June 17, 2014
Mobile messaging apps are super-hot, but it’s still early days for monetization. WeChat, the largest mobile social platform in China, has been focusing on building a large user base globally and maintaining stickiness by upgrading its functionalities constantly. With the strong support of Internet giant Tencent, monetization is not an urgent concern for WeChat yet, but it has paved the way for many monetization options.
There are three options that could work well in monetizing WeChat:
- Mobile gaming. Online gaming is Tencent’s best strength and the primary source of its revenue, so it’s natural for the Internet giant to want to transfer that strength to mobile. For example, when Tencent launched its first WeChat game, the Candy Crush-like Tiantian Ai Xiaochu, it soon became the most downloaded game in the app store. In-app purchases in games will become an important money generator for WeChat.
- Mobile commerce and payments. Selling products on the WeChat platform is not new; last year, local smartphone brand Xiaomi sold 150,000 units in 10 minutes on WeChat. But with the successful launch of the new WeChat Payment service and its cooperation with JD.com, China's second-largest eCommerce player, mobile commerce and payments will soon become scalable on WeChat.
- Advanced services for public accounts. So far, WeChat has set quite strict rules for public accounts, and marketers are limited in their use of WeChat to reach and engage consumers. For example, they're only allowed to send limited numbers of one-to-many messages to WeChat followers, and they don't have much flexibility when it comes to customizing their WeChat public account menu. (For details, see my previous blog post, Why WeChat Is Not A Good Marketing Tool Yet.) WeChat could provide more advanced services such as premium APIs to public accounts, and marketers would be willing to pay for them.
There are also three other monetization possibilities that won’t be as successful as the three above:
- Stickers. Providing premium and sponsored stickers is arguably the most successful form of monetization of mobile messaging apps so far, mainly because of the huge success of Japan’s Line. WeChat also provides stickers, but it won’t be the primary form of monetization. The key reason is that Chinese consumers are not yet used to paying for things like emoticons, stickers, or wallpapers, and cute stickers won’t attract Chinese users as much as they do Japanese users.
- Advertising. WeChat recently started working with local search engine Sogou to provide search services for all public account content; this suggests that Tencent intends to turn this content into advertising revenue. Search ads would work better than display ads on WeChat's platform, but there is still a long way to go.
- Membership fees for premium content. It’s less likely that Chinese consumers will pay for WeChat in the way that US consumers pay for WhatsApp, as they can easily switch to another free replacement. However, it is possible that some users will pay for premium content. For example, actor/celebrity Chen Kun’s public account charges a subscription fee for exclusive content, such as photos, songs, and goodnight voice messages.