The company, which has over a billion users for WeChat and QQ worldwide, has been promoting games through the messaging apps. Video ads and rich content have been a key part of its strategy to keep mobile users engaged.
“Tencent has the widest log-in user coverage in China and a large amount of under-monetised premium ad inventory – two unique advantages that enable it to gain a substantial share of digital ad budgets.”
For Q4 2015, Tencent reported a net income of $1.1bn. Despite below-expectation profits, sales were up to $4.7bn, beating estimates of $4.3bn. Mobile gaming drove a record $1.1bn revenue.
The groups online ad business achieved a 110% year-on-year growth, largely due to a broader advertiser base and more traffic across its platforms. 65% of total ad revenues were generated by mobile platforms during 2015.
For 2016, the company plans to expand its mobile advertising features for marketers, adding new video format content as well as more mobile ad inventory. It also said it wants to leverage new ad formats, including auto-play in Weixin Moments and eCoupons on official accounts. In addition, Tencent has plans to expand its mobile payment services.
Li Muzhi, Analyst, Arete Research Services LLP, adds:
“The strong revenue growth was driven by much higher than expected mobile game revenue, as well as the advertising revenue. That will make investors positive about the company’s growth potential. Their margins exhibited some pressure.”