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Micro blogs and macro payments
Date: 2011/6/27 Click: 1215
The development of the Internet over the past 20 years has not only changed the way most people live their lives, but has also provided a plethora of new platforms for business. The advertising industry's adoption of the micro blog, or Weibo, as a promotional tool is a pertinent example.

Ye Feng, 34, a marketing professor in Beijing, frequently takes calls from public relations (PR) companies offering to pay him 5,000 yuan ($769) for every post on his micro blog that promotes their products.

He writes an average of eight posts daily, mainly about business matters and information about his courses.

More importantly, he has more than 300,000 followers who read his posts on the micro-blogging website weibo.com, which is operated by Sina Corp, a major online media company and a provider of market value-added services.

If Ye agreed to include product placements in 50 percent of his posts, he could make 20,000 yuan a day, just by typing fewer than 500 words, all of which are provided by PR companies.

However, he has consistently declined all offers.

"I don't want to make my micro blog too commercial," he said. "I might lose fans if I am discovered promoting products in my postings."

In addition to his work teaching Executive Master of Business Administration (EMBA) courses at many of China's top universities, Ye is also the founder of Sunup Consulting Co Ltd, a Beijing-based strategic consulting company.

He previously helped Shanghai Volkswagen Automobile Company Ltd to open its official account on Weibo and delivers a series of online marketing activities through his connections with micro-blogging industry insiders.

"The battleground of marketing is the Internet and the micro blog is the center of it," he said.

Micro-blogging is no longer just a tool to make contact with friends and celebrities online, reading their news and leaving comments on their pages. It is also establishing a new business model.

According to Ye, a number of people in the industry have sponsored teams to operate micro blogs purely for commercial marketing purposes. He claims that these sites can earn as much as 100,000 yuan a day from this activity.

These accounts center around jokes, fashion and other light-hearted topics. Millions of people have signed up as followers.

Insiders have said half-jokingly that the influence of a popular micro blog can be compared with a national newspaper if it has more than 1 million fans. If it has 10 million fans, its impact is similar to that of a TV station.

"Many accounts have achieved those sort of numbers already," Ye said.

According to Sina, the number of weibo users hit 140 million by May. The site has seen an average growth rate of 33.8 percent every month since it became operational.

The Weibo account with the largest fan base belongs to a Chinese actress called Yao Chen. She mostly posts about her daily life and work, and, as of June 17, her account had attracted 8,962,014 fans.

According to industry insiders, Yao has been offered at least 100,000 yuan for each post featuring product placements, but her agent has refused all offers.

Yao's agent confirmed to China Daily that her client has received a huge number of offers, but that all have been declined.

"I have never discussed payment for Yao's postings with any of the companies, but I think the value of her micro blog would be more than 100,000 yuan (for each post)," she said.

Like Yao, most movie stars or singers have resisted the pressure to make their micro blogs too commercial, so the PR companies have to think of other ways of getting their message across.

Meanwhile, domestic and international brands have opened official accounts on weibo.com, but the majority are already well-known operations. "The platform is more beneficial for brands that are already popular," Ye said. "Most people won't pay attention to an unknown brand mentioned in a micro blog."

The usual procedure for companies utilizing micro-blogging sites for marketing campaigns is to open an official account to release information pertaining to brands, products and after-sales services and then to offer interactive promotions or lotteries to attract consumers.

Ye said the cost of this kind of advertisement is 15 percent higher than those more usually associated with the Internet. Moreover, larger brands prefer to operate a "package", which means that they will place a regular advertisement on sina.com.cn, a website owned by Sina Corp, and will also offer interactive promotions through Weibo.

"In the next two years, Sina Corp will see a 50 percent growth rate in advertisement sales annually," he said. "Until now, the top 100 'grassroot' accounts have created profits of about 20 million yuan from advertisements since they opened their accounts."

Sina Corp will do more to improve its business model. The company will choose peak times to engage in its promotional activities - usually between 10 am and 11:30 am and 2 pm to 3:30 pm - when the greatest number of users are online. It will also produce online advertisements that target specific locations.

In addition, by September weibo.com will bring out what Ye referred to as "chargeable services" for individuals, without elaborating further. He added that chargeable services for companies would be available by the end of the year.

Rumors of an impending stock market listing by weibo.com have been doing the rounds for several months. Ye said that if it were to go public, the company would definitely break the record for an IPO by a Chinese Internet company.

For the PR companies, however, Weibo's rapid development is a double-edged sword. On the one hand, Sina Corp provides the micro-blogging site with a popular platform, so the PR companies will have to cooperate efficiently with the Internet company. On the other, however, Sina Corp may eventually usurp their business because of its advantages in terms of its vast database, its experience in running systems and its pool of technological talent.

Professional teams

Ye used to teach courses on micro blog marketing as part of his EMBA course. He taught his students, who were all senior executives in major companies, that micro blog marketing needs professional teams to operate successfully .

"We have 1,000 people working for weibo.com," said Liu Yongshuai, a computer programmer at the company. He said technical staff account for half of that number.

However, most PR companies don't employ enough people to conduct effective micro blog marketing, Ye said. Rondview Communications Network Co, a unit of Rebrand Consulting Co Ltd, formed its micro blog marketing team in 2010 and has added extra staff members this year because of the rapid development of micro-blogging. The team finished a series of promotional activities for the fast-food giant McDonald's Corp on weibo.com at the beginning of the year.

Wang Zhiwei, Rondview's media manager, told China Daily that the average cost of a micro blog marketing project lasting between one and three months is about 100,000 yuan. He said the PR companies can produce unobtrusive product placement. "Stars can just post a picture of themselves shopping at a particular mall or eating at a specific cafe, or simply reading an easily identifiable book, and that acts as good advertisement for the mall, the cafe, or the book. It is often difficult for followers to realize that what they are seeing is, in fact, an advertisement." However, he said it is still hard to find A-listers to do it.

In addition to searching for appropriate celebrities, Wang said the hardest thing is to come up with ideas that will attract attention on the Internet. "If the idea is not attractive enough, the effect will be minimal," he said. Also, because the business model of micro blog marketing is not yet fully established, many companies doubt its actual influence on consumers, he added.

Wang believes that micro-blogging is a useful platform for the promotion of products made by a well-known brand, but are not a good method of building up a new brand.

Sina Corp is not only a rival of the PR companies, but also of statistical analysis companies looking to grab a slice of a potentially huge market.

A representative of a statistic analysis business called Social Touch told China Daily that his team works on collecting information about micro blog followers, allowing its clients access to a vast pool of data about subscribers' preferences.

Still in infancy

Ye said all these types of operations are still in their infancy in China, and so the database is limited to "front page information" - age, job, address, hobbies, and other personal details - about the followers. "The comprehensive analysis of consumer behavior and psychology requires analysis of each posting, which most companies won't do because of the high cost," said Ye.

He said Sina Corp might look for partners to cover this business sector, providing great opportunities for the statistics companies. "It is wiser not to compete with Sina directly because it is easy for it to organize a 100-member team and they have the key database," he said.

With regard to the issue of privacy, Ye said a micro blog is a public place and followers need to be responsible and protect their own privacy. In other words, it is not illegal to obtain information from the content of a micro blog for business use if the user doesn't specify that the information is confidential in his or her postings.

Although weibo.com is considered China's most influential micro-blogging site by most analysts and users, Ye said t.qq.com, the micro-blogging website of Tencent Technology (Shenzhen) Co Ltd will share the market with Sina Corp because its QQ chat software has accumulated a huge amount of users.

"Tencent also has greater financial power than Sina," Ye said. "Aside from these two players, the other micro-blogging websites or services will become followers without influence."

How to make money from micro-blogging will remain a hot topic for some time, but the Internet is a place of unpredictable changes.

"The business model for micro-blogging will become fully established over the next three to five years, but it is hard to predict its business potential after that," Ye said.

"Changes come everywhere and at all times. Something new will replace it sometime, for sure."
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