have to be within a range that’s set by the WeChat system according to past performance. For example, if the first article of the account has an average of 100k views, the promised view rate will be limited to 80k to 150k views.
The payment to the account is performance based. After the article has been published, the Official Account will receive the full amount of payment only if the promised view rate has been meet. Otherwise, the Official Account will only get a proportion of the full price.
Tencent gets a cut. WeChat will take a percentage of the advertising revenue.
The Official Account will need to enable Traffic Host (流量主) feature, which is the feature to accept the normal version of WeChat banner advertising.
To be eligible to be a Traffic Host (流量主), accounts need to have at least 20,000 followers. For accounts with Original Content feature, the minimal eligible number of followers is 10,000.
Better targeting. For one thing, Tencent is getting smarter with the advertising setting. It is the first time brands and official account are able to hand pick each other through WeChat backend. In the past, brands only had limited option to target users, according to location, gender, age, interest… But for most brands, this type of targeting is simply too broad. Thus brands would have to go out to their way to purchasing advertising spaces “under the table” directly from the Official Accounts. This type of two-way-pick ads solves the issue of targeting.
Better alignment of incentives. The performance based pricing incentivize accounts to produce better content.
Improved user experience. It enables a clickable button to a custom H5 page. It’s a much more elegant UX than clicking on “read more” thus likely to increase conversion.
Solves "KOL black market" issue for Tencent. Last but not least, Tencent is finally taking a step forward to regulate the gigantic black market of WeChat advertising. Even if the platform charges only a small percentage of the advertising cost, it would still be a large amount of revenue for Tencent.
Mercedes spent millions on this advertising. If you have 500,000 RMB marketing budget, why not give it a try.
For most Chinese companies, and foreign companies that can’t meet the strict requirement of WeChat advertising, you can get for a similar user experience in the old fashion way:
Directly discuss with KOL to put a banner at the end of their articles
Include a QR code and “Read More” link to direct users to your landing page or WeChat account.
Overall, these new ads are a step in the right direction for Tencent: the direction of quality advertising. Banners are usually an affordable and targeted way to get started with WeChat marketing. The fact that Tencent is creating a formal framework for them should be a relief for all marketers.