About this Blog

The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Friday, March 15, 2013

Sina starts major Weibo advertising

My last post on Sina is here:

Sina had been trying to make money from Weibo. But so far, it had proved to be hard going. It made 21.3M from Weibo in the last quarter. It is not insignificant, but considering how much influence it had, it is pitiful.

Sina had some brand advertising on weibo. On the right hand side of Weibo, it had some advertising. But most users completely ignore them. People go to weibo to read messages. But if Sina can make advertising as part of the message, it could make tons of money.

From the following post:

Starting today, 3/15/2013 , Sina is going to start the promoted news feed advertising system. The cost will be CPM = 5 RMB per thousand impressions.

By 3/18/2013, average Weibo users will be seeing these ads.

This is a high risk high reward move. This will disrupt Weibo users habit. They will get to see a lot of messages that they didn't want. Worst yet, Sina's Weibo has a strong number 2 player right behind it, the Tencent Weibo.

If Sina doesn't play this right, it could lose it all to Tencent.

On the other hand, if Sina doing it right, then this will be the start of real major monetization.

I don't know what is the right way to do it. Netease seems to figure out how to manage high risk high reward maneuvers. 4 or 5 years ago, when NTES wants to upgrades its number 3 game XY2 and transition to XY3, it forced players to migrate to XY3. Players revolted and NTES relented. It kept both games and vast majority of players stayed in XY2 (even though XY3 is a much better and more modern game).

Recently, NTES increased the gaming fee of its number 1 game and number 3 games, (XYQ and XY2), as well as XY3, by 50%. Players revolts just as strongly. There is no explanation, no discussion with player representatives. NTES just pretended nothing had happened, except it now charge players 50% more. A month later, all player demonstration and revolt dissipated.

Clearly, NTES had figured out a way to truly gauge how much players are willing to suffer.

So far, I am not sure SINA had figure it out. In the next couple of months, I will check my Weibo account to see how disruptive is this new advertising system and how much does the users complain.


No comments:


A test for now