Sina Weibo Will Monetize Through E-Commerce, Not Ads, Alibaba CTO Jian Says

Posted: May 11, 2013 in GT, Social

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One interesting thing to watch is how social
networking platforms mature divergently as
businesses around the world. Sina Weibo, the public microblogging platform that
has had a huge impact on online discourse in China,
is veering down a path toward e-commerce and
transactions after Alibaba took a stake worth $586
million in it last month. The platform is one of the two
more influential social networks in China today, with the other being Tencent’s messaging app WeChat. But unlike WeChat, Sina Weibo’s growth has slowed
over the last year and its parent company Sina has
had visible issues in monetizing the platform. (It feels
a little bit like the heat Twitter had a few years ago for
taking longer to bring in revenue-making products like
promoted tweets and in-stream ads.) “Weibo is pretty mature right now,” said Alibaba CTO
Wang Jian in an interview. “It’s not in a fast growth
period.” In the Sina’s last earnings report, the company said
Weibo made just under $50 million in revenue, or
about 12 percent of overall advertising revenue. But
investments in the company contributed to an $8.5
million operating loss for Sina last year. Now with Alibaba’s investment, it looks like Weibo will
take a different money-making path than its Western
counterparts, which are more dependent on
sponsored stories or in-stream ads. “I think the best way to monetize Weibo is through e-
commerce, not by ads,” Jian said. “That’s what I
believe. That’s my personal thought. Weibo has a
very good chance to integrate with the Alibaba
business.” It’s a win-win deal. Alibaba, which is veering toward
an IPO, is China’s dominant e-commerce company
and has an extremely data-driven culture. But it
hasn’t been as successful with its own homegrown
social networking efforts. At the same time, Sina isn’t
widely considered to have the same caliber of technical talent as China’s other flagship Internet
companies. While Jian didn’t give a lot of detail on how they would
integrate the two platforms, one could imagine that
users could get targeted offers on goods and services
related to things they’ve posted status updates about. “We just need time to find out how to have a synergy
of data between the two companies,” Jian said.
“Weibo just gave us a new challenge for that.” As for Aliyun, the smartphone OS that Jian is
overseeing, Jian says that he doesn’t think the
platform will fit Weibo — which is sort of hard to
believe considering that Weibo is a mobile-centric
product. “I don’t think Aliyun really fits the Weibo deal,” he
said. While Tencent’s WeChat, which has surged to 190
million monthly active users over the past year, isn’t
a direct competitor, Jian says it is in terms of other
metrics. “If you’re thinking about time that people spend on
their devices, then you can say it’s a direct
competitor. If you look at it from just a media
perspective, I don’t think it’s direct competition. Two
years ago, everyone spent time on Weibo, and now
Weixin (WeChat) is becoming that app. It’s really a time spending problem.”

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