Weibo adverts on the rise as Sina looks for revenue

Mainland microbloggers report seeing more advertising postings on the popular service, as internet giant Sina tries to monetise huge user base

PUBLISHED : Friday, 15 March, 2013, 12:00am
UPDATED : Friday, 15 March, 2013, 5:41am

Users of Sina Weibo, a Twitter-like microblogging website on the mainland, are complaining about a growing number of advertising postings on the platform in recent months.

Yu Yang, a company secretary in Beijing, said she had recently noticed a lot more posts on the website advertising cosmetics, clothes and healthcare products, which distracted her when she was surfing for information.

Sina, a major news portal on the mainland, launched its weibo product in August 2009. The social networking service had more than 500 million users at the end of 2012, up 74 per cent compared with a year earlier, according to the company. However, until now it has not been able to mine that user pool for an equally big increase in revenue.

The Nasdaq-listed company's 2012 net revenue grew by 10 per cent year on year to hit US$529.3 million, while advertising revenue was US$412.9 million, a 12 per cent increase. That means nearly four fifths of Sina's income is generated by advertising, the traditional way for internet companies to make money.

You Tianyu, a senior analyst at iResearch, said the income generated by Sina Weibo last year - US$66 million - missed the expectations the market had for it when it captured investors' attention with dazzling growth over the previous two years.

But You said the failure to monetise its user base was common to all social networking sites.

"Globally, social media platforms are all weak in profitability," You said. "The industry hasn't found a good way of generating profits from the service yet. Having said that, Facebook has some established products like sponsored stories, but weibo hasn't figured out any successful product yet."

Social media platforms are all weak in profitability. The industry hasn't found a good way of generating profits from the service yet

Sina chief executive Charles Chao said the company will "continue to improve user experience and expand the scale of weibo monetisation" in 2013.

While announcing its annual results last month, Sina appointed Jack Xu as the company's chief technology officer. Xu recently joined Sina from Cisco as corporate vice-president of the communications and collaboration business unit. Prior to Cisco, he worked for eBay and NetEase.

Under Xu, new Sina Weibo products could be expected among efforts to improve the platform's profitability, according to You. "That might happen in the second quarter of this year," he said.

Dong Xu, an analyst with Analysys International, said she was not overly concerned that the increasing advertising content on Weibo would seriously worsen users' experience. "Internet users have been trained to get used to seeing commercials online," she said.

Instead her concern is the relocation of users to mobile terminals, which means fewer chances for internet firms to cash in, since small-screened gadgets are less effective at displaying commercials compared with computers. According to Sina's annual report, three-quarters of its active weibo users access the service through mobile devices including smartphones and tablets.

Meanwhile, weibo is also facing a challenge from Weixin, or WeChat in English, a mobile instant-messaging application developed by internet giant Tencent. After being live for just a year, WeChat hit 300 million registered users in January, becoming the second most popular application behind mobile QQ.

According to iResearch data, WeChat surpassed Sina Weibo on mobile by time spent in the fourth quarter of last year.

You said that as a mature social networking platform, weibo won't be replaced in the near future. But with the launch of more customer-oriented mobile apps, weibo will face increased pressure to maintain users and keep them using the platform regularly.