How luxury can benefit from Tencent and Alibaba’s thawing relationship

In the days leading up to the 618 shopping festival one of the main e-commerce extravaganzas in China users received a WeChat Moments ad that took them directly to Tmall. The distinct Alibaba Marketplace brand name and logo were prominently displayed (according to screenshots of the ad), an unheard-of concession from one of the usually walled gardens of the Chinese internet.

On closer inspection, tapping on the ad revealed a branded landing page directing users to the advertiser’s Tmall store in the Tmall app or on the Tmall website if users didn’t have the app on their phone. Although seemingly minor, this is a significant step forward in interoperability between WeChat and Tmall.

Such WeChat advertising driving consumers directly into the Tmall app was previously unthinkable due to the ongoing feud between Tencent and Alibaba, which like other tech giants have fiercely blocked traffic from one to the other. ‘other. Other examples of this anti-competitive behavior are Weibo completely blocking mentions of WeChat and QR codes that link to WeChat accounts, and Douyin appearing to limit the organic reach of messages that could lead a user to other platforms. Yet, as a sign of bigger changes in China’s tech ecosystem, it has recently become a reality as 618 approaches.

There were hints of this earlier, however. The first sign of these two rivals easing restrictions on each other came after the Chinese government’s anti-monopoly push in 2021. Since then, users can open direct links to Tmall in WeChat’s built-in web browser. .ser, like long because links are shared one-on-one or in group chats.

The latest development appears to work as a test case for Tmall merchants advertising on WeChat Moments, although the feature has not yet been made available to every brand on Tmall. And while driving traffic from WeChat to Tmall stores can be a huge opportunity, placing ads on WeChat Moments may not work for all brands.

Xuan Bai, marketing manager at a Beijing-based company little partner (agencies authorized by Tmall to operate e-commerce stores on behalf of brands), believes that WeChat Moments advertisements, which are billed on a cost-per-mile basis, can often be too expensive, especially for smaller names. “Brands need to have good awareness for the ad to generate the traffic and sales that justify the spend,” Xuan explained.

When the two platforms blocked traffic, it hampered brands when marketing, monetizing their WeChat followers, and creating consistent, user-centric online experiences. In this context, what can brands and marketers take away from this change? And what does this revolutionary movement mean for the relationship between these titans of technology?

The reason WeChat Moments is a desirable advertising channel comes down to data and the targeting ability of the platform. WeChat’s daily active users reached 1.26 billion at the start of 2022, and as anyone who has used the platform knows, WeChat is much more than an app of social media apps; it’s embedded in every user’s lifestyle, and the data it collects would be invaluable to any advertiser.

“It really depends on how much data WeChat can share with Tmall. If brands can have full access to the data used in its targeting on WeChat, this could be a fantastic opportunity for them,” Xuan added.

The context of this news is revealing. WeChat saw continued downward growth in its advertising business in 2021 and the first quarter of 2022. Meanwhile, its e-commerce marketplace offering never really took off. Similarly, the growth of Alibaba’s own internal advertising platform has seen sharp declines since the start of 2021. Xuan believes the two platforms will not share data with each other; if they can find common ground and share their resources, it’s a win-win.

For many luxury brands, WeChat is the go-to channel for branding, storytelling, and community building. Once WeChat Moments drives traffic to all Tmall merchants, it will be a great way to turn subscribers into customers and keep them coming back. Insights from Moments Ads will also fuel marketing, helping brands create tailored communications that fuel the growth of their WeChat brand account.

Who will benefit the most? Initially, accessible luxury products, such as perfumes and makeup, could be the biggest drivers, in terms of conversion. But while this news is a harbinger of a thawing relationship between Alibaba and Tencent, it will only benefit brands that have long had to build complicated solutions to problems caused by fierce competition from these two tech giants.

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