Morningstar | Weibo Management Puts More Focus on Operating Excellence to Drive Growth
Weibo, launched by Sina in August 2009, is the largest social media platform in China. It has evolved into a trendy social media platform for “self-media†and marketing to fans, attracting the young Chinese generation. Weibo’s key opinion leader, or KOL, strategy is on the right track and has become an important marketing channel for Internet celebrities, who can monetize their image through advertising, e-commerce, and paid subscription. By the end of 2015, KOLs accounted for over 30% of Weibo users (10.9% from verified users and 20.6% from talent users) and included celebrities, opinion leaders, media outlets, government agencies, and others. Through its strategic collaboration with Alibaba since April 2013, Weibo has become a social commerce platform, directing user traffic at its platform to e-commerce merchants, mainly Taobao stores. Since 2015, riding the global trend of increased video viewership, Weibo has been evolving to a “Twitter-plus-Instagram-plus-YouTube†platform by encouraging its users, especially KOLs, to upload short video as well as live broadcasting. The firm has invested in Yixia Technology, which owns two short-video platforms (Miaopai and Xiaokaxiu) and Yi Live Broadcasting platform. The users of Yixia's video platforms can upload their video content seamlessly to Weibo. Therefore, in the near term, we think Weibo’s advertising revenue will be mainly driven by video advertisement.Weibo has been monetizing its platform through online ads since 2012. Revenue from third parties saw explosive growth of 98% in 2016, mainly because of the increase in advertising customers. In the longer term, we think investors should look at Weibo’s strategy: The firm has been collaborating with some KOL agencies to help them build up a fan base and improve the quality of their content on the Weibo platform. Additional monetization models, such as revenue-sharing, should arise for Weibo.
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