The revenue models of Chinese SNS websites-Part 1

Wed 17 August 2011 17:25, Qin Hu

The revenue models of Chinese SNS websites-Part 1

 

SNS stands for Social Networking Services. For instance, one of the most famous SNS websites right now is Facebook. Many companies and individual investors have high expectations for SNS websites and this also has influenced their investment. For example, Microsoft Corp. invested $240 million to buy Facebook Inc. 1.6% stake several years ago. Li ka shing, the richest person of East Asia and 11th richest person in the world, has increased his investment in Facebook to $120 million in total.

 

The social media hype is gradually extending globally. In China, the development of social media is very positive at this moment. RenRen (a Chinese Facebook) has become a listed company in 2011, after it launched 6 years ago. QQ-zone, one of Tencent’s SNS websites, already had an annual income around 1 billion RMB (around $14,400,000) in 2008. It seems SNS websites generate high revenue in China. So what are their revenue models? What are the differences when those models are applied to Chinese SNS websites?

Here are some revenue models1 used by Chinese SNS websites.

(1:in Chinese)

1. Text and image advertising marketing 

Like portals, videos, BBS (Bulletin Board System) websites, SNS websites also offer banners, leaderboards, skyscrapers, etc. But unlike those websites, Ads on SNS websites will more accurately approach to target audiences.

One reason is that most of SNS websites have their particular target groups. For example, RenRen targets students; target group of Kaixin is white collar; and Tianji users are mainly business people with high positions. So companies will choose different SNS websites to put their Ads according to their own target groups. By doing in this way, the efficiency of Ads has been improved. Since 2009, Ads revenue of Tianji has increased 100%-300% every month, because of Ads investment from many luxury brands, like Cartier. 

In addition, SNS websites can collect and analyze the internet users’ habit. They probably know more what the netizens (a portmanteau of the English worlds internet and citizen) are interested in, which is the reason for attracting many advertisers.

2. Interactive marketing 

Interactive marketing is also one of the revenue models of SNS websites. Adidas has done a great job in this field. On RenRen, Adidas does not only have its own group, but also an App named “篮球巨星” (Translation: Basketball Stars). People can gain game credits by completing their missions and competing with other users. Using the game credits, they can exchange all kinds of Adidas virtual products for their roles in the game, which can improve their roles abilities. The more users play the game, the more sales of Adidas basketball products in the game. Ultimately, the brand image and products information will be displayed more often. Now, the users of “篮球巨星” are around 140,000. The cooperation with RenRen helps Adidas to communicate its brand concept to target groups, and also increase their loyalty. Of course, RenRen also has gained revenue by offering the platform.

Because of the big success of “篮球巨星”, Adidas has decided to keep cooperating with RenRen for a long term. In May 2009, Adidas has launched another App game for its running shoes, called “各跑其乐” (Translation: running with fun), and its users have increased to around 1 million people.

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3. Product placement marketing

Comparing with traditional ways of advertising, product placement marketing can merge brands into entertainment elements, which silently makes customers aware of the brands.

Kaixin, a Chinese SNS website, has realized this revenue model already when it launched its popular flash games “争车位” (Translation: parking cars) and “买房子” (Translation: buying houses) several years ago. Real cars and houses models are used in the games, which attracts many car manufacturers and real estate agents. Furthermore, many other brands, such as LG, Casio, Lenovo, etc., have been placed into different scenes. Chinese netizens have a lot of fun when they play those games with their friends. In the meantime, they also gain more positive feelings for those brands. That is why many advertisers would like to promote their products on SNS websites.

14

It is very interested to see how those revenue models are applied in China, and how they are localized. There are still 3 models left. I will keep updating those models in my next article. See you soon! 

All pictures are from

RenRen and Kaixin

 


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