WeChat Launches Ad Bidding for 'Mini Programs Nearby,' But Will It Be Profitable for Luxury Brands?

    WeChat has begun offering brands an ad bidding feature on its mini program app, but will the ads boost sales for luxury brands when mini program itself has yet to catch on?
    Photo: Shutterstock
    Yiling PanAuthor
      Published   in Technology

    Tencent Offers Monetization on WeChat's Mini Program#

    WeChat has introduced a new element to its mini program that lets you bid on ad space on its list that identifies nearby mini programs. When you open a 'mini programs nearby list' on WeChat, you get shown an array of mini programs that are selected specifically for you based on your location, your gender, and other metrics. With this new feature, which is still in beta-testing, WeChat inches closer to completing its vision for an online-to-offline retail eco-system.

    "Mini programs [nearbay] are very useful for hyperlocal marketing," said Patrice Nordey, the founder and CEO of the Shanghai-based luxury consulting firm Velvet Group. "It has been designed to connect the online world with offline locations. Furthermore, since the technology does not require [you] to download any program (unlike native mobile applications), the users' experience is very fast and seamless."

    According to Jackie Chen, the content manager at WeChat marketing agency Chozan, the feature will be a boon for brands looking to better cater to Chinese consumers who "are longing for more tailor-made services."

    When users are in the vicinity of an offline store, they can access the brand's mini program through a simple search (they don't need to follow the brand on WeChat) to get more information on products and services being offered at the store. It's a more seamless process for Chinese customers who are most-likely on WeChat anyway.

    The Benefits for Luxury Brands May Be Limited For Now#

    In August last year, WeChat successfully opened ad space on the app's Moments section (where users can share posts in a feed viewable only to their network of contacts). Luxury labels Chanel, Miu Miu, and Saint Laurent were among the early adopters of Moments ads.

    Indeed, it has become common practice for luxury brands in China to advertise on WeChat, the country's top social media platform with more than 900 million users. However, with mini-program, which was introduced to the public less than a year ago, things might be a bit different.

    Chozan's Chen believed that the return on investment of mini-program ads may remain uncertain for luxury brands as WeChat users haven't fully taken to the mini programs, thus, making it hard to guarantee high traffic from the service.

    "There is a major concern about how often these mini program users check out nearby mini-programs every day, or if they do this on a regular basis," said Chen. "If users can form the habit of checking out nearby mini programs more frequently, then this feature will undoubtedly increase the chances of accumulating new customers and generate sales from them."

    In addition, Nordey pointed out one more potential reason why mini-program ads might not be very profitable for luxury brands.

    "[There is] still a limitation due to the maximum payment amount allowed on WeChat," he said. In other words, the ads can at most direct luxury consumers to the offline stores but buyers won't be able to directly settle payments on WeChat.

    The WeChat mini program is, nonetheless, an opportunity for luxury brands to get more visibility, both Nordey and Chen agreed.

    "Even if [consumers] never intend to visit nearby luxury stores," said Chen, "[mini program ads] can still create an impression that there are one or more luxury stores in the vicinity."

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