Why are there more and more advertisements in your circle of friends?

In the digital age, WeChat has become an indispensable part of our daily lives. But have you noticed that there are more and more advertisements in Moments? This article deeply analyzes the reasons behind this phenomenon and explores the advertising value and commercial potential of WeChat Moments.

Not long ago, a vote was launched on Weibo, with the choice between WeChat and iPhone. In the end, more than 100,000 people participated, and 84% chose the former.

After all, mobile phones have alternatives, but WeChat does not. A survey conducted by Modern Communication, the journal of Communication University of China, at the end of last year showed that 42.2% of respondents spent an average of 2.5 hours or more on WeChat every day, with usage stickiness far exceeding that of other social media.

As the national social application with the largest number of users in China, it is clear how difficult it is to shake WeChat's position.

At the same time, the commercial returns that WeChat brings to Tencent are becoming increasingly important, especially the growth of video accounts and mini programs. But in the Q2 financial report, part of the growth in advertising revenue was attributed to Tencent Video (which launched popular TV series and variety shows).

However, the long video business is far less than the (medium) and short video. On the one hand, long videos require a huge amount of investment to produce eye-catching content; on the other hand, it is difficult to substantially improve their advertising load rate and monetization efficiency [1].

Tencent’s move to push long videos to the forefront is somewhat puzzling, as Video Accounts clearly have a higher impact on advertising. Some predict that Video Accounts may have contributed more than half of the 19% year-on-year advertising growth.

Since the monetization model of Video Account has been verified by other short video platforms, its commercialization speed within WeChat is faster than other assets, and its monetization rate (monetization space) and advertising load rate (advertising inventory) are also higher than those in WeChat Moments, Official Accounts and other scenarios.

In Q2 2023, Tencent disclosed that Video Account contributed RMB 3 billion to its advertising business, accounting for more than 12%. At that time, the monetization of video accounts was in its infancy (the "heating pack" was launched in Q2 2023, and the "comment area advertisement" was launched in Q3 2023), and now the contribution curve will only become steeper.

In comparison, the advertising revenue capacity of WeChat Moments may not be Tencent’s focus in the short term, and it is even far less attractive than the later-released mini-program ads in terms of monetization. In addition, since 2020, WeChat has no longer officially announced data for each business module, and only revealed user data in Tencent’s financial report.

Growth Black Box recently released a highly valuable "2024 WeChat Moments User Research Report", in which some of the data obtained from the survey are counterintuitive, such as:

● 74.7% of WeChat users use the Moments feature every day;

● 43% of respondents said they spent more time browsing Moments, while only 17% said they spent less time browsing Moments;

● 47.6% of high-income people increased the time they spent on WeChat Moments;

● The frequency of posting to Moments only increased by 2.2%.

Why do we feel that our circle of friends is not as lively as before? This is the reason. It’s not that people don’t like to use Moments anymore. It’s because there are more “indifferent people” in Moments. People prefer to browse rather than post.

Of course, this is not the core of this report, but it uses numbers to prove that WeChat Moments is a gold mine of advertising.

1. Gap between content supply and demand

China Youth Daily previously conducted a survey and found that 63.9% of respondents set their Moments to be visible for three days[2]. This may be one of the direct manifestations of "the circle of friends is becoming quieter and quieter". Just as there is no wife in the wife cake, there are probably no friends in the circle of friends.

But the fact is just the opposite. The Moments still maintains a high level of stickiness, and research data from Growth Black Box shows that the time spent on Moments by nearly 43% of users has increased year-on-year.

As early as 2019, at the WeChat Open Class, Zhang Xiaolong said: "Many people say they want to escape from WeChat Moments, or say they don't use WeChat Moments much. But in fact, this is an illusion seen by everyone in the Internet circle."

As Zhang Xiaolong predicted, social needs have not changed. Whether it is the increase in posting or swiping, social needs are the underlying driving force.

During this process, the key focus is how the commercial value of WeChat Moments changes.

According to survey data, content supply has decreased, but content demand has remained the same or even increased, indicating an imbalance between supply and demand. The Growth Black Box suggests that if brands can place high-quality advertising content in Moments, they will definitely be able to fill the gap and attract consumer attention - this is where the future business opportunities in Moments lie.

To this end, they specifically addressed an advertising-related issue during the survey, and the results showed that consumers who spent more time browsing their Moments were more inclined to watch advertisements in depth. A higher proportion of them will watch ads repeatedly and basically finish watching the ads in their entirety; and a lower proportion will close the ads immediately after seeing them.

A little analysis will lead to a conclusion that the increasing demand of users for information shows, on the one hand, that users attach more importance to the value of information in their circle of friends, and on the other hand, it also gives brands an idea that your advertising may have a deeper impact on users.

There is another valuable point in the report, that is, the circle of friends naturally selects the ideal audience for advertising.

The reason is that people who increase their circle of friends are more inclined to obtain external information and may have a certain degree of "information anxiety". To put it bluntly, they are more likely to be tempted.

The channel with the most sources of grass-growing is social networking among acquaintances, which is the most important relationship chain on WeChat. The conclusion is very obvious: Moments advertising is equivalent to having friends and acquaintances endorse the advertisement, directly hitting the points that users care about most, making users have a deeper impression of Moments advertising.

Even the circle of friends is not a simple "social network among acquaintances", but a "public space" built by screening the relationships among acquaintances. It has both a certain degree of privacy and openness, making the flow of information more natural, and other channels may not be able to replace this particularity.

2. Brand advertising is compatible with both top and bottom

Another counterintuitive statistic in this report is that the richer people are, the more they are willing to check their Moments.

The penetration rate of WeChat Moments is the highest among people with a monthly income of more than 30,000 yuan, with 85% of consumers saying they use the WeChat Moments function every day, and this group of people also has the highest increase in the time they spend browsing Moments.

In addition, the following conclusions were drawn from the survey:

1. The higher the income of the group, the higher their trust in WeChat Moments will be, and the trust will be higher than other platforms;

2. High-income people have a higher level of trust in WeChat Moments ads, and a lower level of annoyance and disturbance;

3 After seeing the ads in Moments, high-income people are more likely to be interested, share interactively, register and retain, and have offline usage experience;

4 Consumers who are interested in luxury goods and cars are more likely to browse their Moments, while the number of people who are interested in toB services has also increased to a certain extent.

In short, compared with other groups, high-income people have a higher tendency to obtain information from their friends circle, and are more willing to promote and spend money.

Moreover, Moments has begun to reach high-end groups that are not covered by traditional offline advertising.

The reason is that when in a closed environment such as an elevator or subway, and there are no urgent matters to deal with, 79.4% of high-income people are more willing to check/post on WeChat Moments, which is higher than the 68.3% who prefer to watch hard advertisements in elevators and subways.

But this raises a conflicting question, that is, the "high-end feeling" of the circle of friends is a prominent feature, and it also gathers a large number of high-quality people. Will it bring about the problem of too high a threshold?

Judging from the survey data, Moments advertising is compatible with both large and small brands. The number of different types of ads users saw compared to a year ago has changed, with brand ads at all levels increasing.

Moreover, Moments does not only bring brand exposure through a single channel or in a specific scenario. It can not only generate corresponding actions within the Moments, but also produce "spillover" and interact with the brand across the entire region.

One of the evidences is that 84% of users will have a series of subsequent conversion behaviors after watching the WeChat Moments ads, and the behavior with the highest proportion is searching for more product information (product details, usage reviews, prices, etc.). This shows that Moments ads can be an effective interest-stimulating point. Among them, the luxury goods industry has the highest proportion of further information inquiries.

What’s more interesting is that even if consumers don’t click on WeChat Moments ads, research shows they will be tempted to try them. The report data shows that some people did not click on the advertisement at all, but just saw the cover, but then went to look up relevant information in the first step. This phenomenon is very obvious, accounting for 30% to 50% of the total query behavior in various industries.

Some of these consumers who "blindly recommend products" will return to the WeChat mini program after searching for information to complete membership registration or even make a purchase.

3. Where is there still growth?

This report also gives several value gaps in the Moments. For example, within three months, 21% of WeChat Moments users had never seen Moments ads; among those who had seen WeChat Moments ads, only 40-50% on average had seen ads on Xiaohongshu, Douyin, Weibo, and Kuaishou. This shows that there are certain differences between users of Moments and people on other social media platforms.

The audience of Moments ads still has a lot of room for brand exposure and conversion penetration. 68% of users have never purchased or used the advertised brands, and 40% of users are still in areas where brands are not fully exposed. Commercial services and beauty and personal care still have a lot of room for brand exposure and penetration.

The report also lists several vertical segments with blue ocean opportunities, such as business services.

But these seem to go against the overall downward trend of social media.

A recent study on the Chinese Internet market pointed out that the network penetration rates of the five major new media platforms, namely Douyin, Kuaishou, Weibo, Xiaohongshu and Bilibili, have all decreased compared with the previous year. The proportion of these platforms in users' total online time has also entered a period of stability from rapid growth.

The problem does not lie with the social media platforms themselves; it is that consumers have changed. In the fast-food era where the average person uses 28.5 apps and attention spans rarely exceed 3 seconds, the word "loyalty" does not exist in the consumer dictionary.

On the other hand, social media fatigue (SMF), a well-defined psychological symptom, is affecting more and more people to "escape from social media" - scrolling through their phones may not bring pleasure, but stress and anxiety.

However, the share of brands' marketing budget spent on social media has not decreased. Research shows that the market share of social media advertising, including short videos, has grown from 22.5% in 2019 to 35.9% in 2023.

As marketing budgets tighten in 2024, 68% of advertisers are still prepared to increase advertising in social media scenarios - among high-budget advertisers, this proportion has increased to 73%. Even if brands have to tighten their belts, they will spend every last penny on social media.

The result of this contrast is that more money and greater competition can only win consumers' more limited time and attention, the efficiency of social media marketing has become lower, and it has become more difficult to build brand awareness.

In this environment, the WeChat ecosystem represented by Moments actually provides brands with a "safe haven" to cope with recession cycles. Although it cannot bring about exponential growth immediately, it can last for a long time in the minds of users and reduce the risk of marketing budget.