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Analysys: The Market Size of China’s Social Media Advertising and Marketing Reached RMB 5.42 Billion in 2016Q2. Information Flow Advertising Grows Fast and Will Become an Important Source of Incomes of Social Media Vendors
According to the data in the Quarterly Monitoring Report on China’s Social Media Advertising and Marketing in 2016Q2 released by Analysys, the market size of China’s social media advertising and marketing reached RMB 5.42 billion in the second quarter of 2016, with a growth of 17.9% compared with the first quarter of 2016 and a growth of 30.3% compared with the second quarter of 2015. In terms of the pattern of market competition, Tencent and Weibo took the leading position in the market of China’s social media advertising and marketing in the second quarter of 2016.
  • 08 Nov, 2016
  • Media
  • 1021
Analysys analysis:
According to the data in the Quarterly Monitoring Report on China’s Social Media Advertising and Marketing in 2016Q2 released by Analysys, the market size of China’s social media advertising and marketing reached RMB 5.42 billion in the second quarter of 2016, with a growth of 17.9% compared with the first quarter of 2016 and a growth of 30.3% compared with the second quarter of 2015. In terms of the pattern of market competition, Tencent and Weibo took the leading position in the market of China’s social media advertising and marketing in the second quarter of 2016.

 
 
Based on the market share of China’s social media advertising and marketing in the second quarter of 2016, Tencent steadily ranked the first with its advantages of social media product matrix and massive user traffic as well as its 52.4% market share. Tencent was followed by Weibo, the market share of which accounted for 28.4%. Tencent and Weibo accounted for more than 80% of the overall market size.

In the opinion of Analysys, the social media advertising and marketing value is constantly deepened as the user penetration rate of social media becomes strong and the vendors deepen the refinement operation of their advertising products. Analysys Qianfan data monitoring shows that the size of monthly active users of WeChat, QQ and Weibo reached 684.368 million persons, 524.952 million persons and 165.842 million persons, respectively, in June 2016. 

Analysys believes that, based on the dynamic performance of major social media vendors in the second quarter of 2016, the market performance of China’s social media advertising and marketing showed the following characteristics:
I. The fast-growing information flow advertisement will become an important source of income of social media vendors
In 2015, QQ Space on mobile terminal launched 15s information flow video advertisement, becoming the China’s first social media platform to launch the information flow advertisement; the financial statements for Q2 2016 released by Sina Weibo shows that the revenues from information flow advertisement accounted for 53% of total revenues; according to the financial statements of MOMO for Q2 2016, the revenues from mobile marketing reached USD16.60 million, a year-n-year growth rate of 146%. This was because that the Company released the native advertise marketing system of self-owned information flow in Q2 2015, enhancing the efficiency. Compared with other advertising mode, the information flow advertising accurately targeted at the user groups more coincides with social networking for its native properties, especially emerging before users in the mobile social form. It made the advertisement accessible to users while securing the user expenses to the greatest extent, and also formed the secondary propaganda through the social relationship chain of users, benefiting users, advertisers and platforms. In future, more social media vendors will launch information flow advertising services as the information flow advertising is constantly enriched and improved. The cognition of users and the market is enhanced. In future, it will become a mainstream form of advertising marketing services of social platforms and also an important source of income of network social market.  
II. Energize the business and enhance the marketing efficiency
In Q2 2016, Tencent social advertising launched the concept of “AD plus”, and devoted to connecting humans and commerce. Through the big data technology and advertising upgrade & innovation, Tencent built the brand new marketing ecology and shared the social connection and commercial value together with its partners. Weibo provided the perfect services for advertisers through Weibo Payment, Weibo Showcase, Weibo Fans Service Platform, Weibo Coupons, Red Envelopes and other commercial products. Meanwhile, it also continued to introduce the third party services and build the open commercial ecology. For advertisers, the multi-level propaganda advantage brought by size of users and user relationship chain of social media have provided huge marketing space for advertisers; however, the massive user data laid a solid foundation for achieving the precious advertising and efficient conversion. Along with the improvement of marketing service product series and the development of new marketing techniques, social media advertising and marketing value will continue to be explored. In future, the market value of social media advertising and marketing services is expected to sustain a high growth.
III. Social application marched toward live broadcast, exploring the diversified business model
The financial statements of MOMO for Q2 2016 shows that the revenue of live broadcast reached USD57.9 million, accounting for more than 58% in the total operating incomes of USD99 million; in addition to launching now live broadcast, Huayang live broadcast and other independent live broadcast products, Tencent also opened the live broadcast functions on QQ Space and other social media platforms. Giants of social field successively embarked on adding the live broadcast function based on their existing community. Analysys believes that social application in aspect of live broadcast not only enliven all social indicators and overall community, and the business model of live broadcast can also make the revenues of social application more diversified. It is a basic business model to express feelings by presenting virtual gifts. Besides, there are also advertising implants and paid watching of content live broadcast. These visible models will attempt the integration in the following industries.
IV. Social media deepen the market layout of programmed transactions and the combination of social advertisements and programmed purchase technology embrace a huge market potential
Up to Q2 2016, these five social Apps had established their own advertisement exchange platform, namely, Tencent Social Ads Exchange (WeChat, QQ Space, resource access of QQ Space), FANS and MOMO Ad Exchange. According to Analysys analysis, social Apps carry multiple service functions, i.e., information, entertainment and consumption based on the online social network, boasting the abundant advertising traffic and advertising value. Social media build the ad exchange platforms, and reduce their dependence on the third party online service providers, which reflects the strong demand of current market for social advertising traffic to a certain extent. The DSPs are pleased to participate in purchasing and bidding of social ads. Meanwhile, social ad platforms have deepened their lean management on self-owned ads, and strengthened their mastery over the distribution of advertising traffic based on the programmed purchase technology. The advertising premium capacity has been enhanced.
V. Paid Q&A service became popular; excellent contents sought the breakthrough for cashing
Zhihu.com and Guokr.com, two knowledge communities in China, respectively launched the paid Q&A products in the second quarter of 2016. The former launched Zhi.Zhihu.com and Zhihu.com Live in April and May. The admission ticket to an “online lecture” of Li Kaifu was sold as high as RMB499/person; the latter launched Fenda in May, and Wang Sicong answered 32 questions in three days, creating total revenues of RMB 238,000. Analysys believes that the “reward” of WeChat and Weibo and paid Q&A of Zhihu.com and Guokr.com similarly sought the channel of cashing the knowledge. On the one hand, payment could stimulate the formation of more excellent contents; on the other hand, payment could provide a more efficient channel of information screening, so as to help form the improved transaction market and ecology.
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