SINA Weibo: Time to monetize?

Sina Weibo has been one of the greatest success stories of Internet on the past year. Though it is not so well known out of Asia, SINA has recently anounced a registered userbase of 150 million of its Weibo service, after less than two years of launch. This growth becomes even more impressive given that in march 2010 Weibo had only 5 million registered users. The potential growth for this service is also something to pay attention, considering Chinas 1 Billion+ population and a growing online community with already more than 600 million users. This impressive growth has not gone by the eyes of the market either: Since September 2010, SINA stock prices have gone up over 200%, mostly due to Weibo, more than double the price growth of Chinese internet giant Baidu since Google decided to leave China.With Sina's total market cap currently $7.35 Billion, it is estimated that Weibo would be valued at approximately $4 billion. Such a quick growth in Weibo's valuation and with rumors of a possible spin off becoming stronger since the company adopted the weibo.com domain, investor community is expecting Weibo to start generating revenues soon.

While maintaining that his current concern is mainly based on incrementing the user base, SINA's CEO has recently announced six potential method of monetization:
1)   Precision Ads
2)   Instant Search
3)   E-commerce
4)   Social Games
5)   Paid content
6)   Wireless Value-Added services

While many consider Weibo somewhat of a Twitter clone, due to its micro-blogging nature, this comparison is not exactly correct. Weibo is somewhere in-between Twitter and Facebook, and has been posing a huge threat to the Chinese facebook-like platform and leading social network RenRen. If anything, SINA Weibo is best described as an all-around Social Media platform, and the way management is considering monetization makes this even more clear. While SINA is considering all these potential methods, Twitter's solution to the monetization problem has been only in sponsored tweets, promoting trends and data analysis for enterprise accounts.

Being part of the 3rd most important web portal in China (SINA is somewhat of a Chinese Yahoo) has obviously been a great asset to Weibo and allows it to go beyond the typical precision ads and instant searches which could be seen as pretty straightforward models for any social platform that is flooded with so much information of the user everyday. The real interesting thing of how SINA is leveraging its capabilities comes on some of the other kinds of monetization. SINA is already an important platform for e-commerce in China, giving it an experience that Twitter does not have, combined with the fact that they cater mainly one single market, which makes it much easier than the diluted markets for Twitter. One good example of how SINA has managed to seize the oportunity of combining both environments comes from its sucessful launch of a group buying ad-on, probably the first truly social group buying application (It came out before Facebook deals).
Online gaming is also a big thing in China, much bigger than in western countries. While we are more accustomed to the Google model of generally free applications funded by advertising revenues, Chinese companies have been making a lot of money from Online gaming. One good example is Netease, a 6 billion market cap company that has 88% of they're revenues coming from online gaming. To this extent, Sina has recently announced the launch of a Weibo gaming platform where developers will not be charged at all during its first year of operation. Further down the road, SINA will take some part of the revenue to themselves, but the revenue sharing agreement will be at a maximum of 30%, which is the lowest sharing rate in the industry.
Finally, Sina has signed a cooperation agreement with China Mobile in order to expand its mobile service offerings. One of the services that will be offered by this partnership is the ability to access Weibo through China telecoms email service "189 mail". Currently over 50% of the Sina Weibo users access the service through mobile use, and the China mobile agreement together with the location based service launched the last month, this proportion should increase.
Future prospects for Weibo seem to be brighter than that of Twitter. Having most of its clients in one single market is a great advantage for SINA, especially given they are already leaders in this market. It is much easier to segment costumers than on Twitter since the audience is much more homogeneous. Weibo is already a lead platform for entertainment in China. Most of the Chinese celebrities have accounts that are verified, avoiding the typical Twitter problem of fake accounts. Also, the integration of other SINA services allow them not only to leverage Weibo on its own, but also to loop back to other parts of the SINA portal. Finally, a great difference between Twitter and Weibo come from the simple fact that in Chinese, 140 characters can actually say much more!

With all these capabilities, user engagement in Weibo has been far better than that of Twitter. The analysis of a few metrics will show this better than any explanation I can give.


Time on site for Weibo has been more than twice as much as the time spent by twitter users. This could be explained by the greater variety of services offered within the weibo platform.

This other graph also shows that the penetration of Weibo in the Chinese market is much bigger than Twitters in any single market. In fact, weibo has 1 out of every 158 internet visits in China according to Hitwise.

Finally, since the inception of the weibo.com website this past April, SINA's weibo has been catching up with twitter on the number of daily Pageviews. It is estimated that by the end of Summer Weibo should have easily surpassed twitters page views.


Twitters has been recently trading at a valuation of $9B in private capital website Sharespost.com. With an estimated user base of 200 million, Twitter has an implied valuation of $45 per user or $150 per active user assuming an 30% active rate. SINA's Weibo, assuming a valuation of $4 Billion has a registered user value of $28.57 or $95 per active user assuming an active rate similar to the one of Twitter. Given the differences between Twitter and Weibo, it would be fair to estimate that Weibos active user rate would actually be a bit higher, somewhere between 40-50%, this would imply a user valuation ranging from $71 to $57. Whatever it is the metric taken though, it is clear that Weibo is still a bargain compared to Twitter, especially if taken into account its potential.

The market has placed its bets, now its time for SINA to show if Weibo has what it takes when converting all its potential into actual earnings.

You can read more about SINA Weibo on this Forbes article