Social network powers mobile advertising

Weibo pioneered the monetization of mobile traffic. According to Sina management, 75% of Weibo active users accessed the service through mobile in Dec 2012. All of its users have been exposed to Weibo’s mobile ad banners while reading the content.

We believe Weixin carries a significant premium to Weibo in terms of the potential to generate advertising dollars. In our view, Weibo is evolving into China’s leading social media site, where user activity is driven by news feeds broadcasted by celebrities and content publishers. Relative to a social network, a media company’s service model carries limited scope, which is the ability to collect information about user interests, and use it for better targeting when serving ads.

Weixin, in our view, has become a true social network, especially after the iOS 4.0 version equipped the service with photo-sharing capabilities. Weixin’s commercial value is the social networking effect, which provides mass traffic and engagement that underpin other monetize-able activities. As users participate in a social network, their engagement will increase the benefits to existing users, giving others more incentives to participate. Referencing the U.S. market, Facebook is approximately 26X of Twitter’s user time spent, indicating the different value between social media and social network properties.