China Internet Sector_14-Dec-17_IF

64 Pages·2017·2.55 MB·English

Asian Insights SparX
China Internet Sector
Refer to important disclosures at the end of this report
DBS Group Research . Equity 14 Dec 2017
Where does online ad spend go? HSI: 28,794

 Our proprietary research shows that ad objectives ANALYST
Susanna CHUI [phone]
(namely, “Attention”, “Interest & Desire”, and
[email protected]
“Action”) influence advertisers’ budget allocation more
Tsz Wang TAM CFA, [phone]
than traditional measures such as users and time spent
[email protected]
 We forecast that ad spending for “Action”, as a % of
China’s Internet Companies
total online ad budget, will increase from the current
Target
30% to 50% in 2019F
Company Price Price Recom 18F 18F
 Alibaba and Tencent will be beneficiaries of the shift in HK$ HK$ PE P/S
ad budget towards “Action”
x x
 Baidu will be in an increasingly unfavourable position Alibaba (BABA US) 174.64 234.00 BUY 32.0 9.1
Budget for online ads calling for ‘Action’ will grow 50+% per Tencent (700 HK) 393.20 512.00 BUY 33.9 9.2
annum from FY16-19. We have analysed the online ad market in
China, using advertising functions (namely “Attention”, “Interest & Baidu (BIDU US) 232.73 n.a. NR 25.4 5.4
Desire”, and “Action”), in addition to traditional measures such as Weibo (WB US) 101.69 n.a. NR 37.0 14.0
users and time spent. Our analysis suggests that ad spending for
“Action” as a percentage of total ad budget will increase from the
Source: Thomson Reuters, DBS Vickers
current 30% to 50% in 2019F, which translates into a compound
annual growth rate (CAGR) of 54% for FY16-FY19F. China's online advertising market share
Ad inventories for “Action” mainly come from e-commerce
100%
platforms; Alibaba is our top pick. E-commerce platforms provide most
of the ad inventories for “Action” (i.e. ads that are converted into real 90%
transactions). Alibaba operates leading e-commerce platforms including 80% 38.7% 36.6% 34.5% 32.3%
Taobao and Tmall in China, and it will be a beneficiary of the shift in ad
budget towards “Action”. We forecast Alibaba’s share of China’s online 70%
ad market to grow from 30% in 2016 to 35% in 2019. This gain in 60% 9.3% 11.2% 13.1% 15.0%
market share will result in a 20% impact on EPS in FY20F (ended March).
50%
Alibaba is our top pick. 40% 22.2% 20.3% 18.9% 17.7%
Tencent is well-positioned in online ads for “Action” in local
service online-to-offline (O2O) market. Online ads for “Action” not 30%
only enhance the sales of goods online (e-commerce), but also that of 20%
services (local service O2O). Tencent is well-positioned to provide 29.8% 32.0% 33.5% 35.0%
10%
online ads for “Action” in the local service O2O market, leveraging its
WeChat monthly active users, Tenpay, and various partnership such as 0%
Meituan Dianping. We expect Tencent’s share of China’s online ad 2016 2017F 2018F 2019F
market to grow 9% in 2016 to 15% in 2019F. The market share
Alibaba Baidu Tencent Others
change will result in a 9% FY19F EPS impact. Meanwhile, Baidu will be
in an increasingly unfavourable position, due to the expansion of e-
Source: iResearch, DBS Vickers
commerce platforms and other local service O2O platforms. We expect
Note: Our proprietary research is based on interviews with ad
Baidu’s market share to decline from 22% in 2016 to 18% in 2019F.
agencies and industry experts.
ed-JS / sa- CW /CS
Asian Insights SparX
China Internet Sector

The DBS Asian Insights SparX report is a deep dive look into thematic angles impacting
the longer-term investment thesis for a sector, country or the region. We view this as an
ongoing conversation rather than a one-off treatise on the topic, and invite feedback
from our readers, and in particular welcome follow on questions worthy of closer
examination.
Table of Contents
Investment summary 3
Introduction 4
Industry overview 5
China’s advertising market 5
What is traditional advertising? 5
What is online advertising? 5
Why the shift from traditional advertising, PC ads, to mobile ads? 6
China’s advertising market versus the United States’ 8
Internet companies’ market share and position in online advertising 9
Internet companies’ current market share of online advertising, dominated by BAT 9
BAT's position in ad objectives, Attention, Interest & Desire, and Action 9
Allocating ad budget to Attention, Interest & Desire, and Action 11
Advertisers’ online ad budget allocation to Attention, Interest & Desire, and Action 11
Internet companies’ online ad inventories in Attention, Interest & Desire, and Action 13
China’s online ads for Action as a percentage of China’s online ad market 17
BAT's estimated market share of online advertising in next three years 18
Which online ad platforms will be beneficiaries? 18
What is BAT’s estimated market share of online advertising in next three years? 19
Stock implication 23
Appendix: How advertisers pay for and evaluate online ads? 25
Appendix: How Internet companies improve user data analytics through collecting and analysing
users’ daily activities 27
Stock Profile 32
Alibaba (BABA US) 32
Tencent (700 HK) 43
Baidu (BIDU US) 53
Weibo (WB US) 55

Note: Prices used as of 12 Dec 2017
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Asian Insights SparX
China Internet Sector

Investment summary
Consensus: Traditional measures such as users and time spent. (2) Internet companies’ point of view: online ad inventories in
Based on traditional measures such as users and time spent, the “Attention”, “Interest & Desire”, and “Action”? The
market believes advertisers would like to allocate more budget continuous growth in user numbers & time spent will
to Tencent. It is because Tencent (700.HK) has the largest cause a chain reaction in the growth in online ad
number of monthly active users (MAUs) of 938m (March 2017) inventories for “Attention”, “Interest & Desire” and
and longest monthly time spent per MAUs of 1,869 minutes, “Action”. However, improving user data analytics, which
while Alibaba (BABA.US) and Baidu (BIDU.US) have lower will increase the click-through rate and the conversion
MAUs of 507m and 400m and monthly time spent per MAUs rate, will amplify the effect of user numbers & time spent
of 224 and 289 minutes, respectively. most on online ad inventories for Action.
Where we differ: We analysed the development of the online ad
Which online ad platforms will be beneficiaries? (1) E-
market in China, using advertising functions (namely
commerce (selling goods online) platforms, which are able to
“Attention”, “Interest & Desire”, and “Action”). We
connect users to point of sales, are the major source of online
interviewed China’s advertising agencies, advertisers in various
ad inventories for “Action” and beneficiaries. (2) Local service
industries (i.e. auto, consumer, financial and property), and
online-to-offline (local service O2O, selling services online)
Internet companies. Our proprietary research shows that
platforms are another huge potential source of online ad
advertising objectives (namely, “Attention”, “Interest & Desire”,
inventories for “Actions” and beneficiaries.
and “Action”) influence advertisers’ budget allocation more
than traditional measures such as users and time spent.
(1) Alibaba (BABA.US) operates leading e-commerce
(1) “Attention”: Attracting potential customers’ Attention, platforms including Taobao and Tmall in China, and it will
be a key beneficiary of the shift in ad budget towards
(2) “Interest & Desire”: Raising customers’ Interest by
“Action”. We forecast Alibaba’s share of China’s online
demonstrating advantages and benefits, and convincing
ad market to grow from 30% in 2016 to 35% in 2019.
consumers that they Desire the product or service,
The market share change will result in 20% FY20F (ended
(3) “Action”: Final purchasing Action. March) EPS impact. Alibaba is our top pick.
Tencent, Baidu, and Alibaba, which have China’s largest social
(2) Tencent (700.HK) is well-positioned in online ads for
communication, search, and e-commerce platforms, are well-
“Action” in local service O2O market. Tencent is well-
positioned in online ads for “Attention”, “Interest & Desire”, positioned to provide online ads for “Action” in the local
and “Action”, respectively.
service O2O market, leveraging its WeChat MAUs, Tenpay,
and various partnership such as Meituan Dianping. We
We forecast ad spending for “Action”, as a percentage of total expect Tencent’s share of China’s online ad market to
online ad budget, to increase from the current 30% to 50% in grow 9% in 2016 to 15% in 2019F. The market share
2019F. We base our analysis on interviews with China’s
change will result in 9% FY19F EPS impact. We reiterate
advertising agencies and industry experts; we expect China’s
BUY on Tencent.
online ads for Action as a percentage of China’s online ad
market to increase from 30% in 2016 to 50% in 2019F. We
(3) Baidu (BIDU.US) is positioned to stir users’ Interest and
expect China’s online ads for Action to deliver CAGR of 54%
Desire, but not to stir them into Action. Its search business
(FY16-19F), versus 30% for the overall online ads industry.
is losing share of China’s online ad market to e-commerce
platforms, which can more effectively direct customers to
(1) Advertisers’ point of view: online ad budget allocation to take ”Action”. Its search business and its ads will be in an
”Attention”, “Interest & Desire”, and “Action”? The
increasingly unfavourable position, due to e-commerce
number of potential customers is the largest in the first
platforms’ product category expansion or increasing
stage – “Attention”, and decreases in the second and
adoption of other local service O2O platforms. We expect
third stages – “Interest & Desire” and “Action”. Online Baidu’s market share of online ads to decline from 22% in
ads for “Attention” are thus the most effective in chalking
2016 to 18% in 2019F.
up in user numbers & time spent. However, online ads for
“Action” are the most effective in converting users into
(4) Weibo (WB.US) is the second-largest social communication
buyers. It is because the lag time between customers platform in China. Like Tencent, Weibo’s ads are
seeing ads and purchasing is shorter, which can reduce
positioned to attract users’ “Attention”. But it is
the chances that customers will be influenced by other ads
expanding its ecosystem to e-commerce through
or other categories, products or brands. Despite having
cooperation with Alibaba (which owns 30% of Weibo), to
the lowest number of potential customers in “Action”, position their ads to convert users to buyers. Weibo will be
advertisers would like to allocate more budget to online
a beneficiary of the shift in ad budget towards “Action”
ads for “Action”.
with Alibaba.
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Asian Insights SparX
China Internet Sector

Introduction
Online advertising, commission, and value-added service fees
are three main ways of monetisation for Internet companies. BAT's revenue mix in 2016
There are three main methods of monetisation for Internet
companies, (1) online advertising (i.e. merchants pay for top 100% 61..69%% 11.3%
90% 18.6%
placement ads in result lists after users’ keyword search on
80%
Alibaba’s (BABA.US) e-commerce platform and Baidu’s 24.3%
(BIDU.US) search platform), (2) commission (i.e. merchants pay 70% 21.6%
transaction-based commission on Alibaba’s e-commerce 60%
platform), and (3) value-added service fees (i.e. users pay for 50%
91.5%
Tencent’s (700.HK) online games and digital content). 40% 46.6%
30% 59.8%

20%
Three main ways of monetisation for Internet companies
10% 17.8%
0%
i.e. merchants pay for top Alibaba Baidu Tencent
Online paflatceer museenrts ’ akdesy iwn orerdsu slet alriscths Online advertising Commissions
advertising Online games Content subscriptions
on Alibaba’s (BABA.US) e-
commerce platform and Others
i.e. Baidu’s (BIDU.US) search
merchants platform Source: Company, DBS Vickers
pay
transaction-
based i.e. users pay for That’s why we are interested in studying how BAT’s share of
commission
on Alibaba’s Tencent’s (700.HK) China’s online advertising market changes. In this research, we
e-commerce Internet online games and digital
companies) content interviewed China’s advertising agencies, advertisers in various
industries (i.e. auto, consumer, financial and property), and
Internet companies. We studied (1) online ad market in China,
Value added
Commission using advertising functions (namely, “Attention”, “Interest &
service fee
Desire”, and “Action”), in addition to traditional measures
such as users and time spent; (2) BAT’s positions in these
advertising functions, and (3) how advertisers allocate their ad
Source: Company, DBS Vickers
budget to these advertising functions. We analysed BAT's
Online advertising contributes a significant amount to the market share of online advertising in the next three years and
revenues of Baidu, Alibaba and Tencent. Among the three, implications for their stocks.
online ads are the key monetisation model, accounting for

91.5%/ 60.2%/ 17.8% of Baidu’s (BIDU.US), Alibaba’s
(BABA.US), and Tencent’s (700.HK) (collectively known as BAT)
FY16 total revenue, respectively.
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Asian Insights SparX
China Internet Sector

Industry overview
China’s advertising market (1) Social communication platforms. Social communication
platforms such as Tencent’s (700.HK) WeChat (微信) and
Driven by online ads, China’s advertising market will grow at a
Weibo (微博, WB.US) have a high number of monthly
CAGR of 21% from 2016-19. iResearch expects China’s
active users (MAUs) and time spent per active user.
advertising market to deliver a CAGR of 21.0% from 2016-19F.
Advertisers can attract potential customers’ attention
Online ads will be the key driver, delivering CAGR of 29.6%
through in-feed ads in between users’ post in WeChat’s
from 2016-19F, during which mobile ads will deliver CAGR of
Moments or Weibo’s Timeline.
40.4%. The growth of traditional ads, such as TV and radio ads
will be flat, and the print ad market will decline 26.1% (2016-
(2) Video platforms. On online video platforms such as
19F CAGR). We see ad dollars continue to shift from traditional
Tencent’s Tencent Video (騰訊視頻), Baidu’s (BIDU.US)
ads toward online ads.
iQiyi (愛奇藝), and Alibaba’s Youku Tudou (優酷土豆),
advertisers can attract users’ attention through in-stream

video ads, before (pre-roll), during (mid-roll) or after (post-
China's advertising market
roll) streaming content.
2016-2019
(3) Portal platforms. Portal platforms aggregate information,
Rmb bn 2015 2016 2017F 2018F 2019F CAGR
such as news from diverse sources, including Sohu (搜狐,
Online 218 290 388 502 632 29.6%
SOHU.US) and Sina (新浪, SINA.US). Advertisers can
PC 119 115 124 132 148 8.6%
attract users’ attention through display ads and in-feed
Mobile [phone] 40.4%
TV 108 105 103 103 102 -0.9% ads (i.e. advertorial) in between content feeds.
Radio 15 15 15 15 15 1.5%
(4) Search platforms. Users of Search platforms, such as
Print 27 17 12 9 7 -26.1%
Baidu’s Baidu Search (百度搜索), are usually aware of a
Total 369 427 518 630 756 21.0%
category, product/ service or brand, and search for its or
Source: iResearch, DBS Vickers peers’ details. So, advertisers can bid for top placement
ads in result listings after users’ keyword search, to attract
What is traditional advertising? traffic to their online web pages.
Traditional advertising refers to ads on mass media, such as TV,
(5) Vertical platforms. Vertical platforms focus on certain
radio, newspapers, and magazines.
industries, such as auto verticals – Autohome (汽車之家
ATHM.US) and Bitauto (易車, BITA.US) – and property
What is online advertising? verticals – Fang’s (SFUN.US) SouFun (搜房) and Leju (樂居,
LEJU.US), with professionally-generated content (PGC).
Online advertising refers to ads on online platforms, such as
Like search platforms, users are usually aware of or even
social communication, videos, portals, search engines, verticals,
interested in a category, product/ service or brand, and
and e-commerce platforms:
search for its or peers’ details. Advertisers can deepen
China’s online ad market breakdown by Internet users’ interest through display ads and in-feed ads (i.e.
platforms advertorial) in between content feeds.
Rmb bn 2012-2016F (6) E-commerce platforms. On e-commerce platforms such as
2012 2013 2014 2015 2016 CAGR Alibaba’s (BABA.US), Taobao (淘寶), and Tmall (天貓),
Social 3 5 8 15 24 71.8% users have strongest purchase intention for a product and
Video 7 10 15 23 32 48.1%
search for different merchants to compare their price
Portal 8 10 11 16 21 30.7%
performance ratio. Advertisers can bid for top placement
Search 26 34 38 71 79 31.8%
ads in result listings after users’ keyword search, to attract
Vertical 10 11 13 15 18 17.6%
E-commerce 18 30 40 59 87 42.9% traffic to their online store to increase the likelihood of
Others 6 11 29 20 29 38.0% purchases.
Total 77 111 155 218 290 38.0%

Source: iResearch, DBS Vickers

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Asian Insights SparX
China Internet Sector

Online platforms’ major ad formats
Online platforms Major ad formats
Social communication platforms 'In feed ads' in between users’ posts in WeChat Moments or Qzone
Video platforms In-stream video ads, before (pre-roll), during (mid-roll) or after (post-roll) streaming content
Portal platforms Display ads and in feed ads (i.e. advertorial) in between content feeds
Search platforms Top placement ads in result listing after users’ keyword search, to attract traffic to their online web pages
Vertical platforms Display ads and in feed ads (i.e. advertorial) in between content feeds
E-commerce platforms Top placement ads in product listing after users’ keyword search, to attract traffic to their online store to
increase customers’ purchasing chance
Source: DBS Vickers
Why the shift from traditional advertising, PC ads, to
mobile ads?
(1) Time spent: Users spend more time with online media. (2) Better ad-targeting: Internet companies can collect users’
Average time spent with online media rose 6% (2013-16 profiles and daily activity (i.e. interests and purchase
CAGR); time spent on mobile media grew 11.3% (2013- behaviour) through universal login across their expanding
16F CAGR). Average time spent on traditional media, such ecosystems. They can define users in different categories,
as TV and radio was flat, and time spent reading print and predict users’ behaviour, for more precise targeting.
declined 5.9% (2013-16F CAGR).
(3) Ad placement is available anywhere and anytime. In
Average time spent per day with major media by adults
mobile advertising, users see ads on smartphones
in China
anywhere and anytime, click on ads for details of products
2013-2016 or services, and even click to purchase.
minutes 2012 2013 2014 2015 2016
CAGR
Online 127 153 169 178 185 6.5% (4) Ad-evaluation accuracy is high and lag time is short.
- PC 61 63 64 62 61 -1.1% Advertisers can easily and quickly determine whether ads
- Mobile [phone].3%
are successful, through evaluating ads’ number of
TV 162 162 161 160 159 -0.6%
impressions, clicks, or actions (i.e. sales).
Radio 11 11 11 11 11 0.0%
Print 14 12 11 10 10 -5.9%
Total 441 491 521 537 550 3.9%
Source: eMarketer, DBS Vickers

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Asian Insights SparX
China Internet Sector

Comparison of traditional, PC, and mobile advertising

Traditional advertising PC advertising Mobile advertising
Ad targeting + Advertisers or advertising agencies + Internet companies can track users’ + Internet companies can collect users’
can conduct market research to browsers by cookies, which is a code profile and daily activities (i.e.
collect data about target markets embedded in web pages to collect interests and purchasing behaviour)
and customers. users’ daily activity data. through universal login across their
mobile apps.
- Research results may be biased by - But cookies are associated with
researchers and respondents. browsers, not people. If a family of + They can define users in different
four shares a browser on a categories, and predict users’
computer, the activity associated behaviour, for more precise
with one cookie might be the result targeting.
of four different people surfing the
web. Similarly, if one person uses
two different browsers on the same
computer or another computer,
there is no way to associate his
actions on one browser with the
actions on another browser.
Ad targeting ✓ Ad targeting ✓✓ Ad targeting ✓✓✓

Ad placement - Ad placement is limited to media at - Ad placement is limited to PCs at + In mobile advertising, users see ads on
homes, schools, offices or particular homes, schools, offices or particular smartphones anywhere and anytime.
areas. areas.
Limited to particular areas Limited to particular areas Anywhere and anytime

Ad evaluation + Advertisers can know viewership of + Advertisers can quickly determine + Advertisers can quickly determine
media. whether ads are successful, through whether ads are successful, through
evaluating ads’ number of impressions, evaluating ads’ number of impressions,
- Advertisers do not know viewership of
clicks, or actions (i.e. sales). clicks, or actions (i.e. sales).
their ads and whether they will be
converted to sales.
- Advertisers can estimate incremental
sales attributed to ads, but after a long
lag time.
Accuracy ✓ Accuracy ✓✓✓ Accuracy ✓✓✓
Efficiency ✓ Efficiency ✓✓✓ Efficiency ✓✓✓
Source: DBS Vickers
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China Internet Sector

China’s advertising market versus the United States’
Advertising spending as a percentage of Gross Domestic
China’s advertising dollar is far below that of the United Product (GDP)
States’, with US$60b versus US$180b in 2016, equivalent to
0.6% and 1.2% of Gross Domestic Product (GDP). 1.4% 1.3%
1.2%
1.2% 1.2%
1.1%
1.2%
But China’s ad market will deliver faster CAGR of 21.0%
during 2016-19F versus the US’ 5.5%, driven by faster 1.0% 0.8%
online ad growth. China’s online ads will deliver CAGR of 0.7%
29.6% (2016-19F), versus the US’ 11.8%. We believe this is 0.8% 0.7%
0.6%
0.5%
likely due to the innovativeness of China’s Internet industry 0.6%
(i.e. mobile applications cater to almost every aspect of daily
0.4%
life).
0.2%

China’s advertising market 0.0%
2015 2016 2017F 2018F 2019F
2016-2019
China United States
USD bn 2015 2016 2017F 2018F 2019F CAGR

Online 31 41 55 71 89 29.6%
Source: iResearch, eMarketer, DBS Vickers
PC 17 16 17 19 21 8.6%
Mobile [phone]%
TV 15 15 15 15 14 -0.9%
Radio 2 2 2 2 2 1.5%
Print 4 2 2 1 1 -26.1%
Total 52 60 73 89 107 21.0%

Source: iResearch, DBS Vickers

United States’ advertising market
2016-2019
USD bn 2015 2016 2017F 2018F 2019F CAGR
Online 60 69 77 87 96 11.8%
PC 28 25 25 25 27 2.2%
Mobile [phone]%
TV 69 71 72 74 75 2.2%
Radio 14 14 14 14 14 0.2%
Print 28 27 26 26 26 -1.2%
Total 171 180 190 200 211 5.5%

Source: eMarketer, DBS Vickers

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Asian Insights SparX
China Internet Sector

Internet companies’ market share and position in online advertising
Internet companies’ current market share of online BAT's position in ad objectives, Attention, Interest &
advertising, dominated by BAT Desire, and Action
China’s online advertising market is dominated by Baidu We apply the AIDA model – namely Attention, Interest &
(BIDU.US), Alibaba (BABA.US), and Tencent (700.HK), Desire and Action, which are objectives of ads – to study
collectively known as BAT, commanding market share of BAT’s position in China’s online advertising market.
22.2%, 29.8%, and 9.3%, respectively in 2016. Others,
including Sohu (SOHU.US), Sina (SINA.US), Autohome (1) First stage: Attention: Attracting potential customers’
(ATHM.US), Bitauto (BITA.US), Fang (SFUN.US), Leju Attention.
(LEJU.US), and Weibo (WB.US) account for less than 5.0%
(2) Second stage: Interest & Desire: Raising customers’
each.
Interest by demonstrating advantages and benefits, and

convincing consumers that they Desire the product or
Share of online advertising market (2016)
service.
(3) Third stage: Action: Final purchasing Action.
Alibaba
30% Tencent, Baidu, and Alibaba, which have China’s largest
Others social communication, search, and e-commerce platforms,
39% are well-positioned in online ads for Attention, Interest &
Desire, and Action (i.e. sales), respectively.
Tencent Baidu
9% 22%

Source: Company, iResearch, DBS Vickers

BAT's position based on the Attention, Interest & Desire and Action (AIDA) theory
Advertising objectives - AIDA AIDA Description Which ad positions are BAT in?
WeChat
Attracting the attention of the customer to a
Ads for Attention (Tencent)
category, product or brand.
Raising customer interest by demonstrating
advantages and benefits.
Ads for Interest & Desire Baidu Search
(Baidu)
Convincing consumers that they desire the
product or service and it will satisfy their
needs. Mobile Taobao
(Alibaba)
Leading customers towards taking action to
Ads for Action
make purchasing.

Source: DBS Vickers
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Asian Insights SparX
China Internet Sector

Baidu’s search ads
Tencent has China’s largest social communication platform,
on which ads are positioned to attract users’ Attention.
Tencent has China's largest social communication Advertisers can bid for
keywords (i.e. hospital)
platform – with the highest monthly active users (MAUs)
and user time spent – which are used for social
communication, but not for making purchases. So, its ads
(i.e. in-feed ads in WeChat Moments or Qzone) are
positioned to attract potential customers’ Attention to a
category, product/ service or brand (i.e. Mercedes Benz,
BMW, Airbnb, McDonalds, and Xiaomi).
Tencent’s WeChat Moments ads
Users can click for a Top placement ads
category, product/ after users' keyword
service or brand's search that the
advantages and advertisers can attract
benefits traffic to its online
web pages for details
(Interest and Desire)

Source: Company, DBS Vickers
Alibaba has China’s largest e-commerce platform, on which ads
are positioned to arouse users’ Interest & Desire to the final
purchasing Action. Having China's e-commerce platform,
Alibaba’s users have the strongest intention to purchase a product
(i.e. computer, communication & consumer electronics [3C],
Advertisers can attract
users' attention through beauty & personal care, maternal & child, apparel & shoes, or food
in-feed ads in Wechat's & beverage), and search for different merchants to compare their
Moments (Attention) price-performance ratio. So, its ads (i.e. top placement ads in
result listings after keyword search to attract traffic to advertisers’

online store) are positioned to arouse users’ Interest and Desire to
Source: Company, DBS Vickers the final purchasing action.
Alibaba’s e-commerce ads
Baidu has China’s largest search platform, on which ads are
positioned to stir users’ Interest & Desire. Having China's
largest search platform, Baidu’s users are usually already Taobao and Tmall's
merchants can bid for
aware of a category, product/service or brand (i.e. medical
keywords (i.e. dress)
and healthcare, network services, or financial services), and
search for this category, product/ service or brand's
advantages and benefits to find out which will satisfy their
desire. So, its ads (i.e. top placement ads in result listings
after keyword search to attract traffic to advertisers’ online
web pages) are positioned to stir users’ Interest and Desire.
Top placement ads
after users'
keyword search
that the merchant
can attract traffic
to its online stores
for detail and
purchase (Interest,
Desire and Action)

Source: Company, DBS Vickers
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