What single-plank bridge is Video Account walking on?

With the support of WeChat, how much commercial value can the video account release? How to grasp the rhythm? How will the video account develop? Perhaps we can’t tell.

No one dares to ignore the existence of video accounts. Tencent's financial report data seems to confirm everyone's predictions. The influence of video accounts on the user side needs no further explanation. At least in the layout of short video platforms, the strategic concept of defense and even active attack has met expectations. Especially with the support of WeChat, an important foundation, the outside world's expectations for video accounts even exceed those of Douyin.

However, no one can tell how much value the video account will release at the commercial level and how to grasp the rhythm.

Taking e-commerce as an example, to some extent, Video Account is another card position for Tencent to re-enter the e-commerce market after Mini Program. If Mini Program only helps brands to better carry the image of official stores and increase sales, Video Account means new possibilities and imagination space for connecting with users. After all, compared with the algorithm distribution of Douyin, Video Account also has the attribute of social distribution.

However, because Video Account emphasizes its own characteristics and Zhang Xiaolong prefers to focus on products rather than operations, there are still many questions to be answered about how this path can be achieved.

1. Video Account "Be Yourself"

One year after proposing "the hope of the entire Tencent", Ma Huateng once again praised Video Account for living up to expectations. This time, he conveyed to the outside world a clearer development path for Video Account: not to follow others in doing the same thing, but to combine its own characteristics to create the tone and ecology of the product.

An important basis for differentiation is that the video account is designed based on the WeChat ecosystem, that is, it must take into account the interactive characteristics of WeChat.

At the beginning of product design, Zhang Xiaolong's vision was that Video Account is a short content platform that everyone can create, and further, it can become the official website of individuals and organizations. The role of the platform here is to connect, not to create content. This reflects Tencent's consistent value concept, focusing on products rather than operations.

Its connotation is to make the whole system run by itself through product capabilities, without the need for human and resource operations. A typical example is WeChat Pay. Without much operation, WeChat Pay has supported tens of thousands of service providers only by relying on product mechanisms. At present, there are only one or two people in charge of WeChat Pay in each industry.

Video accounts have adopted a similar approach. However, the intuitive feeling brought by weak operations is that the actions of video accounts will be much slower.

On the contrary, Douyin uses strong operation methods to do live e-commerce. For example, Luo Yonghao is the top star, which plays a role of proofing and demonstration. The topic itself is a hot event, attracting the attention of the entire industry, and the direct result is a surge in traffic and a large number of merchants entering the market.

In terms of content distribution, the thinking logic of Video Account is also different from that of Douyin and Kuaishou.

Douyin is extremely devoted to algorithmic distribution, which makes it easier for high-quality content to be seen. Kuaishou distributes products with subscription as the core, and algorithms as an aid, which is conducive to establishing deep links between creators and fans, and is the foundation for the birth of the Laotie economy.

Video accounts are backed by strong social platforms like WeChat. When retaining users in the early stages, the distribution logic was mainly based on social recommendations based on real-name likes, supplemented by machine recommendations.

Zhang Xiaolong once explained the design principle. Most people read books because someone around them recommends them to read them. Similarly, it would be a pity to miss the video content that friends are watching. However, Zhang Xiaolong also added that the richer the content, the more suitable it is for machine recommendations.

The characteristics of video accounts are also reflected in commercialization.

Kuaishou's commercialization initially jumped from short videos to live broadcast rewards, while Douyin cut into algorithm information flow advertising. After the epidemic, both parties ended up in the same place and entered the torrent of live broadcast e-commerce. Internal circulation advertising has become an important source of income for them.

Video accounts basically follow this logic, but because of the nature of the development stage, live broadcasts, information flow advertising, and e-commerce transactions are almost carried out at the same time. In July 2022, Video Accounts launched Video Account Stores and native information flow advertising, officially starting the commercialization process.

The special feature of the video account is also reflected in the linkage between the public and private domains. Before the video account, WeChat had already built ecosystems such as mini-programs, WeChat payment, and WeChat for Business, where merchants can establish their own private domains.

LatePost quoted a Tencent source as saying that French luxury brand Louis Vuitton has opened a mini-program mall on WeChat, but has never opened a store on Tmall. One important reason is that the brand believes that the traffic of the mini-program is its own and worth managing carefully.

The emergence of video accounts is conducive to the construction of a closed loop of e-commerce within the WeChat ecosystem. The brand's private domain can bring initial traffic to the video account live broadcast, while users in the public domain can settle in the merchant's private domain. Compared with the instant consumption of Douyin, the user loyalty and conversion rate of the video account settled in the private domain are higher.

Recently, WeChat Video Account has enriched the function of sharing shop owners. Sharers can forward the homepage, window, live broadcast room, etc. of the video account shop to the private domain, and can also invite users to enter the video account live broadcast room. Sharers play the role of middlemen linking the public and private domains.

In addition, the close connection between WeChat Pay and offline merchants helps Video Account to link online and offline. In April this year, Video Account officially announced that merchants in the local life industry can apply to enter Video Account stores of the "local life" business type. The commercialization of Video Account is accelerating.

2. Behind the Slow Commercialization

Relying on WeChat's huge user system, the number of active users and user time of Video Account have increased at an astonishing rate, but the outside world is more concerned about the commercial potential behind it.

In regular financial report disclosures, it is particularly easy for people to use a magnifying glass to look for clues.

Tencent first disclosed in Q2 2023 that the video account advertising revenue reached 3 billion, accounting for 12% of the total online advertising revenue, which is not a large proportion. According to Ebrun Power's calculations, in 2023, the video account's single-quarter advertising revenue may exceed 5 billion yuan, and the annual revenue should be between 13 billion and 15 billion yuan. During the same period, Kuaishou's annual advertising revenue was 60.3 billion yuan.

Tencent’s latest financial report disclosed that in Q1 2024, the total user usage time of Video Account increased by more than 80% year-on-year, and the related advertising revenue increased by more than 100% year-on-year.

Although the growth rate is encouraging, from the outside world’s perspective, the commercialization efficiency of Video Accounts still seems a bit slow. The most important reason is that the commercialization infrastructure is still being completed.

The first is to improve transaction capabilities. Luan Na, vice president of Tencent, shared at the 2024 IN Conference that an important direction for Video Account in 2024 is to vigorously develop closed-loop transaction capabilities with Video Account Stores as landing transaction components.

In addition, WeChat is also improving user experience and promoting transaction conversion by upgrading some functional components.

Recently, the "Me" interface of WeChat is undergoing internal testing to change the original "Card Bag" position to the "Orders and Card Bags" entrance. The main new "My Orders" function area is added for users to view the order information of the video account, including pending payment, pending shipment, etc.

Compared with the "orders" that were previously hidden in the video account interface, the video account orders are now placed in a very prominent position. This is already a routine operation on other e-commerce platforms. Clearly listing order information facilitates user transactions and further cultivates users' continuous shopping habits.

In the past, another important thing that Video Account was doing was to connect Video Account with the entire WeChat ecosystem.

In January this year, WeChat Ads launched a new form of advertising, which allows users to promote video account live broadcast rooms in Moments. Users can click on the material to jump to the live broadcast room and window list with one click. At the same time, the video account launched the live broadcast function, which supports merchants to broadcast video account ads to the video account information flow and Moments with one click.

This means that the ordering path for users is shortened, and merchants can reach more users, especially targeted users, to improve purchase conversion. After the launch of this function, an advertiser revealed that the click-through rate of window ads was 40% higher than that of historical delivery styles, and the conversion rate was 7% higher.

The WeChat ecosystem has a huge user base, and connecting the video account with the entire WeChat ecosystem is of great significance. Tencent is working hard to improve the entire closed-loop link.

For example, in order to welcome the upcoming 618 promotion, WeChat ads have launched a direct jump to the video account store advertising link, which supports jumping directly to the video account store product page from the video account, Moments, public accounts, and mini-program ads, while also opening up the above multiple traffic diversion routes for merchants. The traffic that merchants can leverage will have a wider radiation area, and the investment-output ratio will also be improved.

In addition, the WeChat official account article has also been updated at the bottom, and the official account main icon has appeared. If the video account corresponding to the official account is live, click the icon to jump directly to the video account live room.

3. Obstacles to energy release

The lack of sound infrastructure is a major factor affecting the commercialization of video accounts, but even when this capability is supplemented, video accounts still cannot soar. Before that, video accounts still need to sort out many obstacles.

Among them is the factor of active deceleration.

WeChat has always been a relatively restrained product. You can only see one or two ads in WeChat Moments in a day. In the Q1 earnings call this year, Tencent management mentioned that the current ad loading rate of Video Account is about one-fourth of that of major short video product competitors. This shows that there is still a lot of room for the advertising revenue of Video Account to be released.

In addition to artificial speed reduction, there are also some objective factors that affect the commercialization of video accounts.

For example, the content upload volume and label volume of video accounts are not large enough. Kass Consulting mentioned in the report that in 2023, the content upload volume and label volume of video accounts will only be 40% of that of Douyin. This will directly affect the reach of accurate content.

Another important factor is that compared with the exposure of ByteDance's main product, Douyin, the instantaneous exposure of Tencent's products needs to be improved. The former is a single product with a large volume, so one material may be enough to cover all. For advertisers, this means a low threshold for placement, and the input-output ratio is visible to the naked eye, making it easier to measure.

As for the internal circulation advertising currently pursued by short video platforms, that is, the path of e-commerce transactions driving performance advertising, video accounts also need to evolve.

The general consensus in the industry is that although the platform is making certain adjustments, the age of video account e-commerce users is relatively old. Kas Data's research and analysis shows that the user profile of video accounts has changed from being mainly over 50 years old and mainly male (57%) in 2022 to being mainly 40-50 years old in 2023, and the gender ratio is moving towards balance.

Although the current users of Video Accounts have characteristics such as low returns and high repurchase rates, their overall purchasing power is lower than that of young groups.

So as early as 2022, LatePost learned from Tencent that promoting the “younger” users has become a special task of the video account.

The other is reflected in the category operation. At present, the categories that have developed relatively well in video accounts are clothing, jewelry, and health supplements. This is similar to Douyin in 2020, which is a naturally growing category. In April 2021, Douyin began to divide the category traffic pool and start the track race.

The advantage of doing so is that on the one hand, the pie is made bigger, and on the other hand, it helps merchants to target users more accurately. At present, Douyin e-commerce has promoted the development of different tracks through policy incentives, such as games, sports, agriculture, rural areas and farmers, travel, etc., and tens of thousands of authors have a monthly GMV of more than 500,000 yuan.

Video accounts are also making corresponding attempts. In the third quarter of last year, Liu Chih-ping said in a financial report conference call that Tencent is building an internal operations team to ensure the quality of products provided on the platform and establish category teams to manage different categories. Li Hao, founder of Kas Consulting, also speculated that the refined operation of the five vertical categories is one of the important directions of Video Accounts in 2024.