Tencent urgently needs to loosen up its video accounts

The supply-side cost is lower than that of Douyin, the tool ecosystem is better than that of Kuaishou, and the user-side data continues to grow. Video Account is undoubtedly a trump card of Tencent. Tencent is now increasing its investment in video account live e-commerce. The urgent problems to be solved are the slow development of video account and the balance between traffic delivery and user experience. Let's take a look at the author's analysis.

At the end of 2023, Tencent, which was "trapped" by games, had to increase its investment in video accounts.

On December 15, Tencent, which spent 1.4 billion yuan to promote "Dream Star", attempted to replicate the glory of the king again, preparing to "win good luck and eat chicken tonight", and at the same time revive a series of games such as "QQ Speed" and "Fall Guys".

Just as "Dream Star" and "Egg Party" were hotly competing for players, the gaming industry encountered a huge shock: 7 days later, the "Online Game Management Measures (Draft for Comments)" was released. Simply put, due to relevant regulations, game-related revenues will decline significantly.

In the short term, Tencent can be said to have suffered heavy losses, but fortunately, WeChat is a strong enough portal and has hidden opportunities. At the end of 2023, Tencent is eager to use the video account as a trump card to release positive news about the video account and rejuvenate the capital market:

On December 25, it was revealed that Tencent is adjusting the organizational structure of the WeChat Pay and Video Account teams, and plans to increase investment in "live streaming with goods"; on December 27, an expert survey on Video Account was leaked, and all the data looked very good.

Growing on the soil of WeChat, and accompanied by Moments, official accounts, mini-programs, and enterprise WeChat, the video account has been called the hope of the entire company since the end of 2022.

A year has passed, and based on my personal experience, the video account still has not accurately matched my needs . Recently, due to the cold and damp weather in Jiangsu and the lack of floor heating, my family is planning to buy a dryer. I actively searched for "dryer" through WeChat's "search" function many times within three days, but the videos launched by the video account are still general cultural videos recommended by friends.

If you look at Douyin and Kuaishou, the dryers of major brands will quickly emerge, but on the road to commercialization of the C-end of Video Account, both advertising and e-commerce are a bit "unsuitable":

Users are disguising their preferences, leaving video accounts confused - no one wants to reveal their true preferences to their bosses or colleagues. And the content cannot accurately find users, which means that "the goods cannot find the people."

Growing in the WeChat ecosystem and started with friends’ recommendations, video accounts care more about the user experience of the product than other platforms. As a result, the WeChat team’s goal of “no more than 10% advertising loading rate” cannot allow more people to access products and live broadcast rooms.

In the past, video accounts were moving forward slowly with shackles on their shoulders, but based on Tencent’s current situation, perhaps they need to loosen up the shackles.

1. We have to play the video account card again

As an Internet company founded 26 years ago, Tencent has built diversified business segments, including value-added services, online advertising, and financial technology and enterprise services.

After the draft was released a few days ago, Tencent's Hong Kong stock market immediately fell by 13%. This is because value-added services, mainly represented by the gaming business, have always been Tencent's "ballast stone", with revenue accounting for around 50%. In Q3 2023, Tencent's value-added service business revenue was 75.7 billion yuan, a year-on-year increase of 4%, accounting for 49% of total revenue.

(Source of Tencent’s financial report: Tencent’s financial report)

There is no doubt that Tencent's next development focus will be on the latter two sectors. In Q3 2023, the performance of the two sectors was also good: the online advertising business revenue was 25.7 billion yuan, a year-on-year increase of 20%, accounting for 16% of the total revenue; the financial technology and enterprise service business revenue was 52 billion yuan, a year-on-year increase of 16%, accounting for 34% of the total revenue.

Although the revenue share of the two is not high, their growth rates are both over 10%, making them important engines driving rapid growth in performance.

These two sectors all grew out of the WeChat ecosystem, and among the many portals, Video Account is the "star business" that has high hopes. "The most eye-catching business of WXG (WeChat Business Group) is Video Account, which is basically the hope of the whole audience (the whole company)." In December 2022, Tencent founder Ma Huateng left such a comment.

At the end of 2023, a series of actions taken by Tencent also proved that with the temporary stagnation of the gaming business, Tencent had to once again play its trump card, the video account.

It can be said that both advertisers and businesses cannot ignore the fertile soil of video accounts:

User-side data is still growing. The financial report disclosed that the total video time in Q2 nearly doubled year-on-year, and the number of views in Q3 increased by 50% year-on-year;

The supply-side cost is lower than that of Douyin, and the tool ecosystem is better than that of Kuaishou. The CPM price of Douyin is about 35 yuan, while the CPM price of Kuaishou is about 20 yuan. According to experts' predictions, the CPM of Video Account is 29 yuan.

Compared with TikTok and Kuaishou, WeChat’s links are more comprehensive, and everything can be done in WeChat: Moments, official accounts, and video accounts are responsible for planting grass, corporate WeChat and WeChat customer service are responsible for maintaining relationships, and mini programs and WeChat Pay complete delivery.

Therefore, it is not surprising that Tencent is now increasing its investment in live streaming e-commerce on its video accounts.

On December 25, multiple insiders revealed that WeChat Video Account is increasing its investment in live streaming sales , and has adjusted the organizational structure of the WeChat payment and video account teams for this purpose. One of the insiders said that the adjustment started around Double 11 this year, and the idea of ​​the adjustment is to increase the investment of more resources in live streaming sales in the future.

2. The truth behind slow development

As mentioned in the introduction, after the author clearly searched for dryers in "WeChat Search", the video account was still recommending general cultural content. A natural judgment is that although the various e-commerce tools are constantly being improved in 2023, the video account is still not ready to enter the e-commerce market.

According to Zhang Xiaolong's original intention, the proportion of video traffic should be 10% machine recommendation, 2% friend recommendation, and 1% follow. But judging from the current user experience, friend recommendation and follow still account for the majority.

Specifically, machine recommendations follow indicators, such as completion rate, number of likes, number of comments, number of reposts, etc. The one with good data will be recommended. Currently, the proportion of machine recommendations is relatively low, mainly because the content in its ecosystem is not attractive enough, and most of the reading volume depends on "recommendations from friends."

In fact, it is not easy to accurately match content to users on video accounts.

When users spend most of their time reading content recommended by their friends, their content portrait will become passively unreal - in the online society of WeChat, there are people you know from family, work, and the same industry, and who doesn't want to be a slash youth who loves knowledge and likes sports.

Therefore, whenever people want to like a video, they often think first: "Will this affect my image?" "Will it make me look less serious?" and other questions, which makes the video account robots confused - "This guy has finished watching the video, why doesn't he like, share, forward or recommend it?"

Such "passive" and "active" false user portraits make users increasingly unable to see what they really like. In a limited time, users will go to Douyin to release their true emotions without considering their social identity, and thus no longer stay on the video account.

At the same time, the public does not have a high level of participation in the video account. What became popular on Douyin in 2020 were various challenges with extremely high public participation, such as food-making challenges, various acrobatic challenges, makeup challenges, ice bucket challenges, etc.

These contents can be created by ordinary people who have no fan base and no special skills. They can be viewers and creators at the same time, so the platform can better bind users.

However, the general knowledge videos currently promoted by Video Accounts are difficult for native newbies to create, as the threshold for knowledge categories is very high. Video Accounts themselves have several threshold restrictions when recruiting and motivating bloggers from external platforms:

(Source of the video account anchor recruitment plan: Video Account)

This results in high-quality creators on external platforms pinning their hopes on the WeChat platform and the corresponding traffic support, and coming here with great joy, but users are unable to truly empathize with them, and creators are better off returning to their "base camp" to make a good living.

In other words, without a rich content ecosystem, there won’t be many commercial stories to tell.

After the above series of actions, not only will user stickiness be greatly reduced, but the content ecology of the video account will also be incompatible with e-commerce - the current most popular sections are life, current affairs and government affairs, and education. The TOP10 accounts are film and television entertainment, people's livelihood, life, comedy, emotions, etc.

(Source of WeChat video account content release: Xinbang)

People are liking, collecting, and forwarding content that they like because of tags , which makes it impossible to accurately deliver products. At the same time, among these contents, except for the lifestyle section, the few that are ranked at the back are difficult to monetize.

One question is, the WeChat team must have known that this was not the case, so why did they indulge themselves and allow the recommendation rate from friends to remain high? Why did they allow the pan-entertainment sector to be filled with content?

An expert survey leaked at the end of 2023 gave the answer.

The survey shows that the product experience of WeChat is the focus of Zhang Xiaolong's team, so the advertising loading rate of Video Account is unlikely to reach 15% of Douyin. It is estimated that the upper limit of the loading rate of Video Account is about 10%, which greatly reduces the advertising revenue of Video Account and the frequency of seeding. The current advertising loading rate of WeChat Video Account is 2.8%.

We might as well make such an assumption that with the support of Tencent's resources and team, Video Account is capable of controlling the content ecology and the proportion of machine recommendations, allowing e-commerce to take root earlier, but it has always been constrained by the WeChat ecology, and everything can only be based on user experience.

Therefore, Video Account is openly improving various tools and building various frameworks to let creators and the capital market know that it is working hard; at the same time, it is slowly increasing the concentration of e-commerce and advertising to make commercialization on Video Account slower.

3. How to loosen the rope?

However, the above is the situation before 2024. As mentioned above, Tencent needs to loosen up its video accounts. Before the next financial report comes out, Tencent needs a bright business - video accounts to make up for the vacancy caused by the game business.

It is necessary to significantly improve the accuracy of content matching, that is, to improve machine recommendations. Video accounts may be able to achieve this in one step: expert research shows that machine recommendation traffic accounted for 54.5% in November, and the goal for next year is to increase it to more than 60%. There is still some distance to the WeChat team's goal of "machine recommendations account for 10, friend recommendations account for 2, and attention accounts for 1" (machine recommendations account for about 73.6%).

In the short term, if Video Account wants to ensure user experience and make some money in e-commerce and advertising, it can only start from the life section.

The successful cases Tencent has given to the public are all from the life track. For example, Guo Yiyi and Bao Ge and Bao Sao couple's accounts are both husband-and-wife teams, and the content they update on a regular basis is small stories about getting along with their families in daily life. Both of them are based on sincerity and trust, with strict quality control and a full set of after-sales services, and have become the number one figures in video account sales.

It is worth mentioning that both of these accounts first posted daily videos on Douyin, and then settled in the video account to keep synchronized updates.

(Source of the video account sales case: Xinbang)

What Video Account needs to do next is to delve deeper into the lifestyle section, dig out more sincere, reliable and successful "couple accounts" from Douyin or Kuaishou, update them simultaneously, and broadcast more live on Video Account, cultivate the minds of fans and let them flow into the private domain, while liking, collecting, and forwarding product live broadcasts and promotional videos, attracting more of their own friends and importing public domain traffic.

Among all these, the question Video Account needs to think about is how many accounts with such influence are there? What kind of sales style do Video Account users like? Will Douyin provide more incentives to encourage top anchors to live broadcast more on its platform?

In addition to truly attracting users' interest, necessary and efficient advertising also needs to be strengthened.

An expert survey shows that Tencent’s current advertising delivery tools are relatively backward. Video accounts do not have their own dedicated delivery tools, but instead rely on the unified backend of Tencent Advertising Company.

Tencent is currently developing a traffic delivery tool for Video Accounts, similar to products such as Taobao Express. It is expected that by 2024, a delivery tool specifically for the Video Account ecosystem will be launched, and by 2025 or 2026, a delivery tool for the entire WeChat ecosystem may be launched.

Loosening the restrictions on video accounts is Tencent’s top priority at the moment. Tencent needs to increase the proportion of video machine recommendations faster than originally planned and develop traffic delivery tools faster to allow more products to be "exposed" to the public, even though that may result in the loss of some user experience.

Author: Renee; Editor: Sun Yue

WeChat public account: Sirui Insight (ID: siruidongcha)