1. Declaration of Profit Model
The core of Sina Weibo's profit model is to leverage its pioneering nature and use "interest" as a connecting node. Through careful exploration, three feasible profit models can be identified.
Social networking sites are built with people as the basic information source, becoming a replica of real-life social circles on the internet. Therefore, netizens need a platform that allows mutual exchange privately and do not like being disturbed by commercial activities, which creates an inherent conflict towards advertisements. This is why even a popular site like Kaixin001 is cautious about ad placements, fearing it may affect user experience and corrupt the foundation for the enterprise's survival. If ads cannot generate profits, then the remaining options, value-added services and games, are not the core competencies of social networking sites. Additionally, due to Chinese netizens' habits of not paying for online services, it will be difficult to break through in the short term, forming a bottleneck for social networking sites' profitability.
However, Sina Weibo's operational model has the potential to break this bottleneck. The information sources for Sina Weibo are not only individuals but also various social organizations, including commercial enterprises and all kinds of social groups that have established their official Weibo accounts. Netizens can follow these interesting information sources in real-time by subscribing to them. Sina Weibo has established an open social network centered around "interest," connecting various information sources. This type of network does not conflict with commerce, focusing instead on whether "interests" are fulfilled, laying the groundwork for Weibo's profitability.
"Profit model" is a tough hurdle for SNS (social networking) sites to overcome, even Facebook, the pioneer with over 500 million registered users globally, is still in the exploratory phase of its profit model. Although Sina Weibo is currently in the stage of expanding its user base, whether it can overcome the "profit model" hurdle has become the focus of experts, scholars, and industry insiders.
Since its launch on August 28, 2009, the number of Sina Weibo users has surged rapidly, reaching over 50 million within just one year, rivaling the popularity of Kaixin001, which had been booming for two years. Netizens have shown great affection for Sina Weibo, organizing spontaneous celebrations on its first anniversary on August 28, 2010, causing a stir in public opinion. Industry giants such as NetEase, Sohu, and Tencent, spotting the business opportunity, have launched their own microblogging products to seize the new high ground in the internet market.
Sina Weibo has easily crossed the first hurdle of creating buzz, attracting attention, and accumulating users. But how can it break through the life-or-death challenge of the "profit model"?
Therefore, Sina Weibo can analyze the interest points of its user groups through backend analysis and target advertisements accordingly. This is precisely the precise placement model that advertisers desire, coupled with a massive user base, making Sina Weibo an attractive new media channel for advertisers. The advertising model will undoubtedly bring substantial revenue to Sina Weibo.
Social networking sites, by definition, take real-life "people" as the information source and interpersonal connections as the method of information linkage. Compared to portals that are centered around "information," this website model is undoubtedly a significant advancement. "People" become the masters of information, enhancing website stickiness, and the astronomical number of users proves this point. However, this very feature becomes an obstacle to achieving profitability.
2. Value-Added Service Profit Model
Carefully analyzing domestic SNS websites such as Sina Weibo, Renren, and Kaixin001, Sina Weibo has the potential to become the first to overcome the "profit model" barrier. Sina Weibo's operational model has natural advantages over other websites in terms of profitability. Its advantage lies in breaking away from the traditional SNS model centered around "people" as network nodes, achieving automatic classification of user groups, laying the foundation for profitability.
Traditional social networks, as private platforms for interpersonal communication, create conflicts with advertisements. In contrast, Sina Weibo is an open network connected by "interest," serving as a platform for information acquisition and publication. Not only will netizens not have conflicts with advertisements, but they will also spread ads that interest them, directly influencing their purchasing decisions.
This article comes from Mercer Expert Calls