Deciphering Tencent’s WeChat Ecosystem

    How is how WeChat is building up an entire ecosystem to empower luxury brands to conquer the era of social commerce in China.
    How is how WeChat is building up an entire ecosystem to empower luxury brands to conquer the era of social commerce in China. Photo: Shutterstock
    Yiling PanAuthor
      Published   in Retail

    As China’s leading social media platform with over 1.1 billion monthly active users, WeChat is now a daily business necessity for luxury brands. To serve greater marketing and advertising needs, the app quickly evolved over the last couple of years, enabling brands to acquire and monetize traffic with a one-stop business solution.

    At the 66th annual Cannes Lions Festival of Creativity on the French Riviera this past week, Jing Daily caught up with Kiki Fan, the General Manager of Sales and Operation of Key Accounts, Tencent Marketing Solution, to get an update on the current WeChat ecosystem, which is known to her team as the “ 2.0” model.

    “We offer the 2.0 model to help our customers — especially those that are luxury brands — go one step further and achieve the most direct and shortest path to conversions through Mini Program and mobile payments,” Fan said about mastering the new WeChat. “We not only create content that drives initial interest or traffic, but also help brands achieve a closed loop from traffic to sales.”

    Here, some key details on how WeChat’s “ 2.0” model works for brands:

    Acquiring traffic#

    The incredible marketing power of WeChat today all started with the platform's massive number of daily users, which represents unlimited traffic potential for brands to monetize. Being fully aware of this advantage, Tencent Marketing Solution has gone a step further in helping luxury brands obtain traffic. In the above chart, the team defines four types of traffic that brands can access and acquire within the app. For example, WeChat lets brands tap into users’ Moments (朋友圈) by offering them social coupons and gift cards, allowing those users to gain social traffic. These days, this kind of word-of-mouth traffic is becoming more and more important to all businesses. But the app also accepts advertising requests from brands at prime viewing places such as Moments and posts by key opinion leaders (KOLs). On top of that, Tencent has even created some intellectual property (IP) assets that have gone viral among Chinese Millennials and Gen-Zers, including the video game Honor of Kings and the reality show Produce Camp, that brands can use in advertising. The American cosmetics brand M.A.C., for instance, had a successful campaign that featured Honor of Kings characters in it.

    Decoding customer data#

    With traffic in hand, Tencent Marketing Solution also attempts to help brands interpret and analyze their online history to gain a better understanding of the brand's customers. “We currently provide brands with the Tencent Data Cloud, data modeling capabilities, and other diverse data-driven tools to help them optimize marketing budget allocation, enhance their ability to reach more potential customers, and transform their entire value chains,” said Fan. Tencent Marketing Solution also collaborates with world-leading consultancies like the Boston Consulting Group to provide brands with consumer insights.

    Converting traffic to sales#

    Launched in early 2017, Mini Program is now central in the WeChat ecosystem in terms of turning traffic into real sales. Today, a great number of luxury brands have opened boutique stores, manage customer relationships, and more via Mini Program. “The Mini Program feature is a part of the WeChat ecosystem that also brings together functions like calls, social chat, search, ticket purchases, and payments,” said Fan. “It is an essential touchpoint for brands to connect with consumers by offering customizable features that open new integrated engagements and sales possibilities like the discovery of online pop-up stores, the digitization of offline stores, online and offline campaigns, etc.”

    In addition, WeChat works with brands to add a personal touch to their communications with users — a strategy that effectively increases conversation rates by 350 percent or higher.

    Connecting online to offline#

    WeChat has also greatly enabled brands’ sales consultants to further develop relationships with store visitors online. In the past, brands' sales associates typically added customers to their personal WeChat accounts, which caused a problem when they eventually left their jobs, causing the brand to lose the customer's data. With WeChat’s Enterprise version, brands can stop worrying about that type of customer loss.

    Looking into the future of social commerce#

    Overall, WeChat’s “ 2.0” model is offering a comprehensive solution for luxury brands that hope to excel in the social e-commerce era in China. As this trend is set to keep growing in the future, Fan believes digital platforms like WeChat will become the axis around which content, social sharing, data, and retail product promotions and catalogs will be fully integrated. In that way, luxury brands can proactively and seamlessly engage with consumers in a highly relevant and targeted manner across all touchpoints, regardless of where those customers start their purchase journeys.

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