Commentary

Why China's Tencent Is About To Leapfrog The Competition

Developing markets are said to leapfrog whole generations of technology. For example, China leapfrogged the PC generation and went right to mobile. If Tencent executes on its vision shared at its “upfront” event, they will leapfrog the current generation of marketing platforms.

Along with Baidu and Alibaba, Tencent dominates the digital landscape in China. In addition to being the biggest publisher of video games in China, it owns or has stakes in a vast ecosystem of apps.

With apologies for the crude analogies to U.S. services, the Tencent empire includes:

  • WeChat – like Facebook and Whatsapp
  • QQ – like Twitter
  • Tencent Videos – like YouTube
  • WePay – like Apple Pay
  • Tencent News – like CNN
  • JD.com – like Amazon
  • Meituan-Dianping - like Yelp

Tencent claims its audience is growing 40% YoY. No small feat on a base where WeChat alone has over 1 billion MAUs.  

At the “In Tencent” event on May 10 in Shanghai, the company shared plans to go to the next level. After completing a massive reorganization combing all Tencent’s marketing products in one team, they unveiled the Tencent Data Cloud.   

This creates detailed, customizable, user profiles derived from across the Tencent ecosystem. This data cloud sits at the heart of their enhanced tech stack connecting adtech to martech to smart retail.

It is easy to take potshots at US TV network upfront presentations. Suffice to say, Tencent’s subject matter was very different. There were no celebrities or discussions of time-bound programming lineups.

The ex-BCG consultants who run Tencent used a giant video wall as a massive white board.  They spent three hours mapping out in mind-numbing detail how their end-to-end marketing platform works.

In between, they presented case study after case study. They weren’t touting “cool” examples of product integration. They showed real ROI metrics including incrementality and LTV.

The gist of Tencent’s offer is for marketers to simply bring an interesting idea that provides value to users. From there, Tencent will help:

  • Build that experience inside their walled garden.
  • Tell you who will be interested in your thing and everything about them.
  • Source key opinion Leaders (KOLs) who influence your target.
  • Deliver targeted ads with zero waste.
  • Use dynamic offers in the payment process to drive conversion.
  • Incentivize pass along and advocacy.
  • Use its messaging platform to drive repeat engagement.
  • Connect to retail partners to track true ROI.
  • And drop machine learning on top of it all to optimize performance in real time.

They ended by encouraging the audience to stop thinking about merely selling products and focus on monetizing relationships.  

The Tencent marketing platform is driving lighting-fast brand creation and business growth.  All case studies were local Chinese brands — there was not a single global brand.

On the ground floor of Dentsu Aegis Network’s Shanghai office, I noticed a storefront with a line out to the street. A Chinese colleague explained this was a KOL who built a following and was partnering with a Chinese food and beverage company to use her and name on a line of milk tea and baked goods through a chain of dedicated retail storefronts.

Here in the West, the industry’s conversation is about privacy, fake news and breaking up monopolies. Tencent did not mention those topics once! China is a society under constant surveillance, has no expectation of privacy, and a tradition of propaganda that blurs lines between ads and editorial.

It is hard to bet against Tencent executing their plan locally.

Lest I sound like too much of a breathless fan boy, it should be noted that Tencent’s stock recently popped after the company accepted strict censors from the Chinese Government affecting their video game business.

And while returning to our New York office from an upfront presentation, I had to wade through thousands of Falun Gong members marching down 42nd Street protesting oppression from the Chinese Communist Party.

 Impressive leapfrog aside, one hates to think of how those users would be profiled and “optimized” in China.

Complexities and all, there is a new data-driven marketing power rising in the East.

 

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