With Enterprise 2.0, Sina Weibo Looks to Cash in on Social Ads

Sina Weibo is the most attractive social platform in China for marketers. I’m speaking from the perspective of a social media professional in China: I’ve had countless meetings with clients who want Sina Weibo as the focus of their social media strategy. Despite the vast potential, Sina Weibo has yet to deliver a respectable product for its ad clients.

Sina Weibo Enterprise 2.0 changes that. One week ago, I was granted a test account of the product, and two days ago I also received information about a “Sina Weibo Ad Package” from contacts at several Chinese ad agencies. This is clearly Sina Weibo’s most robust and realistic attempt to monetize so far.

Weibo’s Spotty Track Record in Monetization

Since launch in 2009, Sina Weibo has attempted to monetize both its commercial and ordinary users. But none of its attempts to-date have had major impact.

Before reviewing Sina’s monetization options, let’s review the latest user stats [Source: Sina]. Note that Sina Weibo has a large audience, but its not mass market in the same way as QQ, Baidu, or Taobao.

1. 300 million registered users
2. 27 million daily active users
3. 1.5 hours spent on Weibo per user (average per day)
4. 100 million new posts per day
5. 30 million video views per day

1). Social Gaming

In 2011, Sina ventured into the social gaming field, previously the stronghold of Kaixin001, a social network founded by its former CTO. Kaixin001 recently accepted a strategic investment from Sina’s top competitor, Tencent.

Sina’s early venture into social gaming started with the Sina Weibo game center launched on July 20, 2011. It promotes in-game-purchases via Sina’s virtual currency, Weibi. But 9 months after launch, the activity on Sina Weibo’s game center is far lower than its key competitors. Can it pay for the entire Sina Weibo platform? I guess not.

2). Mini-campaign sites

In social advertising, mini-campaign sites are big money. Brand clients will pay extra for their “very own” fancy flash banner on the site or a few extra functions. Sina’s early approach was to  create pages that acted as online communities for users with shared interests to get together.

Some of the examples are a dedicated page for the NBA and Love Lady. In spite of Jeremy Lin’s hotness, these Sina Weibo Pages never became a big hit.

3). Value-added services

IVAS (Internet Value Added Services) account for about 90% of Tencent’s revenues, while advertising is the remainder. Perhaps Sina was trying to borrow a page from Tencent’s book when it introduced Sina Weibo Code, whereby users could pay for a lucky numerical ID. Whatever the rationale, it is not a popular service.

Relative successes

But not all failed. Although it hasn’t sold much, two products have given businesses a bigger role on Weibo:

1). E-commerce

Sina first launched its Weibo Enterprise Edition in cooperation with e-commerce giant 360Buy.com. Large traffic has translated into considerable income source for 360Buy, and many more e-commerce sites have since adopted Sina Weibo.

2). Enterprise Weibo 1.0 for Brands

The enterprise edition of Sina Weibo is designed specifically for brands. Extra functionality includes customizable widgets and basic data analysis tools for brands.

This is still completely free and has attracted most brands with the foresight and good sense to engage their consumers in social media. I suspect that it won’t remain 100% free for much longer.

2012 will be a decisive year for Sina Weibo: Can it meet the demands of its ad clients and maintain its high engagement? Or will it fall short of media and investor expectations?

Ads in Enterprise 2.0

[Note: the data that follows comes from Sina Weibo Enterprise 2.0 and Sina’s business development presentation for ad clients.]

Enterprise 2.0 is divided into two main sections: the Ad System and the Data Center.

1). Ad System

Sina has revamped its display ads to support a self-serve advertising platform. I’ve translated Sina’s pricing:

Self-serve display ads are experimenting with new forms of engagement. For instance, an ad can allow users to sign-up with their Weibo account to test drive a new car.  These ads come in three types, according to Sina’s BD presentation:

1. 3 types of display options: navigation bar; banner and “image within image”
2. 4 types of interactive options: social interactive; embedded video; information research (redirect, fill in required information and proceed); and category directory
3. 10-ad theme packs

2). Data Center

How will brands monitor performance? So far, Sina Weibo has allowed third-party consulting firms to provide services that guide and help brands to understand Sina Weibo’s markting value.

With the launch of Enterprise 2.0, Sina Weibo is largely taking that into its own hands. Below is an infographic based on sample data from a test account Sina Weibo provided me with: 

This data provides a strong overview of how a brand is performing. It will be challenging for third-party service providers to compete.

On top of this, Sina Weibo is currently developing a paid version of this data service. According to a recent conversation with a VP of Sina Weibo, social media monitoring and Word of Mouth tracking will likely be part of a package to come later this year.

Sina Weibo Limits Third-Party API Access

Enterprise pushes out many third-parties that offer Weibo consulting. Weibo’s commercial API has become less and less accessible over time. In Q3 2011, Sina Weibo ceased granting new commercial API accounts to third-party firms, effectively reasserting that territory for itself. A VP at Sina Weibo told me that new approval guidelines are currently being drafted that will reassess existing third party commercial API partners. Those guidelines will have stricter controls and possibly require profit-sharing between third-parties and Sina Weibo.

Personally, I believe such a move could hamper the social ecosystem in China. It will severely limit the innovation that could come out of a more open environment and change China’s social media industry for the better.

Conclusion

All in all, Enterprise 2.0 is the best Chinese social media advertising tool for brands yet. That should help Sina Weibo become the most profitable social media platform in China.

Update: Sina Weibo VP Xu Jingyang, in charge of commercial solutions and Enterprise 2.0, has resigned. Xu was reportedly the casualty of one of the many insider political fights between divisions at Sina. Xu is rumored to join Baidu.