In just over a month, the annual biggest shopping festival, Double 11, is about to begin. Many merchants have already entered the preparation stage in advance. In the past, Double 11 was Alibaba‘s main battlefield, but this year the invisible high wall on the edge of the battlefield is being dismantled, and there is hope that the battlefield will further expand.
Recently, Ali Mama (Alibaba Group’s digital marketing platform) and Tencent Advertising announced their collaboration. Tencent‘s WeChat channels, Moments, and mini-programs will be opened to Taobao and Tmall. Through Ali Mama’s advertising placement, direct redirection can be achieved. Compared to the previous integration of WeChat Moments with Taobao and Tmall in May this year, this collaboration will go even deeper. In addition to optimizing pop-up windows, businesses can now directly redirect advertisements from WeChat channels and mini-programs which are highly valued by merchants.
This means that Taobao has the opportunity to fill the largest gap in traffic, while Tencent can also leverage the e-commerce giant to enhance its commercial imagination space.
In the decades-long commercial evolution of China’s internet, Alibaba and Tencent have already formed their own systems, keeping each other’s businesses separated by high walls. However, with the arrival of China’s internet anti-monopoly storm and the background of the Ministry of Industry and Information Technology requiring ‘interconnection,’ the giants are gradually breaking the ice between them.
From the first collaboration between Alibaba and Tencent last year, to achieving direct conversion during this year’s 618 period, the link capabilities of both parties have gradually improved through continuous exploration. Ali Mama also felt the high-quality traffic territory of Tencent during the cooperation process.
Nowadays, the external competitive environment has become increasingly complex, which has somewhat eased the tensions between Alibaba and Tencent. On one hand, Alibaba needs to deal with the e-commerce battle brought by emerging competitors such as Pinduoduo, JD.com, Douyin, and Kuaishou. On the other hand, Tencent‘s advertising, gaming, cloud services, and other businesses also need to find stronger growth points.
This year, Taotian Group has defined three major strategies: ‘user first, ecological prosperity, and technology-driven.’ While actively expanding user engagement, they are also introducing more merchant ecosystems. Data provided by Alibaba shows that in the past year, Taobao and Tmall have added over 5 million new merchants.
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In fact, the increasing cost of traffic is a major challenge for the entire e-commerce industry, and Tencent happens to be able to provide a supply of traffic. Alibaba‘s subsidiary, Ali Mama, has recognized Tencent‘s irreplaceability in two aspects: China’s largest internet user base, which can reach all consumers on a daily basis; and the importance of social media, short videos, news and other scenarios that cannot be ignored. This will help Taobao and Tmall acquire traffic more accurately at lower costs and leverage Tencent‘s massive user value.
The beneficiary is not only Alibaba, but for Tencent Advertising, cooperation is also an important opportunity to expand revenue. Tencent‘s latest financial report for the second quarter of 2023 shows that video channel advertising revenue exceeded 3 billion yuan (＄0.4 billion) in that quarter, accounting for 12% of Tencent‘s advertising revenue. In the future, Tencent plans to gradually increase the proportion of WeChat Channels’ advertising and convert it into more income. As a ‘hot chicken’ under the group, the deep cooperation between video channels and Ali Mama also aligns with this strategy.
From the case studies presented at the press conference, it can be seen that due to improved data flow and conversion efficiency, leading businesses in the food category are able to achieve a CPC (cost per click) of 1 yuan (approximatly ＄0.1) for acquiring customers, with a cost of around 5 yuan (approximatly ＄0.7) per customer visit. As a reference, a small home appliance business revealed to Interface News reporters that their CPC is 3 yuan (approximatly ＄0.4), while those targeting higher-end customers may reach 4 or 5 yuan.
But breaking the ice and even joining hands between giants is not an easy task. Taking the cooperation between Ali Mama UD and Tencent Advertising as an example, in order to provide a smooth user experience for C-end users and establish a more efficient delivery process, it took several months for both parties to reach an agreement on subsidy algorithms alone. This involved not only data from both sides but also departments such as finance, legal affairs, taxation, etc.
Federated learning (a machine learning framework) took more than a year to develop. Previously, the media and e-commerce platforms were unable to interact with each other. Now, both Alibaba and Tencent have put forward their respective user group characteristics, achieved individual modeling, and learned from each other’s features while ensuring data compliance. The ultimate goal is to solve the problems of data fragmentation and data silos. The challenge lies in guaranteeing the privacy of their own data while achieving data sharing.
The follow-up cooperation between both parties will further integrate in terms of complementing each other’s crowds and jointly building systems, to meet the different business objectives of merchants in three major operating centers: stores, live streaming, and content. In addition, both parties will jointly launch the ‘Double 11 Super Explosion Plan’, investing billions of yuan in subsidies and multiple benefits to achieve the promotional goals of attracting traffic to stores, completing purchases, and driving traffic through live streaming.
What can be seen is that, unlike the initial forced ‘breaking of the ice’, this cooperation between Alibaba and Tencent carries a sense of proactive embrace. However, how many opportunities there will be in the future still depends on the validation effect of this year’s Double 11.