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.”