Tencent announced in its short video platform that advertising could become a "substantial" revenue source. The new source of revenue could have a positive impact on the business when other aspects like gaming are facing pressure.
Tencent's WeChat will be Competing with TikTok by Focusing on Ads
According to the story by CNBC, by putting its focus on advertising, the company will be directly competing with two of the largest short video players in China. The two largest short video players so far are Douyin by ByteDance and Kuaishou.
Tencent recently reported its year-on-year quarterly revenue decline as the company's gaming sector has started to face downwards. The company was reportedly affected by the tighter tech regulations, economic situations, and the resurgence of COVID in the country.
Tencent First Ads to Its Video Platform in July
The company is known for running the most popular messaging app in China known as WeChat that already has more than a billion users. There is also a short video platform that is already built within WeChat itself.
Users can easily scroll through different videos within the app. Tencent's first time to bring ads to its video platform was in July through the service that it calls video accounts.
Tencent President Says Video Ads Will Become a Substantial Revenue Source Over Time
The company announced that it will be releasing even more video ad inventory within the month of August. As per the president of Tencent, Martin Lau, video ads will grow into a "substantial revenue source for us over time."
It was also noted that Tencent spent a huge part of its opening of the earnings call to explain what the video ads potential was. This underscored how important the revenue stream could become for the company.
Martin Lau Says They Will be Able to Capture More of the Advertising Budget of Other Companies
Martin Lau told analysts that video accounts have started to become one of the most popular short video services within the country. Video accounts were noted to already have substantial video engagement.
Lau noted that the new move could help them expand their market share. Since advertisers have already been spending a lot on different short-form video platforms, Tencent's president notes that they should be able to capture more of the advertising budget of other companies.
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WeChat Also Helped Direct Users to Tmall, an e-Commerce Platform Under Alibaba
Lau announced that it took five quarters for WeChat Moments, a feature that allowed users to post status updates, videos, and pictures to reach $147.42 million in quarterly advertising revenue. He announced that the video accounts will help them reach goals much faster due to the current size of traffic as well as the strong demand for "short form video ads."
An article by Panda Daily also shared how WeChat would also help direct users to an e-commerce platform under Alibaba known as Tmall.
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This article is owned by Tech Times
Written by Urian B.
