Advertisers are starting to grasp the significance of social networking sites
Sina Corp employees in the company's micro-blogging division in Beijing. The Chinese version of Twitter has become an increasingly popular tool for business marketing. [Photo / Bloomberg]
BEIJING - The development of the Internet over the past 20 years has not only changed the way most people live their lives, but has also provided a plethora of new platforms for business. The advertising industry's adoption of the micro blog, or Weibo, as a promotional tool is a pertinent example.
Ye Feng, 34, a marketing professor in Beijing, frequently takes calls from public relations (PR) companies offering to pay him 5,000 yuan ($769) for every post on his micro blog that promotes their products.
He writes an average of eight posts daily, mainly about business matters and information about his courses.
More importantly, he has more than 300,000 followers who read his posts on the micro-blogging website weibo.com, which is operated by Sina Corp, a major online media company and a provider of market value-added services.
If Ye agreed to include product placements in 50 percent of his posts, he could make 20,000 yuan a day, just by typing fewer than 500 words, all of which are provided by PR companies.
However, he has consistently declined all offers.
"I don't want to make my micro blog too commercial," he said. "I might lose fans if I am discovered promoting products in my postings."
In addition to his work teaching Executive Master of Business Administration (EMBA) courses at many of China's top universities, Ye is also the founder of Sunup Consulting Co Ltd, a Beijing-based strategic consulting company.
He previously helped Shanghai Volkswagen Automobile Company Ltd to open its official account on Weibo and delivers a series of online marketing activities through his connections with micro-blogging industry insiders.
"The battleground of marketing is the Internet and the micro blog is the center of it," he said.
Micro-blogging is no longer just a tool to make contact with friends and celebrities online, reading their news and leaving comments on their pages. It is also establishing a new business model.
According to Ye, a number of people in the industry have sponsored teams to operate micro blogs purely for commercial marketing purposes. He claims that these sites can earn as much as 100,000 yuan a day from this activity.
These accounts center around jokes, fashion and other light-hearted topics. Millions of people have signed up as followers.
Insiders have said half-jokingly that the influence of a popular micro blog can be compared with a national newspaper if it has more than 1 million fans. If it has 10 million fans, its impact is similar to that of a TV station.
"Many accounts have achieved those sort of numbers already," Ye said.
According to Sina, the number of weibo users hit 140 million by May. The site has seen an average growth rate of 33.8 percent every month since it became operational.
The Weibo account with the largest fan base belongs to a Chinese actress called Yao Chen. She mostly posts about her daily life and work, and, as of June 17, her account had attracted 8,962,014 fans.
According to industry insiders, Yao has been offered at least 100,000 yuan for each post featuring product placements, but her agent has refused all offers.
Yao's agent confirmed to China Daily that her client has received a huge number of offers, but that all have been declined.
"I have never discussed payment for Yao's postings with any of the companies, but I think the value of her micro blog would be more than 100,000 yuan (for each post)," she said.
Like Yao, most movie stars or singers have resisted the pressure to make their micro blogs too commercial, so the PR companies have to think of other ways of getting their message across.
Meanwhile, domestic and international brands have opened official accounts on weibo.com, but the majority are already well-known operations. "The platform is more beneficial for brands that are already popular," Ye said. "Most people won't pay attention to an unknown brand mentioned in a micro blog."
The usual procedure for companies utilizing micro-blogging sites for marketing campaigns is to open an official account to release information pertaining to brands, products and after-sales services and then to offer interactive promotions or lotteries to attract consumers.
Ye said the cost of this kind of advertisement is 15 percent higher than those more usually associated with the Internet. Moreover, larger brands prefer to operate a "package", which means that they will place a regular advertisement on sina.com.cn, a website owned by Sina Corp, and will also offer interactive promotions through Weibo.
"In the next two years, Sina Corp will see a 50 percent growth rate in advertisement sales annually," he said. "Until now, the top 100 'grassroot' accounts have created profits of about 20 million yuan from advertisements since they opened their accounts."
Sina Corp will do more to improve its business model. The company will choose peak times to engage in its promotional activities - usually between 10 am and 11:30 am and 2 pm to 3:30 pm - when the greatest number of users are online. It will also produce online advertisements that target specific locations.
In addition, by September weibo.com will bring out what Ye referred to as "chargeable services" for individuals, without elaborating further. He added that chargeable services for companies would be available by the end of the year.
Rumors of an impending stock market listing by weibo.com have been doing the rounds for several months. Ye said that if it were to go public, the company would definitely break the record for an IPO by a Chinese Internet company.
For the PR companies, however, Weibo's rapid development is a double-edged sword. On the one hand, Sina Corp provides the micro-blogging site with a popular platform, so the PR companies will have to cooperate efficiently with the Internet company. On the other, however, Sina Corp may eventually usurp their business because of its advantages in terms of its vast database, its experience in running systems and its pool of technological talent.