Sina Follows Twitter And Launches Sponsored Ads
Sina‘s (NASDAQ:SINA) microblogging platform Weibo which has over 350 million registered users, is considering the introduction of in-line advertising, better known as ‘sponsored tweets’ or ‘Weibo Tui Guang’. This is similar to Twitter’s ‘Promoted Tweets’ service. The service is believed to be in the testing phase right now in collaboration with select brands such as BMW and Chinese travel agent Ctrip (NASDAQ:CTRP). According to a Sina Weibo spokesperson, the company is not selling ad space to the general public at present. BMW was observed using the system to gain exposure and reach beyond its existing 480,000 plus Weibo followers. ((China’s Sina Weibo begins testing Twitter-like ‘sponsored tweets’))
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Advertisements will appear at the top of their timeline once Weibo users log in and when they refresh the page, they will appear at the bottom of the timeline. Each user will see only one advertisement per corporate microblog in a 24-hour time period. The lower left-hand corner of each such advertisement will contain a notice, “from Weibo Ads.” [1]
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Internet penetration in China is rising at a rapid rate and increasing the overall user base. [2] So the prospects for online advertising may not turn out to be bleak despite China’s slowing economy. We believe that Sina’s latest move is another step in this direction, after having introduced an Internet TV Service a few days back. The focus is clearly towards figuring out ways to monetize the Weibo platform.
The impact of this strategy, even if it implemented soon, will take some time to be reflected in the company’s earnings and valuations. Sina has already warned investors that due to a planned increase in investment spending on the Weibo platform it is likely to post operating losses this year. ((Sina results beat view, warns Weibo to eat into second quarter, Reuters))
In light of the above, there is no change to our $66 Trefis price estimate for Sina which is nearly 30% above its market price
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