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Tencent pushes mobile advertising

News, 21 March 2016

SHENZHEN: Chinese internet giant Tencent is following Facebook by exploring new ways of attracting advertising revenues and is focusing on its WeChat social platform as the vehicle to catch up with its bigger rivals.

According to the Wall Street Journal, Tencent is pushing ads "aggressively" on WeChat as it seeks to monetise the huge popularity of the app, which already has nearly 700m active monthly users.

The Shenzhen-based company last week announced a 22% year-on-year jump in net profit of 7.16bn yuan ($1.1bn) in the fourth quarter to the end of December. This came from revenues of $30.4bn yuan, a 45% increase on the same quarter in 2014.

More than half of Tencent's revenue came from online games, but online ad revenue more than doubled from a year earlier to 5.73bn yuan, making advertising the company's fastest-growing revenue stream.

Tencent launched WeChat in 2011 and the site was ad-free until it started to experiment with banner ads in 2014. But last year it started hosting ads on its Moments section and then, in February, extended this option to advertisers with smaller budgets.

On top of replicating Facebook with its Moments section, Tencent is also reported to be recruiting expert researchers and analysts to improve its data and targeting capabilities.

Some of these specialists have joined Tencent from Facebook, Google and Baidu, a rival Chinese internet service, according to the Wall Street Journal's sources.

In addition, Tencent is said to be busy hiring marketing and branding managers from automakers and electronics manufacturers to tap their knowhow about advertisers' requirements.

"The key is really how fast Tencent can grow its advertising revenue," said Tony Chu, a portfolio manager at RS Investments, a US asset management firm. "People see what Facebook has already done. The expectations are high."

Data sourced from Wall Street Journal; additional content by Warc staff