Tencent Holdings is reportedly speeding up WeChat monetization by integrating search results advertising within the app. This comes on the heels of the company's revenue decline earlier this year.
WeChat Search Engine Advertisement
Following reports, the Chinese social media and gaming giant will soon permit brands and merchants to pay for ad placements in search results within its well-known WeChat super app, which has almost 1.3 billion monthly active users. Tencent is also expected to be implementing an auction system to improve page rankings.
The new service will assist advertisers in promoting their official WeChat accounts, products, applications, and minigames by enabling users to access their content when they search for the brand name or a closely related keyword, according to The South China Morning Post.
This new WeChat super app mechanism is similar to the Google Ads rank threshold in that merchants can determine ad positioning and visibility by bidding on keywords, auction-time ad quality, and the context of a user's search.
Google chooses which ads to display and where to place them through the ad auction. Every ad in the auction has its Ad Rank determined by Google Ads. Tencent's ad auction may be a version that is more dependent on purchased advertisements than on the value and quality of ads.
With its many features, which range from messaging, news, shopping, and gaming, WeChat has already become a staple app for Chinese users. According to SCMP quoting the WeChat announcement, the implementation of search engine advertising will allow for "effective exposure and conversion" for advertisers.
Ads and Declining Revenue
Back in August, Tencent predicted that as competition intensifies in other parts of its business, like gaming, advertising in its young short video platform could grow to be a "substantial" source of income.
According to CNBC, ByteDance's Douyin, another short video platform similar to TikTok, is in direct competition with this advertising product from one of China's largest technology companies.
WeChat, the most widely used messaging service in China, is operated by Tencent and has over one billion users. Within WeChat, there is a platform for quick videos. Users can browse a variety of videos in the said app in an endless loop, much like TikTok. Tencent started showing users ads in their "video accounts" for the first time in July following reports.
Tencent announced a dip in revenues and profits in the second quarter despite a weaker macro economy, and the company is still searching for new growth drivers.
"Strategically, they allow us to expand our ad market share," Martin Lau, president of Tencent, told analysts in August. "As advertisers have already been spending aggressively on multiple short-form video platforms, we should be able to capture more advertising budgets."
Tencent's online advertising revenue experienced its steepest decline ever in the June quarter, falling 18% year over year to 18.6 billion yuan (US$2.5 billion). On Nov. 16, Tencent will release its third-quarter financial results.
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