HONG KONG (AdAge.com) -- Marketers have dozens of choices for reaching Chinese online, from search giant Baidu to China's e-commerce leader Alibaba, and more recently, online video players like Tudou. But Lau Seng Yee has turned Tencent, which started as the QQ instant messaging service back in 1998 and grown into an all-purpose portal offering social networks like Qzone, e-commerce and multiplayer online games, into the homegrown favorite for multinational advertisers.
"QQ is the largest social internet site in the world," said Sam Flemming, CEO of CIC Data in Shanghai, a research firm that measures internet word-of-mouth. "It has a mature social ecosystem with the most-popular instant messaging client by far, blogs, bulletin-board sites, and a virtual currency."
The company's vast user base partly explains Tencent's success. There are 637 million QQ accounts. Facebook, by comparison, has just over 575 million subscribers globally. Tencent is the world's third-largest internet company after Google and Amazon, with a market capitalization of $38 billion. Its 2009 revenue was $1.8 billion, including just over $144 million in ad revenue and net profit hit $760 million, making it the most profitable internet company in China.
S.Y. Lau, as he is commonly known, is Tencent Holdings' president of online media has turned QQ into a marketing powerhouse by speaking the language of advertisers and delivering tailor-made campaigns.
Many digital companies in China are led by tech geeks who are more comfortable writing code than building brands, but Mr. Lau spent nearly two decades in China's agency world. Before joining Tencent four years ago to oversee its online media business division and develop its online ad business, he served as Publicis' managing partner and BBDO's China CEO. He has also held senior management positions at Dentsu Young & Rubicam in Shanghai, and at McCann Erickson in Beijing and Hong Kong.
Armed with a deep understanding of the challenges facing marketers looking to build brands in China, Mr. Lau and his team work with marketers to create customized campaigns.
Mars, for instance, used QQ.com to promote Skittles as a way to escape the monotony of school life within China's regimented educational system. The U.S. confectionery company created animated animals and games that disrupt routine school activities, by tapping into the iconography of popular online viral ads and games on QQ.com. For example, teens can play a game based on their school's morning calisthenics exercises. In the online version, animated characters and "Skittlelized" creatures turn the task into a dance competition with catchy music and combo dance moves.
Procter & Gamble Co. turned to QQ to create its first-ever social-networking campaign for Max Factor, a cosmetics brand that is no longer sold in the U.S. but is big in China. Women can create and publish their own beauty "Maxgazine" on QQ.com.
Ford Motor Co. launched the Fiesta in China with a big presence on QQ.com, and PepsiCo used QQ to create a travel-themed website under the 7 Up brand name, 7up.qq.com.
A popular figure on China's speaker circuit and a coveted dinner date for digital marketing agency heads looking for a competitive edge over rivals, Mr. Lau is also notoriously brainy. He has an executive MBA from Rutgers State University in New Jersey and has done marketing and management courses at Harvard Business School.
Under his rein, QQ has evolved from an instant-messaging site into a cultural phenomenon with added services like online gaming, ringtone downloads ... even a virtual bank. Users can use "Q-Bi" coins to buy items and merchandise on the site. The currency has become so popular that other online gaming sites and e-commerce stores have started to accept the virtual coins as currency. QQ's soaring popularity has helped turn China into the world's-largest market for both internet users and mobile phone subscribers. Tencent was founded in Shenzhen, just over the border from Hong Kong, by Ma Huateng, one of China's richest men, and has catered to Chinese web users, but with growth slowing down in the mainland, the company is starting to look overseas for expansion opportunities.
In December 2010, Tencent took on Microsoft and Yahoo by offering versions of its QQ instant-messaging service in English, Japanese and French, aiming at expatriates living in China and overseas users with acquaintances in China.
Tencent also plans to set up a social-networking site in English in early 2011 to rival Facebook, which has been blocked in China for the past 18 months. Tencent has already made investments in India, Russia and Thailand, mainly through joint ventures with South Africa's Naspers, Tencent's largest shareholder.