Tencent targets affluent customers

23 February 2012

SHENZHEN: Chinese web giant Tencent is attempting to target wealthy smartphone owners in a bid to boost its advertising revenues.

Bloomberg reports that the company, which owns digital brands including QQ.com, is focusing on improving its mobile services, giving the provider additional opportunities to sell lucrative mobile app ads.

Tencent currently lags behind other web firms in developing this kind of premium inventory.

Dick Wei, an analyst at JPMorgan, commented: "Advertisers have regarded their users as low-end."

This perception is borne out by Tencent's own data, which suggest that it is only China's sixth biggest earner in terms of online ad revenues despite being the nation's biggest internet company.

QQ.com, China's most-visited site, earned $95m from ads during the latest quarter for which figures are available. By contrast, rival web portal Sina.com received $101m in revenues over the same period, despite attracting fewer visitors overall.

Tencent's prioritisation of mobile marketing is partly due to the fact the smartphone-owning demographic is growing rapidly in China.

Figures from Strategy Analytics suggest that the nation overtook the US to become the world's biggest smartphone market in the third quarter of 2011, with shipments rising 58% year on year.

Data from Morgan Stanley released last year also revealed that 91% of consumers living in China's major cities plan to purchase a smartphone when next buying a mobile handset.

Tencent has attempted to leverage this trend with Weixin, a new social media service for iPhones and Android-powered devices. The network has attracted 50m subscribers since its launch in 2011.

Catherine Chan, a spokeswoman for Tencent, told Bloomberg: "With the adoption by smartphone users with 3G data plans, Weixin is then helping Tencent to sign up a more high-end mobile user base."

Data sourced from Bloomberg; additional content by Warc staff