Tencent's 2019 earnings report: Social advertising is making steady progress, but media advertising continues to grow negatively

On March 18, 2020, Tencent announced its fourth quarter and full-year 2019 results. According to the financial results, Tencent's total revenue for the full year 2019 was 377.289 billion yuan, up 21% year-on-year. Network advertising revenue reached 68.377 billion yuan for the full year.18% YoY，Among them, social and other advertising revenue increased by 33% to 52.897 billion yuan, while media advertising revenue decreased by 15% to 15.480 billion yuan。

Photo credit: Tencent

Unlike other Internet giants, advertising revenue has never been the social giant's main source of revenue, advertising revenue in recent years in the overall share of revenue has been stable at about 18%, Tencent's platform commercialization rhythm has been relatively restrained.

Photo credit: Tencent

Social and other advertising growth has been steady

WeChat Circle of Friends and small programs are the main engines

Tencent's social and other advertising businesses have been steady.

Tencent's social and other advertising revenue accounts for more than half of total advertising revenue.And that share is growing。 TOP Jun found that Tencent's social and other advertising revenue accounted for about 63% of total ad revenue in 2017, and its share of social and other advertising grew to 69% in 2018 and 77% in 2019.

And in terms of the magnitude of the increase,Tencent's social and other advertising growth has also remained stable in the face of a weak economy and changing industries in 2019growth of 33% for the full year and 37% in the fourth quarter.

According to Tencent's earnings report,The increase in advertising inventory and exposure in WeChat's circle of friends and small programs is the main engine of social and other advertising growth。 Since the first friend circle advertising first launched in 2015, WeChat circle advertising has been favored by the industry, this call is also with the opening of small programs and more enthusiastic, with 1.16 billion months of live WeChat social advertising can help advertisers efficiently channel, and through lightweight small programs to open the marketing closed loop, shorten the customer conversion process, social advertising and small program combination is seen as Tencent to break the advertising industry winter.

In 2018, Tencent opened the second advertising space of the Circle of Friends and launched a small program ad. At the beginning of 2019, the number of ad spaces in the Circle of Friends was increased to three, and by the end of the year, the fourth ad space in the Circle of Friends had been fully launched.

It can be seen that Tencent in the circle of friends in the commercialization has been steadily seeking progress, together with the steady growth of WeChat's user ecology. By the end of 2019,WeChat and WeChat combined monthly growth of 6.1% year-on-year to 1,164 million, with a 15% increase in the number of daily messages in the fourth quarter。 High activity and wide reach make WeChat's circle of friends the "Super Bowl" in social advertising.

On top of this ecology, WeChat Friends Circle Ads in 2019 are also taking advantage of strong social attributes to increase the interaction of Friends Circle ads.

In April 2019, Friends Circle Ads and Friends Comments Interactive features are fully open, users can not only like friends circle ads, comments can also be at any time friends to comment on interaction, to expand the reach of ads. Similarly, users and friends like the same ad will also have a circle of friends prompt, which not only increased exposure but also increased the topic of the ad discussion.

WeChat Friends Circle Ads - Friends feature

WeChat Friends Circle ad review interactive feature

At the end of the year, friends circle ads also online the first comment function, users receive ads at the same time can see the brand's first comments,At the beginning of the release of Zhao Wei, Li now, Liu Wei and other stars "airborne friends circle" operation on the greatly stimulate the fan's enthusiasm for interaction, comments, likes are much higher than the average。

Liu Wei "airborne" WeChat circle of friends

According to 36 news, last August, WeChat friends circle also went online topic ads. The so-called topic advertising is in the top right of the circle of friends advertising display can see the words "topic discussion", click into the video page has to see, forward, message, select messages and other functions, this function is also to encourage users to actively discuss under the topic, the formation of a brand community zone. In addition, users can click "look at" to distribute content to the "take a look" information flow, expand the scope of dissemination, and perhaps in the future will also be to look at the commercialization of the information flow to support.

In addition, small program advertising has also spent the second year, the ability of small programs has been market validation.In January 2020, Tencent disclosed in WeChat's open class PRO that the small program has achieved 300 million daily and 800 billion transactions a year, and in the past year Tencent has further enriched the advertising form of its circle of friends and small programs to meet diversified marketing needs。

For example, for advertisers specific time period of promotional needs, friends circle ads launched a limited-time promotion model, so that advertisers more accurately set the starting time of delivery, the shortest can support online 4 hours, so that more flexible delivery, suitable for new product launches, live broadcasts, limited-time snapping and other time-limited activities.

WeChat friends circle limited-time promotion function

Before double 11, WeChat advertising also launched a circle of friends "action card ads", the first time in the outer display of action buttons, to help businesses shorten the conversion path.

Friends Circle "Action Card Ads"

At the same time, Tencent is constantly improvingSmall program video advertising workYes.

In September, WeChat ads were posted in front of small program video ads and mini-program videos. The small program video ad length is 6-15 seconds, in the 4G and WI-FI environment can be automatically played, the traffic owner can determine the actual display of ads in the small program page. Similarly, small program video pre-ad time is 6-15 seconds, or 5 seconds of pure picture footage, the traffic master can choose which videos to access before playing. In addition, Tencent has extended the length of video ads such as incentive videos, allowing advertisers to fill in richer content.

Small program video ads

The short video is one of Tencent's key strategies in its 2019 reportIt is not difficult to see that this year Tencent has been increasing the proportion of video content in WeChat, the introduction of video numbers at the beginning of the year was placed second only to the circle of friends, small programs on-line live-streaming function, these brewing video ecology are laying the foundation for future commercialization. BesidesSearch, take a look and public number of information flow advertising space has not yet opened, as the commercialization process has been steadily advancing, Tencent's social advertising in the future there is unlimited growth possibilities.

Media advertising continues to grow negatively

NBA, episode extension is troubled

Unlike social advertising, Tencent's annual media advertising revenue fell 15% in 2019 and 24% in the fourth quarter. Financial results show thatThe main reason for the negative growth in media advertising was the delayed broadcast of episodes and the decrease in advertising for NBA games。

There have been incomplete media statistics, in 2019 more than 50 dramas "disappeared", you Aiten three video sites last year, the number of new episodes were negative growth. The tightening of policy supervision, represented by the restriction of ancient orders, is the main reason for the extension of Tencent's video series.

Last year, Tencent originally planned to launch a number of ancient costume dramas, including "The World of the Daqin Empire," "Mrs. Kyusju Yuzhu," "New Tianlong Eight," "Night 2," "Yan Yuntai," "Three Lives III Pillow Book" and many other ancient costumes, fantasy and historical dramas, while only "Night 2" and "Three Lives on the Pillow" have been launched in early 2020.

Poster for "The Book on the Pillow of Sansheng III"

The uncertainty over regulatory policy is affecting the entire film and television market, and Tencent Video is just one of them. The good news, though, is that Tencent Video will become a video site with a record fewer than 100 million users in 2019, after Ai Qiyi. Tencent's video membership reached 106 million by the end of 2019, and its full-year operating loss in the video business was reduced to less than 3 billion yuan, according to the company.

In addition, the NBA incident on Tencent video is not small, when Tencent just signed a new five-year contract with the NBA for $1.5 billion to get exclusive broadcast rights to the NBA, after this matter, Tencent reduced the number of daily broadcasts, advertising sponsorship also decreased accordingly, in the Lakers and Clippers game is to create a 0 sponsorship 0 advertising pioneer. In addition, advertising revenue is relatively low compared to 2018, when there will be no major global tournaments such as the World Cup.

Macro view, the economic down-line advertiser budget tightening and the accelerated layout of the fast-talking B station have hindered the growth of Tencent's advertising business to some extent, but with the further development and functional improvement of WeChat's circle of friends and small programs, attracting more advertisers and traffic owners, there is still a lot of room for growth in the future.

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Tencent's 2019 earnings report: Social advertising is making steady progress, but media advertising continues to grow negatively

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