This is spot on.
In China, and other emerging economies that have only recently reached the “building the infrastructure of mass-commerce” stage, advertising doesn’t play nearly as big a role in the way consumers and brands interact.
Less than 20% of [WeChat creator] Tencent’s revenues come from advertising compared to over 95% for Facebook’s revenue. In fact, most large consumer mobile companies in China (and elsewhere around the world) do not rely on advertising as their primary source of revenue; they focus on transactions instead. (Connie Chan, a16z)
Chinese internet companies have experimented with all sorts of models, including in-app or in-game fees, monetised user-generated discovery (Little Red Book, Mogujie, Meilishuo), micro-transactions, digital goods as social currency (yy.com) and umpteen versions of the on-demand model.
Most of these products implicitly leverage social relationships to enable discovery, clarify context, qualify intent and create a virtuous cycle of more relevant onwards referral. And because a large percentage of these users mostly or only access the internet on mobile, “always on, always with you” collides with context markers (location, past choice/behaviour etc.) to only fuel this further.
(Reality check: There’s also currently a lot of tracking, and data privacy varies, but our current model relies almost entirely on tracking. When tracking collapses, i’m not sure what will be left.)
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