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WeChat Search is yet another brick in Tencent’s walled garden strategy

By Rita Liao

tencent one day journey

At Mobile World Congress in Shanghai last week, Tencent showcased how it is building a new paradigm of trust by ingesting the immense amount of social data generated from its ecosystem of products into its search engine.

“From the minute you wake up,” says Kiki Fan, GM of Planning & Implementation Department at Tencent, “we have Tencent News for you, the number one news site in China; social apps like QQ and WeChat, also dominating China; music streaming services like QQ Music and KuGou, which make up 60% of market share; Tencent Video, the number one streaming platform equivalent to Netflix; not to mention the many brothers we have like Dianping, Didi and China’s number two e-commerce, JD.”

Consumers’ One Day @ Tencent, presented by Kiki Fan at Mobile World Congress Shanghai 2017

The list is impressive but also alarming; Tencent has gotten more aggressive in adopting a “walled garden” strategy, from introducing multi-functional mini-programs within WeChat to buying stakes in some of the world’s biggest game publishers. The strategy has been successful: Tencent now captures 60%of all eyeball time from China’s internet users, says Fan. On top of that, the internet juggernaut has just added yet another feature to lock people into its proprietary environment: WeChat Search.

In May, WeChat unveiled a new “Search” feature, preceded by the announcement of its “search application department” a month earlier. Different from Baidu or Google, WeChat Search pulls content only from within WeChat rather than from the open web, including updates posted by individual users and an endless number of WeChat accounts run by individuals, businesses and organizations. WeChat accounts are akin to Facebook pages with more powerful tools, such as chat bots and e-commerce stores, to help users better manage their business.

“Baidu Search gives you knowledge and brand information. However, people are increasingly reliant on social opinions,” says Fan. “You can’t get these information from search engines, but you can with WeChat.”

WeChat already covers more than 95% of China’s internet users, according to Fan. With 938 million registered monthly users as of May, WeChat clearly has enough data to perfect its search results. And people are more likely to trust these results, argues Fan, because they not only show information published by companies but brand engagement with real users—may it be a user-generated WeChat article or news on a friend’s Moments.

An query of “iPhone 7″ via WeChat Search gives you results from articles to friends’ Moments

WeChat has long had an ambition for search. As early as 2014, content on WeChat official accounts became searchable on Tencent-backed Sogou Search. But Sogou Search has never come close to Baidu, who commands a 78.1% market share followed by Sogou at 2.6% as of Q4 2016, based on a report by the Beijing consultancy Analysys.

This might change as Baidu’s reputation was hit by a PR fiasco.

Wei Zexi, a 21-year-old college student, died of synovial sarcoma after receiving distorted information on cancer treatment from Baidu’s search engine. Regulators ordered the search giant to reduce the advertising it carried alongside query results to no more than four per page, flag ads with more conspicuous labels, as well as more closely vet advertisers.

Though the NASDAQ-listed Chinese company says “revenue impact” from the 2016 scandal is “largely behind” it, it experienced two-straight-quarter sales decline in February, as sales dipped 7.8% to RMB 18.21 billion ($2.65 billion) in the fourth quarter of 2016. Each misstep in a corporate might increase the chances of long-lasting harm to their reputation.

“Trust sell better than ads,” argues William Bao Bean, General Partner at SOSV, at NEXT Conference in Hamburg. In Asia, companies first build up trust and then they might sell now and then. “We are in the post-advertising market,” he adds.

In the age of information saturation, consumers increasingly look to reviews, endorsements and validation from people they trust to help filter through the clutter in their decision making process. This has given rise to the KOL (key opinion leader), or wanghong, economy worldwide and in China, with internet celebrities driving millions of consumers to brands.

If Tencent is correct about social search (that people increasingly demand information from the grassroots level rather than an authority) the sky is the limit for WeChat Search. As of June 2016, China has 593 million internet search users, among which 524 million are searching on mobile (in Chinese). With more than 900 million MAU and half of whom spending 90 minutes daily on the app, WeChat has yet to deploy the potential of the non-searchers.

More data means better search results, and of course, greater customer insights for Tencent’s advertisers.

“Search will help future manufacturers better communicate with the consumers,” says Fan in her closing remark. Already, Tencent is catching up with digital advertising, holding 11.4% of market share behind Baidu’s 23.3% based on the Analysys report. Their competitor Alibaba, with its own walled garden inhabited by the world’s largest online shopping platforms along with investments in music content (Xiami), taxi-hailing (Didi) and social media (Weibo), has surpassed Baidu last year as China’s largest digital advertising platform.

Source:: WeChat Search is yet another brick in Tencent’s walled garden strategy

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